Why crypto is a good bet but not an investment? (2024)

Weird. How can crypto be a good bet but not an investment? Think about it.

I dug a bit and found that investment simply means “the acquisition of assets with the intent of generating a return on that asset from the increased productivity that the investment generates”.

So where is the productivity gain in a crypto investment? Is someone employed? Is an assett made more valuable? Is there more efficiency or advantage of scale? Where is the positive good… the productivity. Is the ability to make a return the only criteria for an investment? With that definition then gambling is an investment… which it is clearly not.

Buying stock in a company or real estate should allow it to be more productive and thus the investor rightly gets to share in that benefit. That is an ethical and totally justified reason for expecting a return. No question.

So where is the productivity in crypto?

Satoshi (who invented Bitcoin) must be besides himself watching todays speculators drive up the price of his baby.

The core engine of the rising coin price is the mining process and the scarcity of computing power needed to add blocks to the blockchain.

Where is the productivity in that?

How is that productive?

It’s not.

Crypto is more akin to Gambling

By classification, crypto investing is more akin to gambling. Only it’s unregulated and generally far more predictable than the spin of a roulette wheel.

Because of this when friends ask me if I’d invest in Bitcoin I explain that to me Crypto investment is not true investment. It’s closer to gambling. And I don’t gamble. It’s not productive. If I invest in something it has to do more good than simply return me a profit. It has to be productive. Has to do some common good.

Some would argue that investing in businesses is gambling, and true there is risk, but a constructive investment helps a worthwhile enterprise to be more productive.

Ethically and morally you can expect to share in the progress of a company that becomes more productive due to your contribution. That is a noble thing.

Anti-crypto?

Does this mean that I am anti crypto? Not at all. When I first read Satoshi’s paper I was in wonderment. Bitcoins beautiful integrated components and design including elegant cryptography and decentralised self administration captivated me.

Its design promised of a future where all earth citizens could use one universal instrument of trade. Where African bushmen could trade with Wall Street on the same playing field free from political agendas and manipulation that limit the use of traditional fiat currencies. And is free of middle men and gate keepers. Banks, currency traders, and card fees.

That is an underlying theme to what my friend Angela (Clark) and I are doing at Wallet Nation.

If the stars align in our favour we will see a trading crypto with minimal mining fees (less than a cent per transaction), high transaction throughput, charge back capabilities and is generally useable for everything from a coffee to buying a house.

And because Angela and I have a similar sense of justice, we are eager to see the model used everywhere.

Consider El Salvador. They have taken the plunge to make Bitcoin a national currency. Gutsy. Theoretically this strategy can help counteract the effect of massive inflation, but the reality is that every transaction costs $5 USD in mining fees minimum. In an economy where a bus driver makes $40 per week, getting your weekly pay check would cost a whopping 13% never mind the fees on a coffee or a loaf of bread.

Someone somewhere needs to deliver on the promise of Satoshi’s original vision. Wish us luck!

Angela and I are currently working on a universal middleman-less escrow service for all flavours of crypto. Then well set our sights to the next goal. Digital fiat. Follow us at Wallet Nation on Linkedin if you would like to be involved as early adopters, beta testers or core community members. We love to hear from others of the same spirit.

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First published on Medium | 4 min read

Chris Bird #crypto #speculation #satoshinakamoto