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Why Financial Experts Advise Against Putting Money Into Cryptocurrencies
With the value of Bitcoin exploding in 2017 many people are now talking about cryptocurrencies and
whether they should start putting their own money into them. Before anyone does so they should
listen to financial industry veterans such as Micahel Antonelli of Robert W. Baird & Co. Inc. He points
out, for example, that there is literally no expert when it comes to cryptocurrencies like Bitcoin,
Ethereum, Litecoin, and the other 1,500 odd other ones that now exist.
All cryptocurrencies are based on a technology called blockchain. All of the transactions are kept on a
decentralized digital ledger where everyone that owns cryptocurrencies are kept anonymous. People
that advocate for these currencies say that makes them more secure because they're not controlled
by a central bank or any hard assets. However, because everyone is anonymous they are also
susceptible to hacker ransoms and black market activities. Their also really volatile because of how
they are designed to function.
A company can increase in value. It can sell more products, expand into new markets, or otherwise
grow in value. Cryptocurrencies are not this way. They're like speculating in baseball cards, hoping
that down the road you can sell one you own to someone else who values it more than you. A baseball
card doesn't inherently increase in value, after all; it doesn't get bigger or shinier making it worth
more. It's just purely speculative, just like Bitcoin and its ilk.
A large part of the reason that people want to speculate in cryptocurrencies is that they're boring,
Antonelli has said. They're really volatile which can possibly result in someone making or losing a lot
of money. For some that is appealing because they want to try something different that is more
exciting than investing in stocks.
One government official in Wisconsin, Jim Poedwils of the Wisconsin Department of Financial
Institutions, cautions against anyone putting money into cryptocurrencies. He says that they're too
risky, especially because they're anonymous. If someone is able to steal your Bitcoin or other currency
he says that you're not going to have any recourse to get your money back.