By Anna Baker March 4, 2022
At this point, you’ve likely heard of cryptocurrency by now. While it makes promises to revolutionize the financial world, it really only suits the super-wealthy. In other words, crypto is a scam and you should not put your money in it.
Cryptocurrencies are digital or virtual currencies based on a network across a bunch of different computers. It is not run by a centralized authority, meaning it can’t be manipulated by governments. These currencies also use blockchain technology to make it virtually impossible to forge transactions.
Crypto companies and its supporters brand crypto as revolutionary and something that everyone needs to invest in. There are arguments on how it positively changes privacy since transactions can be anonymous. Supporters also claim it can earn people a ton of money.
However, in general, crypto is a scam. Sure, many people have made money from crypto, but that usually has to do with them being already wealthy.
To make money from crypto, there has to be someone else to sell tokens to. As more people buy into a cryptocurrency, the value of the coin goes up, so people will then sell their coins at a super high price.
Essentially, crypto investors can only get money from the other investors putting money in and the cycle continues. This system only works when other people are willing to buy the coin. Otherwise, crypto has no value and no way to get a return at all since most retailers don’t take it.
Crypto is essentially a breeding ground for Ponzi schemes, which is exactly what has happened time and time again.
Many smaller currencies pull the rug once investors come and run off with millions of dollars. This type of scam happens all the time. A random currency pops up with a weird name like Baby Musk and then disappears with the scammers getting all the profits while the investors get nothing.
Crypto scammers in total took over 14 billion in cryptocurrency in 2021. These scams hurt real people who typically lose around $2000 each. This is a lot for lower-income people who make up a sizable 21 percent of investers in crypto.
It makes sense that there are celebrities like Elon Musk promoting crypto. They are not risking a lot when buying into the system because they already have a ton of money, unlike most people.
The volatility of crypto is another major concern. Like other assets, this currency relies on supply and demand, but also media hype. When a celebrity endorses a cryptocurrency the price will skyrocket thousands of dollars and drop when the hype dies down. It’s very possible to not make any money from it due to this unreliability.
This is concerning since the whole point of crypto is to sell it to others, which is how Elon Musk made so much money from it. However, if its value is highly unpredictable, so is its potential to make you money.
There is a way to invest in cryptocurrencies like Bitcoin without putting money down, which is by mining, but this is also risky. Mining entails a computer solving complicated math problems and when the problem is solved, the miner receives a new block of bitcoins.
This may seem low risk but mining is not cheap. The hardware required for mining can cost up to thousands of dollars. Considering the volatility of Bitcoin, miners may not always get a return.
Overall, crypto is very unreliable to put your money into. There’s always a chance you will walk away with nothing in any investment opportunity but with crypto’s volatility, that chance is multiplied. For those who aren’t already millionaires, crypto is a scam.
Anna Baker is an English senior who can be reached at [email protected]