Dominic Thomas
Oct 2023  •  3 min read

Crypto King

The appeal of cryptocurrencies is really twofold, firstly some people seem to be making a lot of money from investments into them. Secondly, some people seem to be making a load of money from investing into them. Oh, ok the better reason, is that digital currency enables finance to be arranged more promptly without the dreaded interference of those nasty ‘Bankers’ and avoid problems of exchange rates.

Perhaps I am oversimplifying, but the truth is that cryptocurrency is generally fuelled by greed and a belief that money is very easy to make. The evidence for investment is generally a conversation with a specialist or anecdotal discussions with friends and perhaps a bit of ‘research’ online.

Let me be clear, I am not saying that the banking system is good, it’s terrible frankly, but there is something to be said for ‘better the devil you know’ than the backroom hack shops beholden to organised crime. I am not a crypto expert, I know a couple, but as of right now in 2023, I cannot see a good reason for the typical long-term investor to muck around in the sector.

We see story after story of failed currencies and platforms, where supposed fortunes become worthless. Unlike your portfolio, there are no real assets behind most cryptocurrencies, often just other cryptocurrencies.

I will likely be proven wrong by a friend of yours who makes several million from a couple of pounds.  I can live with that, but can you live with your investment portfolio becoming worthless?

The mistakes that investors consistently make are invariably due to four key beliefs

  1. They know what they are doing
  2. They have done their ‘research’
  3. The opportunity is too good to miss
  4. This time it’s different.

Delusion is very powerful and is alive and well in all aspects of professional life. You may have read the BBC story about the ‘King of Crypto’ (Sam Bankman-Fried and FTX).  Panorama had a look at the whole sorry mess (have a look on BBC iplayer).