Reasons not to buy Bitcoin

7 Reasons NOT to Buy Bitcoin

The more you stay away from Bitcoin, the better. It is a risk for gullible investors and is harmful to society. Here’s why.

1) Bitcoin is not a currency.

The currency has the characteristic of intrinsic value, which means that its value is independent. “1 Euro” makes you think that you can buy an espresso with it. If I say 0.00022 Bitcoin, you have no idea what I’m talking about.
  
Also, coins require widespread acceptance, and I’ve never seen a single bar or supermarket accept Bitcoin. Not being a currency, Bitcoin is a non-productive asset, like oil. Thus, you could use barrels of oil (or Bitcoin) to pay for a motorcycle, but you would need to look at oil prices in dollars and deliver the dollar equivalent of the cost of the bike in barrels of oil.

2) Bitcoin is speculation at its highest.

If you buy a Bitcoin for profit, you have to pray that others will be willing to buy it at a higher price, but in the meantime, Bitcoin will do nothing for you: it will not yield dividends, interest, or grow in size. If others quit their interest in Bitcoin, you’re left with some expensive bytes on a screen. In other words, it all disappears in thin air when the music stops.

3) Bitcoin is a bubble!

As the memory of financial events is short, let’s revisit an extraordinary financial bubble: the 1636-1637 tulip bubble in the Netherlands was the world’s first. Historian M. Dash writes that, at the height of the mania, the price for a single bulb of Semper Augustus was enough to feed, clothe and house a whole Dutch family for half a lifetime, or sufficient to purchase one of the grandest homes on the most fashionable canal in Amsterdam. Not bad for a decorative plant.
 
Edward Chancellor, in his book on financial speculation Devil Take the Hindmost, outlines some characteristics of the tulip mania and bubbles in general:

An exponential increase in price fuels the obsession.

Did most people talk about Bitcoin before or after the 1440% surge in price during 2017?
 
o As the craze goes on, people look for lower quality commodities.
At the peak of the Bitcoin mania, I heard so many people tell me: “Bitcoin is too slow, too stupid, too outdated, but this other unknown coin is going to gain even more!”. In January 2018, 22% of the whole cryptocurrencies’ worth was in coins outside of the Top 10 Cryptos. These unknown coins were valued at $180 billion (!). Intesa Sanpaolo, Italy’s biggest bank, is only worth $45 billion.
Today, 4847 cryptos exist, and many of them are overvalued. Assuming that Bitcoin or some other crypto was the currency of the future, what do you think these other unknown coins would be worth?

Rumors fuel the boom.

Do you remember all the stories and mystery about Satoshi Nakamoto? The rumors (Is Satoshi his real name? Is he dead? Is he American?) participated in making Bitcoin exciting and viral.

Excessive use of leverage is employed.

Many online platforms provide margin trading for Bitcoin, which is an excellent tool if you are a fan of losing more money and faster. Leverage can even make you gain a 1,000,000,000% profit but then can make you quickly lose 100%, leaving you with 0, nada.

Extreme consumption among speculators.

I’ve seen at university an announcement for a trading workshop, picturing a Lamborghini and Bitcoin. Below, the phrase: “Want a Lambo? Go DIYO” (DIYO stands for “do it yourself online”).
I believe that luring people into risky trading by promising great future riches and luxury cars is a mischievous act. It is the same trick applied in Ponzi and pyramid schemes, and it makes me sick. Furthermore, people that are attracted to these corrupt systems are frequently the most financially vulnerable.

4) The cryptocurrency world is full of fraud.

Take a look at this graph from HowMuch.net displaying the most massive cryptocurrency hacks and scams:

Also, the worst scandal is missing! Cryptocurrency company ModernTech wins the gold medal, stealing $660 million. Their Pincoin tokens promised 40% monthly returns to investors, who fell into the trap in tens of thousands, and the promoters ran away with the cash. How are people so greedy to believe in these impossible numbers?

With 40% per month compounded, a 1 Euro (100 cents!) investment would become worth €300,000,000,000,000,000 after ten years. That figure is more than all the money on Earth. After 50 years, you would have more dollars than there are atoms in the universe. Good luck with receiving your interests!

5) Bitcoin is expensive to exchange.

This year, the maximum transaction fee has was $ 5-6, which makes paying an espresso with Bitcoin 6-7 times more expensive. During the height of the mania, in December 2017, the average transaction fees skyrocketed at $55 because of the high demand for transactions. Such high costs prove that the system is unprepared for widespread adoption.

6) Bitcoin wrecks the environment.

It is by design in need of miners that compute a massive amount of calculations, consuming globally as much electricity as a small country like Switzerland. Above all, our environment cannot bear such excessive energy consumption.

7) Bitcoin encourages short term thinking.

Bitcoin traders think they can get rich fast by holding intra-day positions, with negligible time and work required. Do you want to live in a society that promotes gambling kids that drive Ferraris? Because there’s no difference between betting on horse races or trading Bitcoin: what one person gains, another loses. It’s a zero-sum game where the trading platform takes it all.

I’ll end this post by trying to dissuade potential Bitcoin traders with a remark from Rothschild, who once said that “the time to buy is when there’s blood in the streets”. However, with Bitcoin, you only see Lambos around. The blood has yet to come.

A special thank you to Jannis, my Greek friend, for helping me gather valuable material for this post. I knew I could rely on him since he’s one of the fiercest Bitcoin critics. Also, thanks to contributor ‘West of the Sun’ from Medium.com for providing a summary of Devil Take the Hindmost. To conclude, I would like to remark on my appreciation for blockchain technology in general.

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