6 reasons why you should not buy Bitcoin
The arguments Bitcoin supporters never dare mentioning
Reading time: 6 minutes
Bitcoin has become incredibly popular these days. So much so that even old people have been dragged into it —most likely by a crypto fanatic grandchild who doesn’t understand how the economy works was also dragged earlier by someone else.
Although Bitcoin’s price went through the roof and many people claim it is a good investment, no one is giving the other side of the argument.
Despite all the people promoting it, there are many negative on Bitcoin you should know. In fact, we strongly recommend you stay away from Bitcoin if you want to invest safely.
Let’s see the 6 reasons why you should not buy Bitcoin.
Reason 1 - Bitcoin is a volatile, decentralised currency that no major economic power will ever accept
The US wants control over their economy and currency, and with Bitcoin, they would certainly lose that control entirely.
After every severe financial downturn, the Federal Reserve (FED) has printed money to boost the economy and increase spending —that was how the US successfully recovered the financial crisis in 2008. However, with Bitcoin that would be impossible. If the US ever accepted Bitcoin, it would completely lose control over the currency and would not be able to print more when needed, inevitably leading to a severe financial catastrophe.
The largest economy in the world will never give up their own currency —which they can control— over Bitcoin.
China has already banned Bitcoin. President Xi Jinping has already ensured the country does not lose control over its economy —which is what would happen shall China accept this digital currency. The second largest economy —on its way to become the largest— will never take Bitcoin as the main currency either. They also want to be in control of their economy.
Finally, it is extremely volatile as a currency. It can lose more than 30% of its value in one day. Do you really think any reputable country will ever accept a digital currency which price fluctuates that much? One day one Bitcoin can buy you a car and the next day it can’t even buy you a loaf of bread. It certainly has no good prospects as a day-to-day currency for any developed country.
Reason 2 - Bitcoin does not produce anything
As opposed to buying stocks, which allow you to calculate the cash the company will generate and therefore estimate the cash the company will return to its shareholders, Bitcoin does not produce any cash flow. We can’t calculate how much cash will return to its shareholders because it does not produce any. When people buy Bitcoin only buys it expecting that someone will pay more in the future and not because the cash it generates. Therefore, people are simply speculating, and speculating can lead to a permanent loss of capital if you don't find someone willing to pay more in the future for the same asset.
“Whether it goes up or down in the next year, or five or 10 years, I don’t know. But the one thing I’m pretty sure of is that it doesn’t produce anything”.
—Warren Buffett
Reason 3 - Bitcoin is just another cryptocurrency
There are an infinite number of cryptocurrencies out in the market. If crypto is indeed the future, which is the crypto that will triumph over the rest? Who says it’s going to be Bitcoin and why?
Since new cryptos are being created every day, it is almost impossible predict which will be the winner of the race long term. Therefore, betting on Bitcoin is risky since more competitors are being brought to the game daily. And every time with new and better characteristics.
In a hypothetical world where crypto currency is used by all countries, how do we know Bitcoin will be the winner of the crypto race? We simply don’t know.
Reason 4 - Technology will improve over the next decades
Do you remember how Bitcoin supporters used to say that it was not possible to produce more Bitcoins? Well, that is with our current technology.
If we go back 20 years, our technology back then wasn’t advanced enough to create Bitcoin. It was unimaginable. Same thing happens here. Just because we cannot produce more bitcoin right now with our current technology, it doesn’t mean we will not be able to do so in 20 years’ time with the arrival of new, disruptive technology and quantum computers.
Reason 5 - It is immoral
Bitcoin in the perfect currency for committing crimes and getting paid anonymously. How wonderful would a world with anonymous payments where all the extorsions, kidnaps, tax evasions, murders, etc., would happen with no control and consequences? Investing in Bitcoin is supporting all these crimes. We have enough crimes in a world with centralised currencies already. We should not help criminals more.
Reason 6 - The best investors of all time see bitcoin as a bubble
Great investors like Warren Buffett or Charlie Munger, who have more than 80 years of experience investing and seeing bubbles forming in the market, have said Bitcoin will end badly.
What surprises me is that all of a sudden, everybody thinks they know more than the best investors of all time. They were smart enough to identify and avoid all bubbles formed until now. They have never lost money in a bubble. Yet, Bitcoin supporters think these two are wrong. How daring.
“I can say almost with certainty that they will come to a bad ending”
—Warren Buffett
Not only Buffett, who started investing at the age of 8, has a negative opinion on Bitcoin, also billionaire Charlie Munger thinks likewise.
“I have a slightly different way of looking at it. In my life, I try to avoid things that are stupid and evil and make me look bad in comparison with somebody else, and Bitcoin does all three. In the first place, it's stupid because it's very likely to go to zero. The second point is it's evil because it undermines the Federal Reserve system and the national currency system, which we desperately need to maintain integrity and government control and so on. And third, it makes us look foolish compared to the Communist leader in China..”
—Charlie Munger
Investing is about deploying money to buy an asset that will generate more money in the future. However, Bitcoin does not produce anything at all, and its future is completely uncertain. There are so much better and safer investments out there which future can be predicted with high degree of accuracy.