What to Say to Someone Who Imposes Cryptocurrency on You

The end of 2022 and the beginning of 2023 brought with it a lot of negative news about cryptocurrencies , from layoffs in the industry to allegations of fraud against one of the industry’s former gurus . Once you’ve digested the bad news (and brushed up on the basics of all cryptocurrencies ), you may feel like you’ve decided to let go of your skepticism about investing in volatile digital assets that aren’t regulated or backed by central banks.

Even if you’re sure that you personally won’t be buying bitcoin anytime soon, you might find yourself trapped in a conversation with someone who insists that the only reason you’re skeptical about cryptocurrencies is because you’re not. understand. That’s why we’ve put together a short list of the top crypto talking points so you can arm yourself and be prepared to avoid the pro-crypto debate. Here’s how to talk like you’re experienced enough to stop talking to someone who’s trying to swindle you out of crypto.

“It’s just too big of a risk for me.”

The easiest thing you can do to end the conversation quickly is to present cryptocurrencies as too risky for you personally . If you click, you can delve into the details:

• The so-called decentralization. Many are drawn to the decentralization of crypto because their market is theoretically immune to government interference or manipulation. You might argue that reality is not so simple. For example, as reported by Investopedia , ownership is highly concentrated, with just 100 addresses accounting for approximately 12% of circulating bitcoins and total value, giving them extraordinary market power.
• Lack of regulation. The most obvious disadvantage of decentralization is that the cryptocurrency is not supported by the banking system. Right now, if the company managing your cryptocurrency holding fails, you probably won’t have a chance to get your money back – a sad fate recently experienced by many who have invested in the FTX cryptocurrency exchange (the subject of the aforementioned federal investigation). By some estimates , about a fifth of all bitcoins are now inaccessible due to lost passwords or incorrect send addresses.
• Possibility of fraud and theft. The two points above make cryptography a great opportunity for scammers. If someone manages to infiltrate your crypto wallet, you will have almost no way to ask for help.

“Cryptocurrency is too hard to value.”

Compared to valuing stocks and other assets, cryptocurrencies don’t have a long track record that you can use to form an opinion on its value. The history of cryptocurrencies is short, and during this time, the prices of cryptocurrencies have proven to be volatile. This time last year, the value of Bitcoin fell from $69,000 to about $33,000 in a few days, and in 2023 it is around $23,000 (admittedly much better than the average $16,000 in December) . While this drop in value reflects the general uncertainty in the economy, the cryptocurrency was hit much harder than the stock market — a 60% drop compared to 20% for the entire stock market (even if some individual stocks experienced even more volatility ). Simply put, many consider cryptocurrency to be a speculative bubble that will eventually burst. Even if it doesn’t crash tomorrow, the cryptocurrency isn’t stable enough to risk money you can’t afford to lose.

“I can’t explain how bad cryptocurrency is for the environment.”

Another Big Argument Against Crypto: Climate Impact . You have probably heard that Bitcoin alone consumes as much electricity as the Netherlands . Combined with thousands of other cryptocurrencies, the losses on the planet are only getting worse.

Chances are, the person pushing you with cryptocurrencies doesn’t care about environmental losses or has arguments to justify it . In that case, perhaps you two could start talking about climate change instead. This will probably go well.

bottom line

Ultimately, the defining feature of the current state of cryptocurrencies is that they just haven’t become mainstream yet. You are not crazy if you erred on the side of caution with a relatively new, highly speculative investment. If someone in your life insists on arguing with you about cryptocurrency, stay firm in your resolve. Tell them that you understand the risks of cryptocurrencies and prefer not to accept them.

Note that the points above don’t go into too much detail, as your goal is to avoid heated debate, not stir it up. For a more thorough critique, check out this lecture by technologist David “DSHR” Rosenthal , presented at Stanford in December 2021 and adapted from a talk he gave at the investor conference from which this article is taken.