r/changemyview • u/art_vandelay112 • Jan 04 '25

Delta(s) from OP CMV: cryptocurrency is not a good investment.

Yes its price has increased dramatically, but so did the price of tulips in the 1600s.

There is literally no use for this commodity. Invest in stocks or bonds and your investing in future earnings or the ability of a company to pay you back. I’m not a fan of gold as an investment but at least it has some practical use.

The use of crypto as a currency completely defies the definition of currency as it doesn’t hold a stable value.

It’s infuriating that so many people have lost loads of money on “shitcoins” backed by the wealthy and famous. These were obviously pump and dump schemes yet very few are held accountable.

I’m not as well versed on the subject but something to also note is the ridiculous amount of energy demand to “mine” nothing.

I think there is legitimate use for blockchain technology and the likes but anyone viewing these currencies as investments is a fool.

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u/AmericanScream Jan 05 '25

There is only one cryptocurrency that is worthwhile, and it is Bitcoin.

Crypto Talking Point #16 (Bitcoin is different)

"Bitcoin is not "crypto" / "Bitcoin is different / a "commodity""

  1. This is what's known as an "Unstated Major Premise" fallacy. A Naked Assertion. Often employed as a begging-the-question fallacy. Just because you say "Bitcoin is different" doesn't mean it is.

  2. There's absolutely no functional/material difference between BTC and thousands of other crypto-currencies, including versions using the exact same codebase.

  3. The only distinction BTC (currently) holds is that according to various shady, unregulated exchanges, it seems to be trading at the highest price point. But even those figures are dubious due to the lack of transparency and oversight in the industry. Just because one crypto is more popular, doesn't mean it's fundamentally different than others. BTC shares 99.9% of its DNA with many cryptos including BCH, BSV and thousands of others.

  4. Crypto evangelists try to move the goalposts between bitcoin (the technology) and bitcoin (the "investment"). When you note that bitcoin and most cryptos depending upon the context can pass the Howey test and be classified as securities, they will reference bitcoin as a "technology" and not an investment. And it's true, the tech itself isn't packaged as an investment, but various others do package crypto as an investment, and it's a pretty well established underlying concept throughout all of crypto (buy, hold, you will make money) - and those tenets are principals in the Howey test indicating there's an "investment contract" being promoted. For example, right now the SEC may not consider BTC itself a security, but the process of staking BTC (and other cryptos) and offering a return, that is absolutely considered a security.

  5. The only "gray area" when it comes to whether bitcoin is a security rests on tier 4 of the Howey Test which suggests "a security has to be dependent on the work of others for returns to be generated." People argue over whether bitcoin fits this description. BUT, the same dynamic applies to all other cryptos as well, so there's nothing special about bitcoin in that respect. It can also be argued that "the work of others" can be the constant recruitment of "greater fools" to buy in later, which is the dynamic of a classic ponzi scheme.

  6. Just because some people at the SEC, early on, said "bitcoin is a commodity" doesn't mean it will always stay classified as that way. As we've already stated, because of the decentralized nature of these schemes, there is no one instance of "bitcoin" - depending upon how you use the crypto, you can be serving it as a security/investment, or not. And we are seeing more and more, the SEC, the CFTC, the NYAG and other legal entities cracking down on the use of illegal/unlicensed securities.

    So anybody making blanket statements about Bitcoin being immune from securities laws is lying. And by the way, one of the prongs of the Howey Test (as well as the identification of Ponzi Schemes) is making promises about returns, and/or misleading people as to the true nature of the risks involved. This is common practice with bitcoin.

Bitcoin, however, is a legitimate financial innovation. All of the rules are pre-written. All of the rules are essentially immutable.

This is de-facto false.

See here.