this post was submitted on 07 Dec 2024
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None of this is specific to cryptocurrencies or even money, people do this with stocks (esp penny stocks), precious metals (look at all those "Buy Gold!!" videos), and collectibles (I still remember the beanie baby craze of the late 90s).
This is just gambling, betting that you'll cash out before everyone else, but after the price has run up.
But that's not "how all cryptocurrency works." Yes, cryptocurrencies are valued based on supply and demand, but many aren't actively speculated on and are used more as a currency. For example, Monero isn't attractive for speculation because mining is unprofitable and exchanging with fiat is banned or difficult in many areas. It's great as a currency though because transaction fees are low, transactions are fast, and it has a bunch of privacy features. Bitcoin is more attractive, but not as much for gambling because volumes are too high to get crazy spikes. So you end up with longer ye term speculation in Bitcoin like you'd see with individual large cap stocks. Bitcoin isn't going to 10x overnight, but it's also not going to drop 90% overnight either.
Like anything else, pick carefully, and ideally don't gamble.
Even worse, it is unregulated gambling. In normal gambling there are rules. Yes, the house will always win in the long run as the odds are in their favor, but the game is set up in a transparent way and doesn't change half way through.
Also the original idea of cryptocurrency was never speculation and cashing out. But sadly it has turned into that in 99% of the time.
Yup. The good news is that it's really easy to avoid that nonsense. Stick to the more established currencies and you'll be golden.