10 Brutal Truths About Crypto
Crypto Is Great. But A Few Things Suck And Once In A While We Should Talk About Them.
Crypto changed my life.
It brought me wealth and opened amazing new opportunities. It’s an exciting technology. And I believe in the positive impact that it will have on humanity.
But the truth is: some things about Crypto are problematic.
And often, these things get ignored. Especially when we are in a bull market.
At the same time, I believe it is important to discuss negative aspects when it comes to cryptocurrencies. Because this helps us to make things better.
So here’s a brutally honest list of 10 bad things about Crypto.
1. Price Manipulation By Crypto Whales.
Individuals or institutions that hold large amounts of cryptocurrencies have a strong impact on price movements. Sure, we all like it when there’s news that MicroStrategy or El Salvador added hundreds of BTC to their portfolios which makes the price go up.
But the opposite is also true. For example when Tesla announced they would no longer accept BTC as a payment for their cars. Even worse are the whales who are not publicly known and who manipulate prices in order to scare other investors so they can scoop up their coins at a lower price.
2. Too Many Speculators Vs. Too Few Believers And Actual Users.
I’ll be honest here. I have invested in some cryptocurrencies not because I believe in their use case or because I plan on using them. It’s simply because I expect to make money with them.
And because many people think like me we see a lot of coins that get pumped and dumped.
However, according to Tony Sheng, to have a lot of speculators in the space is not necessarily a bad thing. Because chances are that a certain percentage of them can be converted to users. This seems to be the case with more established cryptocurrencies.
3. Prices Often Do Not Reflect The Real Value Of Crypto Projects.
Dogecoin is literally a meme coin. A joke. But at the time of writing this article, it is among the top 10 coins in terms of market cap.
There are many other examples of cryptocurrencies and Crypto projects without good fundamentals that get pumped high. Meanwhile, there are many solid projects that are far undervalued. It’s a direct consequence of the point I made above.
4. If A Coin Is Listed On An Exchange It Doesn’t Mean That It Is Legit.
That’s because Crypto exchanges make money by charging you trading and withdrawal fees. As long as there are enough people to trade a coin and as long as they can make money, Crypto exchanges don’t care (much) about underlying fundamentals.
5. Some Crypto Projects Take Advantage Of New And Inexperienced People.
They promise incredible returns by making false or fraudulent claims to lure in people. The financial and personal consequences can be dramatic. In a previous article, I told the story of Steve and how he lost his life savings by investing in Bitconnect. Check it out to learn how you can protect yourself from falling victim to a Crypto scam:
6. Security Issues.
Because blockchain and smart contract technologies are still at an early stage of development, quite a few projects have security issues. There are numerous cases when this caused investors to lose their money. Just in the first half of 2021, about $3 billion got stolen due to hacks and fraud.
That’s why it is important to never put all your eggs into one basket.
7. Fake News.
There is a lot of false information floating around in the mainstream media when it comes to Crypto. Here are a few headlines:
Cryptocurrencies are used by criminals.
Bitcoin is harming the environment.
Crypto is useless.
Why do the media keep on telling you this?
Because Crypto hurts powerful and centralized institutions such as banks, corporations, and governments. And because these institutions own and control the mainstream media they will do whatever they can to deter the development of decentralization and stop you from using cryptos.
Don’t let them.
8. There Are Lots Of Scammers And Pretenders.
We all know them and we all hate them.
People asking you to send them their coins, private keys, etc. Another kind is individuals pretending to be trading pros who tell you to invest in a certain coin because it will go 100x.
Yeah, sure.
And when things go bust, they will tell you that nothing they said was financial advice and you always should do your own research. It’s a persistent and annoying problem. But there is a way how you can protect yourself. Read my free guide on how to do proper cryptocurrency research so you don’t have to believe what some strangers on the internet tell you.
9. Crypto Exchanges Are Not Reliable.
Crypto exchanges are constantly targeted by hackers. In other cases, some exchanges suddenly ‘disappear’ with all the money held in their wallets. Here is a list of crypto exchange hacks that caused total losses of almost 300 million USD.
If you have your coins in an exchange, then they aren’t actually yours. Your cryptos are only yours if they are in a wallet and you hold the private key.
10. Most Cryptocurrencies And Crypto Projects Fail.
There are several thousand cryptocurrencies and tokens in existence. Most of these projects will fail at some point.
Don’t believe me?
I published an article in 2019 about the Crypto betting industry.
Inside the article, I analyzed 11 projects. After two years, only 3 of them (Augur, Gnosis, and Peerplays) are still active. The rest have abandoned their social media accounts a long time ago and the tokens they created are no longer to be found on coinmarketcap.com. That is a survival rate of only 27%.
Check out the historical snapshots on coinmarketcap and you will notice that many coins that were ranked very high a few years ago are not to be found in today’s top 100 list or have simply vanished. This is a natural process and a fact that many investors and believers like to ignore.
Final Words
I am aware that many of the things in this list cannot be solved easily. They are part of the system.
While we should not forget these negative aspects, it is also a fact that Crypto has changed a lot over the years and has often developed for the better.
And despite all the justified criticism, one should not forget that even with its current shortcomings, Crypto is in many cases a better solution compared to traditional systems.
