Why Cryptocurrency is ‘Closer to Gambling than Investing’
When I first heard about Bitcoin, I dismissed it as just another fad like many others did. Then last year the cryptocurrency skyrocketed to a point where no one could ignore it. By the time everyone was ready to jump on the Bitcoin bandwagon, it was already trading at a then-record high of 2,200 USD.
Bitcoin is the first decentralized cryptocurrency that was released in early 2009. Similar digital currencies have crept into the worldwide market since then, including a spin-off from Bitcoin called Bitcoin Cash. In December last year, Bitcoin left many with their jaws on the floor as it shot to high of over $19,800 USD. Alas, this was not to last. Soon after soaring to record value the cryptocurrency plunged to under 10,000 USD, with experts reporting it could drop down to as far as 1,000 USD over the course of 2018. This uncertainty positions cryptocurrency in the same basket as gambling and my recommendation is not to go for the bait. If you’re interested in betting you’re money, you might as well turn it into a holiday and just go to Vegas.
Having said that, I can also say I believe more in Blockchain, the technology behind cryptocurrency. Blockchain has transformed cryptocurrencies like Bitcoin into an asset class that stands on its own two feet. Yes, we see the rise and fall of of cryptocurrencies, but we do also see the rise of a new asset class. Blockchain finance has the potential to be disruptive not only in finance but also other spheres, and it also has the potential to not be transformative at all. Why do I consider blockchain a wiser gamble than cryptocurrencies? You see, by buying cryptocurrencies, you’re not betting on blockchain itself. Instead, you’re betting on a specific application of blockchain. For your investment to work out in the long run – and I use the term investment loosely here because cryptocurrencies have no intrinsic value – you must be right about blockchain living up to the hype and about cryptocurrency someday becoming useful for anything other than speculation. Blockchain can succeed, becoming a widely used technology in a variety of applications, and these cryptocurrencies could still be worth nothing.
Cryptocurrencies have been around since 2008. Bitcoin, the first ever cryptocurrency, gained momentum after Occupy Wall Street accused big banks of misusing borrowers’ money, duping clients, rigging the system, and charging mind numbing fees. Bitcoin pioneers wanted to put the seller in charge, eliminate the middleman, cancel interest fees, and make transactions transparent, to hack corruption and cut fees. Thus, creating a decentralised system. 2017, however, changed the game for virtual money.
2017 made cryptocurrency and Bitcoin move from being just a currency to an asset class that people buy and hold. Similar to gold. We are now seeing cryptocurrencies becoming institutionalized. The rise in cryptocurrency is just the stepping stone for the Blockchain technology that will be adopted across different industries.
Despite my belief in the the technology behind cryptocurrency, we must remain cautious. Looking at the volatility of the price of cryptocurrency, it is definitely not a safe investment. Any asset class that jumps up by ten per cent or loses its value with such frightening magnitude in one day is far from what I consider as safe. The argument for this volatility may be attributed to the maturity of the new asset class but this does not make it a safe investment. The growing frenzy around bitcoin and other cryptocurrency offerings creates serious warnings on the risks that current and potential investors should keep in mind. Potential traders should educate themselves, and trade in a manner that is well informed with realistic expectation.
If you’re looking to invest and invest safely, directing your money into real estate gives you a good eight per cent to ten per cent annual return and can be done with fear of devastating overnight price crashes. I highly recommend the purchase of a house in strategic areas of Dubai. The science behind probable returns it is backed by years of analysis, and even in the event that the market sees decline, the investment risk you are taking is to decrease your annual return from eight or ten per cent to around seven per cent, which again is significantly higher than what a regular bank offers and way safer than cryptocurrency. Ultimately, real estate is long term investment with a 10 year strategy and not an overnight gamble, and 2018 is a moment to take advantage of prior to a rising market.
Notes to Editor:
Having gained national recognition in Australia for its powerful wealth creation strategies and mentoring program, Dream Design Real Estate (DDP) first launched in the UAE in 2017 to help individuals gain financial freedom, through building their local property portfolio. As a “one stop shop” for property investment strategy, finance, property sourcing, legals and rental property management, DDP offers each client, regardless of their property knowledge or experience, an ongoing personalised service that caters to their unique and changing needs and circumstances. First founded in Australia in 2012, DDP has since helped its clients to purchase nearly 800 clients to purchase over 1,000 properties.
Ameer recently won the “Best Global Real Estate Investment Company” BURJ CEO award from the CEO Clubs Network Worldwide. The award, which CEO Clubs Network official Tariq Nizami dubbed “an Oscar for CEOs,” honoured Ameer for his outstanding achievements and positive contribution to the booming Sydney real estate market, which he has recently expanded into the UAE and Eastern Africa. Ameer also contributes over AED530,000 per year to a variety of Australian and UAE charities including Dubai Cares, in his efforts to give back to the community.