3 big reasons crypto sceptics are WRONG

Cash is used by criminals to launder money. But, for some reason, no-one suggests banning it, but they cite it as a reason to prohibit digital currencies.

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Bitcoin (CRYPTO: BTC), Ethereum (CRYPTO: ETH) and other cryptocurrencies are at a critical juncture at the moment.

As the flag bearer representative of the entire digital currency sector, Bitcoin has lost about 30% in value since early November.

In December alone, it lost 20%. This is the worst decline since May when it copped a 35% hammering.

Hence the cryptocurrency critics have been loud in saying “I told you so” in recent weeks.

So are they right? Were cryptocurrencies a con all along?

Ignore volatility, hold for the long term

DeVere Group chief executive Nigel Green is one expert who reckons investors should “ignore the crypto deniers” and be in it for the long haul.

“The Bitcoin bashers, the crypto cynics, the digital deniers are out in force at the moment, trotting out the same old stale arguments about cryptocurrencies,” he said.

“However, investors who are focused on building their wealth for the long-term should ignore their tired rants. Instead, they should look at the data.”

Indeed, despite the price plunge the last couple of months, Bitcoin actually gained 71.25% over the 2021 calendar year.

“For the third consecutive year, Bitcoin has outperformed both stocks and gold.”

Bitcoin is 1% down on Wednesday morning, trading for $63,878.79 at the time of writing.

No one is suggesting cash should be outlawed because criminals use it

Green believes the common criticisms from cryptocurrency cynics are incorrect in 3 different ways.

The first is the old argument that the anonymity of digital money is used by criminals to evade authorities.

“However, law enforcement agencies can more easily catch criminals who use the public ledgers on which cryptocurrencies are run compared to those who use cash or other forms of payment with no record,” said Green.

“Are these people really saying cash isn’t used by criminals?”

Critics also point to the volatility in value for cryptocurrencies.

“This is true, but is it necessarily always a bad thing? Many investors embrace this short-term volatility for longer-term gains,” Green said. 

“They use the lower prices of Bitcoin and other major cryptocurrencies to top-up portfolios.”

And, finally, Green thinks Bitcoin’s role as a hedge against inflation and facilitator of easy international movement of capital would see it remain a force for a long time.

Bitcoin programmatically has a hard cap of 21 million coins in circulation. This scarcity works to reduce inflation by limiting supply.

“Borderless, global, decentralised currencies are the future,” he said.

“It’s my view that to create, build and protect wealth for the long-term, the crypto deniers’ ideologies should be dismissed and the data from the financial markets should speak for itself.”

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Motley Fool contributor Tony Yoo owns Bitcoin and Ethereum. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin and Ethereum. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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