Nick Bruining: Here’s the two biggest problems facing the crypto devotees, and why I won’t touch the stuff

You need the hide of a rhinoceros protected by a sheet of titanium if you take on the cryptocurrency crowd. Expressing anything other than a cult-like glowing endorsement of the stuff will see all sorts of abuse hurled at you. I speak from personal experience after posting some frank and honest opinions on my Facebook page. I personally don’t understand why anyone would invest in something that is backed by well . . . nothing. But then again, I wouldn’t put money on a horse that’s running in the fifth at Ascot either. I’d much rather invest in shares in a company that’s backed with real assets generating real profits that get paid out to me as real cash dividends. You see, the only way anyone can make money investing in crypto is to find someone who is prepared to pay more for it than you did. The supposed strength of crypto is its complete freedom, unconstrained by any form of regulation. Its price is “set by the market” and supposedly, can’t be manipulated. Riiight . . . So when, for whatever reason, your crypto tumbles and you lose 20 per cent in as many hours, who can you turn to? No-one. That’s the downside of unregulated virtual “assets”. That said, there is no doubt that blockchain technology has a place in our future. Who knows, one day we may see a crypto version of the pound sterling or even an Australian dollar. The difference is that these crypto assets will be backed by their respective central banks and, implicit in that, their respective economies. One day, I’ll probably be using crypto Aussie dollars to buy junk from overseas. And don’t get sucked in by the recently announced government inquiries, reviews and reports into crypto-investing. They will not provide any additional guarantees or safety to the crypto assets you might buy. These reviews are looking to regulate the market participants. These are the creators, fund managers and crypto exchanges who take your real money and convert that into crypto investments. Regulations will make sure that when someone says they bought one Bitcoin with your $80,000 cheque, they did. And if you invest in a fund that invests in crypto assets, those underlying crypto assets are there — no matter what their value might be from one hour to the next. In some respects, it is a bit like regulators stepping in to control the betting and wagering operators of the 1950s. But one thing is for sure, whoever you use to trade or invest in crypto assets will want to be paid for the services they provide. And make no mistake my friends, that payment will be in cold, hard Aussie dollars.

Nick Bruining: Here’s the two biggest problems facing the crypto devotees, and why I won’t touch the stuff

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