Last night, Apriland I watched "Bitconned" on Netflix. For those unfamiliar, I highlyrecommend checking it out. The documentary delves into a group of young conartists who managed to create a fake cryptocurrency, raking in millions ofdollars daily. It's staggering to see how far they went and how much money theywere able to pilfer with a plan that wasn't even particularly well-crafted.Without spoiling too much, what struck me most was how effortlessly theseindividuals exploited the system, leveraging people's fears and greed to theiradvantage. This got me thinking about the common question we've been receivingin the coin industry since around 2017: "What do you think about crypto?"
For the firstseveral years, my response remained consistent: "I don't know much aboutit, and it seems to be the antithesis of what we do. We deal in tangibleinvestments—assets that can be held and stored securely. Cryptocurrency isvirtual." However, as Bitcoin began to surge a few years ago, followed bythe rise of numerous altcoins, inquiries about crypto became more frequent.Some customers even expressed interest in purchasing coins usingcryptocurrency, and major online distributors began accepting cryptocurrenciesin exchange for metals. This compelled me to take a closer look.
The TangibleReality of Precious Metals
While I stillstruggle to grasp the intricacies of blockchain technology, I can appreciatethe allure of decentralized barter. After all, it's a concept we engage indaily. Both investors in physical metals and cryptocurrency share similarconcerns about the current state of the US dollar. They worry about thediminishing value of their hard-earned money sitting idle in bank accounts,earning negligible interest. Unfortunately, both groups find themselves in a metaphoricalsinking ship, desperately seeking ways to avoid drowning.
While physicalmetals and cryptocurrencies offer similar value propositions as hedges againsta declining dollar, they occupy vastly different ends of the spectrum. To me,the value of precious metals lies in their tangibility—they represent tangiblewealth that can be seen and felt. Their value derives from their finite natureand the necessity for physical exchange. This transcends mere numbers on ascreen.
Cryptocurrency:The Digital Frontier of Investment
I'll concede thatone aspect of cryptocurrencies that appeals to me is their ease of transfer.They enable investors to store wealth outside of fiat currencies and carry itwith them anywhere in the world. As someone who has assisted customers intransporting thousands of pounds in gold and silver over the years, the idea ofhaving it all stored in a digital wallet is certainly enticing. However, theprospect of being unable to access funds in the absence of an internetconnection or during electrical grid failures is concerning. In contrast, whileless portable, precious metals still offer a universally understood form ofbarter.
Cryptocurrenciesmay outpace precious metals in terms of rapid value appreciation. I recall somepeople who acquired bitcoins for $900 in 2016, and the potential profits fromcrypto investments at the time were astronomical. However, the volatility cutsboth ways, with losses being equally staggering. At one point in 2022, 72 ofthe top 100 coins had plummeted nearly 90% from their all-time highs. Preciousmetals, on the other hand, are far less volatile, offering less excitementduring bull markets but also less heartache during bear markets.
Furthermore, bothphysical metals and cryptocurrencies boast a diverse array of products. Whilesome hold intrinsic value and utility, others are inflated money traps. In themetals community, stalwarts like Eagles, Maples, Rounds, Bars, and Krugerrands standalongside overhyped collector pieces. Similarly, in the crypto space, Bitcoin,Litecoin, and Ethereum dominate alongside numerous coins lacking real utility.This abundance of options makes it easier for con artists to peddleget-rich-quick schemes. The fraudsters in "Bitconned" had nothingconcrete to offer; they dealt solely in the illusion of a concept. In ahumorous twist, hardcore metals enthusiasts might ask, "How is that anydifferent from the Federal Reserve?"
