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If you’ve followed my articles on Crush The Street, you know that I’m a strong proponent of cryptocurrencies. Recently, for our sister site Smart Money Results, I interviewed Craig Cobb, a crypto trader and overall industry evangelist. Throughout the discussion, I found myself agreeing with his thesis regarding blockchain investment assets.

At the same time, I think that even as an ardent bull, I must remind myself to be agnostic. Getting too emotionally involved in any one asset class typically leads to misguided decisions. And that could ultimately translate to either lost opportunities or money. Obviously, neither one is a pleasant outcome.

During a video shoot for my personal YouTube channel, I came upon a stark reality. In our daily existence, we ground ourselves down in exchange for paper certificates which we call money. Put another way, we exchange our energy for supposedly something valuable.

Now, our paychecks are paid in U.S. dollars (assuming you live here) and of course, they have value. With the greenback, we purchase anything from food to shelter and all the necessities and discretionary items in between. But is this money intrinsically worth anything?

If the government collapsed tomorrow, all the effort that you had expended would be worth nothing. But in many ways, cryptocurrencies are no better.

 

Cryptocurrencies Still Face an Existential Threat

In the most extreme example, a post-modern war with EMP strikes and similar weapons could knock out our digitalized existence. Without the internet, bitcoin and other cryptocurrencies collapse: it really is as simple as that.

Of course, such a scenario is unlikely to happen, at least within the foreseeable future. But another possibility – although again unlikely – is that people stop caring about cryptocurrencies. What’s one of the craziest concepts about this market is that we’re doing the same thing with fiat currencies: exchanging our human energy for certificates.

This time, though, the certificates are digital, and they’re not even certificates: buying bitcoin represents buying access to bitcoin, not the actual coin itself. Moreover, in a flip of a switch, or the push of a red nuclear button, it could all go bye-bye.

Again, I will reiterate that these are highly unlikely scenarios. Chances are high that cryptocurrencies will thrive because of growing mistrust toward global governing bodies. But does a decentralized source of wealth transaction and distribution make trust any easier?

Perhaps that’s the case, or maybe it’s not. One thing is clear: uncertainty will always exist in any investment class, no matter what is. Therefore, diversification is your best friend.

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