Crypto and other Currencies

If there is one question we are hearing more frequently, it would be, “What about cryptocurrency?”

If you don’t understand how blockchain works, your risk of investing in cryptocurrency is increased. I have chosen not to invest in cryptocurrencies for this reason. Risk is the one thing that needs to be controlled if any investment is to turn a profit.

Warren Buffett states it differently,

• “Diversification is protection for ignorance. It makes little sense if you know what you are doing.”

In other words, if you really want to be successful financially, then understand what you are investing in prior to putting your money into any investment. Sector gains can offset sector losses, but the opposite is just as true, sector losses can and do offset sector gains. This leaves diversification an unreliable and unproven method of managing risk.

My knowledge and understanding of blockchain and cryptocurrencies has recently been expanded remarkably by Nassim Taleb.  Taleb is a brilliant analyst and statistician who leaves no stone unturned in his research and writings.  His book “The Black Swan” concerning the impact of the highly improbable, was published in 2007 and still holds the attention of those who want to build financial sustainability in an unstable and unpredictable world.

If you are interested in learning more about cryptocurrencies, I encourage you to check out Taleb’s blog:  https://www.fooledbyrandomness.com/BTC-QF.pdf  You will find Taleb quite knowledgeable. His article can provide you with a fuller understanding about cryptocurrencies, as well as gold and silver, and how they work in a free market economy. You’ll also find out how cryptocurrencies are not the infallible investment vehicles which they have been touted to be. This may just settle your own questions about cryptocurrencies.

If you have difficulty following Taleb’s logic and thought process in this paper, don’t worry.  In the last paragraph he tells a parable from Damascus, his native city.  This parable is all you will need to fully understand and protect yourself against the risks of owning cryptocurrency today.

Bon voyage.

Dr. Tomas P. McFie

Most Americans depend on Social Security for retirement income. Even when people think they’re saving money, taxes, fees, investment losses and market volatility take most of their money away. Tom McFie is the founder of McFie Insurance which helps people keep more of the money they make, so they can have financial peace of mind. His latest book, A Biblical Guide to Personal Finance, can be purchased here.