What Does “Highly Speculative” Even Mean?
I think the label comes from a more sinister intent where the aforementioned influential parties realize that there is a credible threat to their dominance/power/importance/wealth/ influence and that is what they are desperate to protect – and so they mislead.
Photo by regularguy.eth on Unsplash
By Shawn B
This article was published in late 2021 on an earlier version of DibbSpot.com. It is being republished here for continuity.
Time and time again, I read (in the news) or on the web that cryptocurrency is HIGHLY speculative. I always do, but I wonder if anyone else stops to question what HIGHLY speculative actually means. Seriously, Investopedia defines it (in relation to finance) as “the act of conducting a financial transaction that has substantial risk of losing value but also holds the expectation of a significant gain or other major value.” Google Dictionary simplifies that even more, with “Investment in stocks, property, or other ventures in the hope of gain but with the risk of loss.” So where did we get this HIGHLY speculative moniker that is always attached when describing cryptocurrency?
We invest in stocks, funds, real estate, art, services, business, even sports with the hope to gain in the long run, notwithstanding the chance of loss. So why is crypto any different? It isn’t – it’s just a talking point that influential people are using to deter others – specifically those who take these words at face value without any due diligence. What is the threshold for HIGHLY vs normal speculation? The short answer is – there is none. It’s either speculative or not speculative. There are no levels. When you buy a house or art (as an investment), a stock, a business, mutual funds, etc., you’re hoping the value goes up and it can very well go down. The hope placed on crypto is no different than hope placed on any other speculative vehicle. It’s all just hope – the same damn hope. As well, the risk of loss is no different than any other. Yes, the gains and losses swing more in crypto, but that is still mitigated by the player’s risk tolerance. Dare I say, the risk in crypto is proportionate to the risk in every other investment. To what level is debatable. Nonetheless, risk is risk is risk.
In all these financial vehicles, you risk what you can afford to lose. It’s all the same speculation. Crypto is not HIGHLY speculative – it is just speculative, but so is every other traditional vehicle. When you buy stocks – don’t you hope it makes you money? When you buy a house, don’t you hope it builds equity? If you buy an expensive painting, don’t you hope it at least holds its value or even fetches top dollar at a future auction? In your business, aren’t you hoping to turn a profit? With all of these, is the upside guaranteed? Is loss a possibility? If you answered honestly, then you should acknowledge they all fit the definition of financial speculation. So what? Why does crypto deserve the distinction of standing above the pack? Be honest about that too.
Last, I think the label comes from a more sinister intent where the aforementioned influential parties realize that there is a credible threat to their dominance/power/importance/wealth/ influence and that is what they are desperate to protect – and so they mislead. But, that’s a story for another post.
Think for yourselves.
