Innovation

Cryptocurrency is big, but there are still reasons to be skeptical

Bitcoin, and other digital currencies like it, are soaring in value. That doesn't mean it's a good idea to just jump in, according to TechRepublic's Brandon Vigliarolo.

Investing in cryptocurrencies like Bitcoin can seem like a sure thing, but not so fast. TechRepublic's Dan Patterson and Brandon Vigliarolo have a few reasons for you to be skeptical of investing your hard-earned money.

Patterson: Blockchain technology and blockchain-based companies have value, and these companies perform a number of different tasks that are needed in the business technology marketplace, but the derivatives, which are cryptocurrency, well, that's anyone's guess. Brandon, what are some reasons to exercise caution when it comes to cryptocurrency?

Vigliarolo: Well, I think it's important to remember, the blockchain and cryptocurrency aren't the same thing, like you mentioned. One's a derivative of the other, and those markets for cryptocurrency right now are largely based on speculation.

SEE: Quick glossary: Blockchain (Tech Pro Research)

There's not a lot of practical usage for Bitcoin. There's places you can use it to make purchases, but by and large, it's not being used for that. It's being used primarily as a vehicle for investment, and speculation-based investment at that.

Patterson: So, the advocates for Bitcoin will say, "Well, there's no place to spend it, or there are very few places to spend it right now, but those are coming." What's an appropriate response to that?

Vigliarolo: Well, those have been coming since 2015, right? It's been three years now, and we're still waiting for all these places you can spend Bitcoin to show up. Yeah, you can use it, but its value is still incredibly volatile.

If Bitcoins remained at a consistent price, then pricing something in a Bitcoin would be worth it, but if I want to sell my car for one Bitcoin, I might make $1,600 for that today, and then the next day I might make $1,100. It's so inconsistent that there's no reason to price anything using it, and that's going to stop people from adopting it as a usable currency.

Patterson: So what about the other cryptocurrencies? There's Bitcoin Cash. There is Ethereum. There is Ripple. The list goes on, and on, and on. Why should I invest in these other currencies, or should I take other cryptocurrencies seriously, especially if I run a business? Is the massive amount of cryptocurrencies that exist in the marketplace relevant? Which ones are and which ones aren't?

Vigliarolo: In my opinion, Ethereum is particularly relevant because it's not just used for monetary value. I mean, Bitcoin, Bitcoin Cash, Ripple, they're all basically just digital money.

There is digital money to be found in Ethereum, but it's used to build decentralized applications, and it has a purpose besides just having value. So, if there's stability's going to be found in one form of cryptocurrency that's big right now, it's probably going to be Ethereum.

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About Brandon Vigliarolo

Brandon writes about apps and software for TechRepublic. He's an award-winning feature writer who previously worked as an IT professional and served as an MP in the US Army.

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