Note: The following post is not financial advice. It is for informational purposes only.
Popularity of Crypto
The following data, primarily from 2024, provides perspective on crypto’s popularity: Global Crypto Adoption (2025): Users, Rates & Country Data
$3.5 trillion estimated crypto market value.
9.9% Crypto adoption rate globally.
Over 13k cryptocurrencies.
Bitcoin has 40% of the market share in Crypto.
Especially considering Bitcoin’s impressive adoption, why doesn’t it serve as a reliable currency or investment? For a currency, broad acceptance and stability are essential, but volatility remains a major issue. As an investment, it should have economic value, yet it lacks intrinsic value.
Does Bitcoin do what it’s supposed to do?
Yes, the original intentions behind Bitcoin, introduced by Satoshi Nakamoto, hold up with some caveats.
Inflation-free
Bitcoin is inflation-free because of its limited supply, but that doesn’t make up for the volatility that it experiences.
Decentralized
Bitcoin is also decentralized because the ledgers are public and distributed, so there is no central control. However, this means your funds are not protected by anyone except yourself. Have you ever forgotten your password or lost your phone? That’s how easy it is to lose access to all of your cryptocurrency funds, since it’s accessed using a secret key (virtual and/or physical). If you lose your credit card, a bank will just send you a new one.
Privacy
Bitcoin is semi-private. Even though the ledgers are public, the individual identities are not easily tied to a person. Just to be clear, the transactions can be traced back to people given enough time and effort; the level of privacy is that of using a nickname.
Hype and Scandals
With all the hype over the last ~10 years, people were eager to buy crypto, but there is no single place where non-technical people can learn how to buy and sell it directly. Companies take advantage of this knowledge gap by creating intermediary infrastructure similar to traditional banks.
Even though crypto companies are similar to traditional banks, they lack the protections banks offer, creating a significant opportunity for scammers to take advantage of people who are less aware of the intricacies of cryptocurrency. Let’s take a look at some of the largest crypto scandals and their impacts in the table below.
| Scandal Name | What Happened | Impact |
|---|---|---|
| Tokyo-based Mt. Gox (2014) | Once the world’s largest Bitcoin exchange, Tokyo-based Mt. Gox revealed that it had lost 850,000 bitcoins belonging to its customers and itself. | Approximately 7% of all bitcoins in circulation were lost. |
| QuadrigaCX (2018–2019) | An investigation by the Ontario Securities Commission later concluded that QuadrigaCX was a fraudulent Ponzi scheme run by the founder, Gerald Cotten. It was discovered that Cotten had been using customer funds to trade for his own profit. | Approximately 76,000 clients lost up to C$260 million. |
| Terra-Luna ecosystem (May 2022) | The algorithmic mechanism used to maintain UST’s peg relied on burning and minting LUNA tokens. A massive sell-off of UST triggered the algorithm to mint more and more LUNA, causing hyperinflation and a collapse in the price of both tokens. | The collapse wiped out an estimated $45 billion in market capitalization within a week. |
| FTX and Alameda Research (November 2022) | An investigation revealed that FTX had secretly lent billions of dollars in customer deposits to Alameda Research to cover its losses. The exchange used its native token, FTT, as collateral for risky, illiquid investments. When rival exchange Binance announced it would sell its FTT holdings, it triggered a run on FTX and exposed its insolvency. | Billions of dollars in losses to customers. |
| The 2022 “Crypto Winter” | Following a market peak in late 2021, the crypto market entered a prolonged bear market, dubbed “crypto winter,” that lasted through 2022. | Widespread layoffs at major crypto firms and the collapse of multiple lenders and exchanges. The total crypto market cap lost over $1 trillion in value. |
| Binance money laundering (2023) | Binance failed to implement proper controls to prevent its platform from being used for money laundering, effectively enabling transactions involving terrorists, cybercriminals, and sanctioned countries. | Binance paid a historic $4.3 billion fine. |
If you’re looking for more guidance on how to pick out common crypto scams, take a look at this article: What To Know About Cryptocurrency and Scams.
Traditional banks and investment firms are not safe from scams either
Compare the scandals above to a previous non-crypto scam by Bernie Madoff (2008), the largest Ponzi scheme in history. It defrauded investors by promising high returns, using new investors’ money to pay earlier investors. The estimated fraud was around $65 billion. While financial scams are not unique to crypto, the combination of hype, technical complexity, and limited protections makes crypto particularly attractive for scammers.
What is wrong with traditional banks and “fiat” currency again?
Banks are also insolvent, just like crypto exchanges; you couldn’t pull all your money out at once
That’s true, banks lend out some of your money, but FDIC insurance (in the US) protects your funds, even if everyone can’t “cash” it out at once.
Banks take your money and make huge profits from it
Yes, that is the quid pro quo exchange in a sense: they store your money for free. They make profits from their own investments. Some of those investments you could do yourself, but the issue is, how do you get the money for that investment in the first place? Saving.
Banks charge exorbitant fees, especially impacting lower-income individuals
Overdraft fees are strange, aren’t they? Charging you for running out of money, why don’t they just reject the transaction? This is unfortunate, but it is still under your control; start by looking for banks with more lenient policies. Long term, this is where everyone really needs an emergency fund to cover any small budgeting error.
As for the fees to transfer money internationally, crypto does have an advantage here, besides the price volatility, of course.
Given all this, what value does Bitcoin actually provide?
Don’t get me wrong, I believe that the ideas behind Bitcoin are good, and would make the world a better place… But it struggles to take hold in our interconnected world. Bitcoin is basically digital gold in the sense that the value is determined by public opinion (not influenced by a federal bank), and you own it in full (you don’t need bank approval to use it). It does give a sense of collective ownership.
But the price of goods and services in your area is determined by the local markets around you (your expenses), and your pay is determined by the value provided to employers/clients (your income). Bitcoin does nothing to help with either of those fundamental pieces of your life. It actually made it worse when El Salvador adopted Bitcoin as legal tender; Bitcoin’s volatility introduces another variable into affordability outside the local economy (Bitcoin in El Salvador).
So, Is crypto the future?
As a currency? Not yet, it still needs to be tested long enough to say whether it can be a viable currency.
As an investment? Seemingly not, even with the large monetary backing, it’s still speculative, with no intrinsic value.
Looking at the base of people investing in crypto, this comprehensive study finds that the majority of investors are driven by high profits and risk-seeking behaviors (which is not good for a currency or a long-term investment): A systematic literature review of investor behavior in the cryptocurrency markets.
I may be biased as a boglehead, but it seems like retail investors waste too much time and money speculating when even Charlie Munger, a professional investor, recommended that most people should invest in broad market index funds. Here’s an article supporting the recommendation, showing that the average investor had 1/3 of the return compared to the S&P 500: Annualized Returns By Asset Class Between 1999 – 2018. Index fund investment requires almost no time from you besides a bit of up front research, and the data shows you’re statistically likely to make more money than picking individual investments, with less effort.