Marc Cuniberti: The lowdown on crypto |

Marc Cuniberti: The lowdown on crypto

With the explosion both in investor interest and price action, crypto currency is a hot topic. Originally conceived as an alternative currency, Bitcoin was the first digital money to make its debut in 2009. Since then, over 4,000 different cyber coins have hit the market. The allure is that it reportedly cannot be manipulated or eliminated by any one person, entity or government. Created and stored in cyber space, the argument appeared to be a valid one.

Since their creation, stories of overnight millionaires abound, and I am hearing more of these rags to riches stories everyday. And it’s not just about making a few bucks. If what I am told is to be believed, ungodly sums of money have been made by more than a few acquaintances.

I have to admit, I can’t say I understand fully how crypto works. I would guess neither do many of its investors.

What I can say is this has all the trappings of a mania. From the buzz, to the quick profits by the inexperienced, to the price charts and right down to the “this time it’s different” story — it reeks of a mania. And now perhaps the sad late chapters of manias: they fall down, and usually hard.

I have issues with crypto. I own a small amount through a Wall Street vehicle and not on any phone app. Stories of investors losing passwords or hacked apps resulting in absconded funds abound. One investor profiled in a Wall Street article was locked out of 100 million and only had two chances left to remember his 132-character password before losing this fortune into the black hole of cyberspace.

And no, there is no one you can call. Once it’s locked, it’s essentially gone forever.

Besides the “too good to be true” aspects of all the stories and overnight zillionaires, cyber coin will never, at least in its current form, function as a valid currency.

Currencies must possess a variety of characteristics, among the most important being “store of value.” This means if you take a currency for something real, you must be sure the currency you received maintains the value it had when you took it.

No problem, you say? It will eventually, if not overnight, skyrocket in price?

A skyrocketing price is not a store of value. Store of value must be in both directions. Which means both the buyer and the seller must not lose value over time in the transaction. Simply put, for every winner in cyber coin, there is a loser. Which is why currencies must be stable, and not fluctuate in value and what it can buy.

It’s a hard concept to digest, with most investors thinking they will gladly take a cyber-coin for payment. Ah, but would you pay one out to buy something?

A currency must remain at relatively the same value over time to be a valid receipt of products or services, as that is what a currency is, a receipt of a consistent value.

Cyber-coin is anything but price stable. Just look at its run up, and most recently, its “run down,” and I can’t say I am surprised in the least bit.

Besides its roller coaster action, a few other things bother me about sinking thousands into cyber-coin.

Elon Musk, the maverick founder of Tesla, appeared on Saturday Night Live and then two days later tweeted Tesla would no longer accept bitcoin for the foreseeable future. That hammered bitcoin down 12%.

I don’t know about you, but I don’t want oodles of my hard-earned money susceptible to obliteration when a single tweet or statement can crash it. The last two weeks has crashed it in half.

No thanks.

As for being an indestructible cyber space currency no one government can manipulate, governments don’t have be able to “get at it” to eliminate it.

All they have to do is outlaw its use, and/or remove the apps that trade it. Bitcoin crashed 4% when the country of Turkey outlawed its use as payment. They are not the only ones.

The following countries have in some form or another banned, restricted or warned against cyber coin usage: : Kyrgyzstan, Bolivia, Bangladesh, Iran, Nepal, Thailand, India, Denmark and Ecuador.

This list is bound to grow larger as sovereign currencies, the checkbook of governments, are threatened by the use of cyber coin. Just think what would happen to the price if the U.S. or another major super power took similar steps?

Again, no thanks.

Someday cyber-coin may find its rightful place among monetary instruments, but for now, it scares the hell out of me.

Marc Cuniberti holds a B.A in Economics with honor from San Diego State University and is the hose of Money Matters carried on 66 stations nationwide. California Insurance LIc# 0L34249. Call him at 530-559-1214 or visit

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