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Is Crypto a Good Investment?

Is investing in crypto a good idea?


Next question.

Okay, don’t get your tinsel in a tangle. Hang around, and we’ll dig into all the reasons why cryptocurrency is bad.

You’ve probably heard stories of people making millions (or losing millions) investing in cryptocurrency. But here’s the million-dollar (or million-bitcoin?) question: Should you invest in cryptocurrency?

Despite what every loudmouth on the internet yells at you from their digital soapbox, buying cryptocurrency isn’t a safe bet for your investing future. In fact, more than 80,000 Bitcoin millionaires who were living high on the hog saw their accounts drop several zeros during the crypto crash of 2022.1 Easy come, easy go, right?

But we’ll get more into that in a minute. Let’s unpack what crypto is first.


Key Takeaways

  • Cryptocurrencies are digital assets people use as investments and to buy stuff.
  • Crypto isn’t a good investment because of risks like volatility, an unproven rate of return and fraud.
  • Crypto has been banned by some countries, and the U.S. is looking for ways to regulate it.

What Kind of Investment Is Cryptocurrency?

Cryptocurrencies are digital assets people use as investments and to buy stuff. You exchange real currency, like dollars, to buy “coins” or “tokens” of a certain kind of cryptocurrency.

You’ve probably heard of some of the big names in cryptocurrency: Bitcoin, Dogecoin, Litecoin and Ethereum. But there are actually thousands of types of crypto out there.

Crypto investors buy crypto and hope it goes up in price so they can sell it for a profit. You know, “buy low, sell high” and all that jazz. Investors might buy and sell Bitcoin or any of the other cryptocurrencies lots of times as the price goes up and down. Or they might stockpile it, planning for the day when it’ll grow into a fortune that will make all their digital dreams come true.

And in the last couple of years, some people were raking in lots of moolah by investing in crypto. But the crypto market was in a bubble, and the thing about bubbles is that they pop. And that’s what happened in 2022 when two cryptocurrencies (Luna and Terra) collapsed. Panic set in and the crypto market lost about $2 trillion in value.2 That’s 2 tril straight to nil!

Is Crypto a Safe Investment?

If anything we’ve said earlier hasn’t convinced you about investing in crypto, we’ll just flat-out say it: Crypto is not a safe investment. You could lose your shirt (and pants) messing around with crypto. Steer clear, Big Tuna. Head for open waters. Crypto is risky business.

Yes, some people made lots of cash investing in crypto, but it’s all based on speculation—which is just a step above gambling.

Risks of Investing in Cryptocurrency

Crypto is risky for a lot of reasons. But the big reason it’s not a safe investment is because it can have huge swings in price in the blink of an eye. In the investing world, that’s called volatility. And volatility isn’t good for an investment portfolio. (It’s not a good characteristic for a politician either—but that’s another story.)

Let’s take a look at the risks involved with crypto investing.

Cryptocurrency is volatile.

It’s true—crypto is about as hot tempered and unstable as a 3-year-old scream-crying, “I’m not tired!” Crypto’s value swings way up only to come plunging back down, and you never really know what you’re going to get each day. Someone sneezes and the price drops! And unlike stocks that rise and fall based on a company’s performance, crypto goes up and down based purely on speculation.


Market chaos, inflation, your future—work with a pro to navigate this stuff.

Inflation, recession fears and more regulation on crypto mining have added to the volatility. You stir all those things together, and you’ve got one really gross pot of chili.

Let’s be real here, all investing comes with some level of risk. But why jump all the way into the deep end with something this up and down?

Cryptocurrency has an unproven rate of return.

Cryptocurrency is exchanged person-to-person on the web without a middleman (like a bank or government). It’s like the Wild West of the digital world—but there’s no marshal to uphold the law.

Because crypto has very few regulations, there’s no pattern to the rise and fall of its value.

You can’t figure out the changes or calculate returns like you can with growth stock mutual funds. There just isn’t enough data, or enough credibility, to create a long-term investing plan based on cryptocurrency. Don’t play poker with your financial future here.

Cryptocurrency has lots of unknowns.

Crypto lives up to its name in that it’s pretty cryptic. Think about it: Nobody even knows who founded Bitcoin! Only a small percentage of people in the world really understand the blockchain technology crypto is based on. And ignorance makes you vulnerable. We always tell people that if you can’t explain your investments to a 10-year-old, you have no business investing in them to begin with. You’re setting yourself up for a big mess.

P.S. Even though it might seem like everyone and their grandpa is investing in crypto, most people say they’re still hesitant to put any money into it (72%) or don’t trust cryptocurrency at all (68%).3 One study showed that only 8% of Americans feel positively about crypto, which coincidentally is the same percentage of Americans who feel positively about The Bachelor franchise.4

Cryptocurrency makes theft and fraud easier.

Hackers stole $400 million of crypto in the first three months of 2023. Yes, $400 million! And what’s really crazy is that security experts celebrated that number because it’s 70% less than what was stolen in the first three months of 2022.5

Hackers have routinely pulled off heists on the level of The Italian Job—and they didn’t need Marky Mark or a fleet of Mini Coopers to do it. Stealing millions from a traditional bank is almost unthinkable, but it happens all the time in the world of crypto.

And hackers aren’t the only ones stealing crypto. FTX, one of the largest platforms for buying and selling crypto, went belly-up in November 2022 after its founder, Sam Bankman-Fried, was arrested and charged with fraud for stealing money from his customers’ accounts. FTX customers lost billions of dollars.

Crypto just seems to attract seedy characters. Now look, we’re not saying everyone who uses cryptocurrency is a bad guy who’s dodging the government and making shady deals on the black market. But if someone wanted to commit a crime and fly under the radar without being tracked, cryptocurrency is going to call their name.6

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Cryptocurrency Laws and Adoption

Crypto laws and regulations vary a lot from country to country. Nine countries, including China, have banned cryptocurrency.7 Two countries (El Salvador and Central African Republic) jumped all in and adopted Bitcoin as legal tender.8

In the U.S., more and more businesses have started accepting crypto as payment, but it’s not legal tender. Crypto is overseen and regulated by the Financial Crimes Enforcement Network, the Securities and Exchange Commission (SEC), the Commodities Futures Trading Commission, and the U.S. Treasury Department.9

Here recently, the SEC has cracked down on the cryptocurrency industry in an attempt to make it follow the same rules that apply to other securities (stocks, bonds, etc.). They hope this will protect investors from fraud. Some in Congress are pushing to create a regulatory framework for crypto by the end of the year.10 It’s still up in the air if this will happen or not.

The U.S. government is also looking into creating a central bank digital currency (CBDC), a government-backed digital currency that’s legal tender. If a U.S. CBDC becomes a reality, there’s no telling how it would impact the value of cryptocurrencies.

Taxes on Cryptocurrency Earnings

We left out one other agency that oversees crypto: the IRS. Yes, when you make money buying and selling crypto, the tax man will come calling. Crypto profits are taxed as capital gains just like the proceeds from selling stocks or bonds. 

If you sell or spend crypto that you owned for less than one year, this is considered short-term capital gains, and you’ll pay taxes on your profit at your normal income tax rate. If you make a profit on crypto that you owned for more than a year, that’s long-term capital gains, and the tax rate is usually lower.

Cryptocurrency as a Long-Term Investment

Some financial institutions offer cryptocurrency self-directed IRAs, which allow you to invest in crypto for retirement in a tax-advantaged account. Crypto IRAs aren’t super common—and probably for good reason. Crypto isn’t known for being a good long-term investment because of its volatility. You shouldn’t put your nest egg into investments that could be here today and gone tomorrow!

Should I Invest in Cryptocurrency?

Crypto investing has left behind a trail of bright young people who are now depressed and broke with no friends.

Following the 2022 crypto crash, a Twitter account called “Coinfessions” sprung up. It’s full of sad stories of broken dreams. If you won’t listen to us about the dangers of crypto, take a look at this Twitter post:

“My family still thinks I’m rich. I have no friends, no GF, and spend 12-14 hours a day staring at charts. I have $4.9K at the moment. 6 figure student loan debt, $20k+ CC debt. Every day is hell on earth.”

Listen, you can try your hand at cryptocurrency if you want to. If you have some money you’re willing to lose, money that you might’ve thrown away on a roulette wheel in Vegas instead, knock yourself out. We’re not going to be mad at you for that. But we want you guys to win with money and secure your retirement future—and there’s just no evidence that cryptocurrency will do that for you.

Plain and simple—investing in cryptocurrency is not a good way to build wealth for your future. Now, we’re not saying cryptocurrency is going to go away. And we’re not saying it's horrible. But we are saying that crypto doesn’t have a proven track record of building wealth.

If you really want to invest in something with a solid track record, here’s the better plan: If you’re out of debt, have an emergency fund that’ll cover 3–6 months of expenses, and you’re ready to invest, then focus on investing 15% of your income in growth stock mutual funds—which are way more secure than crypto.

Don’t give in to a craze just because there’s a lot of hype. We’ve talked to people who have taken out a mortgage or cashed out their entire 401(k) early to invest in cryptocurrency—heck no! Don’t put it all on the line and risk your financial future, your retirement dreams and your family’s well-being. If you can’t afford to lose the money, don’t invest it in something as unstable as crypto.

A Better Way to Invest

Bottom line? The road to building wealth is slow and steady, and there are still way too many unknowns when it comes to cryptocurrency. Could crypto become a more legit way to invest later on down the road? Maybe. But as things stand today, just say no.

Get-rich-quick schemes are just thatschemes. Don’t risk it and pour all your hopes, dreams and money into them.


Next Steps

  • Learn more about Ramsey Solutions’ investing philosophy that has helped millions of Americans save for retirement and become millionaires over time.
  • You can diversify your portfolio by spreading your money between different investments. This can help you lower your investment risk and take advantage of compound growth. 
  • The SmartVestor program can connect you with several investment professionals in your area who can help you invest for the future.
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Frequently Asked Questions

Crypto is not a good hedge against inflation because it’s volatile. To protect yourself from inflation, you want to invest in something that has a slow and steady growth rate that outpaces inflation, which is usually 2–3% (except in the last couple of years). Good growth stock mutual funds do this. Historically, the 30-year return of the S&P 500 has been roughly 10–12%.1

Cryptocurrency investing and spending has grown like crazy in the last few years, but it’s still not legal tender in most places. It’s doubtful that a cryptocurrency would become the new world currency because governments like to be in control of monetary policy. It’s much more likely for the U.S. to create a digital dollar that would be similar to a cryptocurrency but not quite the same.

Technology moves at the speed of light, so there’s really no telling where crypto will be in the next five years. Some so-called experts believe Bitcoin, the world’s largest cryptocurrency based on its market value, could soar to $1 million in the next five years. Others think it could fall to $10,000. Bitcoin is selling for about $30,000 right now.

This article provides general guidelines about investing topics. Your situation may be unique. To discuss a plan for your situation, connect with a SmartVestor Pro. Ramsey Solutions is a paid, non-client promoter of participating Pros. 

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About the author


Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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