Is Bitcoin a Bad Investment or a Financial Breakthrough?

In Collaboration with CoinSmart

Warren Buffet called it rat poison and it’s been making headlines for all the wrong reasons. No wonder you’re a crypto skeptic. But if you believe the naysayers without doing any of your own research, you’ve bought into a different kind of hype. Cryptocurrency isn’t what you think it is, and regulated platforms like CoinSmart* are moving it even closer to mainstream adoption. 

Why? Because, right now, crypto behaves less like currency as we understand it and more like an investable asset. More than that, it’s a powerful tool for socio-economic progress that can improve our quality of life. Here’s why crypto has an undeniable value that makes it a legitimate investment in the long run.

*Please note: CoinSmart is now part of WonderFi and the platform is not accepting new signups. If you’re looking for the best crypto experience in Canada, we recommend signing up for Bitbuy, another licensed Canadian cryptocurrency trading platform operated by the same parent company, WonderFi. With Bitbuy, you will get access to an improved experience on web and mobile, staking rewards, Private Wealth services, and an advanced trading interface.

A currency by any other name

The word “currency” misrepresents the true nature of crypto and what it’s capable of. So it’s not really shocking that most people – from seasoned financial advisors, billionaire investors, and your uncle – dismiss it as a worthless shill. 

Cryptocurrency, like traditional money, can be used as a token of exchange in much the same way other tokens have been used in the past. Throughout history, people have used some pretty interesting things to facilitate the trade of goods and services like sea shells, beads, metal coins, and even giant rocks. These tokens were valuable because enough people believed they had value. 

Guess what? The cash in your pocket is a modern-day sea shell. Its value has not been tied to a physical asset since 1929, when Canada abandoned the gold standard. At its core, our traditional money is a token that has value based on supply, demand, and our collective faith in it. 

That means crypto and the Canadian dollar are not so different after all. While there are some differences between cryptocurrency and traditional money, both are used as mediums of exchange and stores of value, and they both serve similar functions in the economy. But there’s something extra special about crypto that naysayers fail to see. 

Crypto beyond currency

While crypto can function like money, albeit imperfectly, many cryptocurrency investors don’t treat it that way. Instead, they find value in its underlying blockchain technology. In a nutshell, blockchain technology provides a radically more secure and transparent way to transfer value and data. It has the potential to disrupt the way we engage with finance, conduct business, and interact online.   

Others find value in Bitcoin’s scarcity. For example, Bitcoin has a maximum supply of 21 million coins. Once that number is reached, no new Bitcoin will be created. Many investors believe this scarcity makes it attractive as an investment. They speculate Bitcoin and similar cryptocurrencies with a limited supply will increase in value over time as demand increases. And the data supports their assessment.  

What does the data say?

The crypto market peaked in the fall of 2021 and has since lost over $2 trillion in value, with Bitcoin down 75% from its all-time high. That makes for sensational headlines and “proof” that crypto is a foolish investment at best, and a scam at worst. 

But zoom out on the charts and you’ll see that the value of Bitcoin has increased by over 12,300% over the last 14 years while the Canadian dollar has lost about 32% of its value during that same time thanks to inflation.

Inflation is largely a function of supply. Bitcoin’s limited supply protects it from artificial inflation caused by centralized monetary policy. In fact, the mysterious figure who invented Bitcoin, Satoshi Nakamoto, did so because he believed “ the central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.”

In this way, Bitcoin and similar cryptocurrencies can serve as modern money for the modern world. But that’s not all they can do.

3 Things Nobody Told You About Crypto

Yes, the crypto market is volatile and investors have had a rough go lately. But Bitcoin and the broader crypto market have survived several crashes of 50-90% and recovered to reach new all-time highs. For those who understand crypto and its long-term potential, this is just a speed bump. Here are a few reasons why:

1. Financial inclusion 

Did you know that almost 5 million Canadians are not able to access the banking services we take for granted? That’s a huge problem with deep systemic roots. Cryptocurrency can provide access to essential financial services for people who are unbanked or underbanked. 

It can be used to store and transfer value, pay for goods and services, and even access loans and credit, all without the need for a bank account. Crypto has the ability to help everyday people break the cycle of poverty and live a life of dignity. 

2. A boon for small businesses

Small businesses are the backbone of the Canadian economy, providing jobs for every 6 out of 10 people you know – like your friends, family and neighbours. But small businesses struggle to compete against big competitors with deeper pockets.

Services like SmartPay by CoinSmart make it possible for small businesses to easily send and receive cryptocurrency payments without worrying about volatility thanks to a handy auto conversion feature. Businesses can engage with crypto without actually having to engage with crypto. That can help them save money on things like expensive credit card transaction fees and connect with an untapped market of pro-crypto consumers. When small businesses do well, they reinvest back into their local community which benefits everyone. 

3. Cross-border payments

If you have ever had to send money out of the country, you know exactly what an expensive and painful process it is. Cryptocurrencies provide a fast and low-cost way to transfer money anywhere in the world. The person on the other end can receive it in as little as a few minutes and convert it into their local currency.

The cost savings are critical for anyone sending money to their families back home, or for individuals and businesses who engage in cross-border transactions. A regulated and reputable platform, like CoinSmart, is an easy and inexpensive way to buy crypto and send it wherever it needs to go.  

But what about…

Criminals and market volatility? Dramatic price swings and a slew of scandals certainly give crypto naysayers a lot to criticize. Again, when we zoom out to look at the bigger picture, things aren’t nearly as nefarious as they seem. 

Bad actors

Criminal activity is neither endemic to crypto nor is it more prevalent than in the rest of the financial system. Sam Bankman-Fried and Do Kwon are not a consequence of crypto. They’re opportunists just like Bernie Madoff, Enron, WorldCom, and so many others that demonstrate the need for better regulation – not boycotting.

Volatility

Price volatility makes sense given the market is still in its infancy and is a part of the already volatile tech sector. All markets are in distress right now. Crypto’s fall from grace is hardly an anomaly, but a predictable reaction to the current economic climate. 

The market has survived several stunning crashes much worse than this. There’s no reason to believe it won’t recover along with the other markets. With proper regulation, more investors and innovators can confidently enter the space, help it mature, and reduce volatility.    

Mass adoption is coming

Crypto is on the cusp of going mainstream. It’s no longer a question of “if” but “when.” Innovation and progressive regulation are making crypto safer, more reliable, and easier for us to incorporate into our everyday lives. Here’s how: 

Regulation

Canada is one of the most crypto-friendly countries in the world. Financial regulators are working together to build a framework that protects investors by ensuring the Canadian crypto market operates transparently and in compliance with the law. It’s still a work in progress, but it shows that our country is embracing cryptocurrency rather than suppressing it. 

A regulated exchange platform like CoinSmart is much safer and more secure than an unregulated one. They must comply with strict financial laws and are subject to regulatory audits that ensure CoinSmart isn’t exposing your assets and personal information to unnecessary risk. 

SmartPay

In order for crypto to become mainstream, it has to be trustworthy, easy to use, and add value to people’s lives. SmartPay gives businesses an easy and stress-free way to send and accept cryptocurrency payments for goods and services. 

When a crypto payment is received it can be automatically converted into fiat and deposited into a business bank account to solve the price volatility issue and capital gains tax – because the price of crypto can skyrocket as quickly as it can crater. Or they can choose to hold their crypto receivables as-is. This kind of service is bridging the gap between businesses looking for a competitive advantage and consumers who want to use their crypto like traditional money.

Over The Counter (OTC) Trading

As more businesses and institutional investors enter the market, they need a fast and low-cost way to trade large volumes of crypto without contributing to or being affected by market volatility. 

CoinSmart Premium provides a secure Over The Counter (OTC) trading desk for anyone looking to execute crypto transactions of $25,000 or more. This service provides people like high-volume traders, investors, and businesses with a fast and cost-effective way to engage with cryptocurrency.

The case for crypto

Younger generations, like Gen Y and Z, have grown up with technology and are much more receptive to cryptocurrencies. Unfortunately, traditional finance has failed to keep pace with their unique needs and preferences within a radically different economy than that of their parents.

Crypto is already growing in popularity among younger Canadians. This trend will likely continue as the younger generations comprise a larger and larger proportion of workers and consumers in the Canadian economy. And in an increasingly digital world, it makes sense for money to also be digital. 

Cryptocurrency is to finance what the car was for transportation, the internet for commerce, and the mobile phone for communications. Bitcoin and similar digital assets aren’t just funny-money. Their fundamental design, real-world application, and growth potential make them a legitimate investment worthy of your attention. 

Of course, every investment has an element of risk, and investing in cryptocurrency is no exception. If investing in this space doesn’t align with your values or risk tolerance, that’s OK – as long as eye-popping headlines aren’t the only thing informing your choices.  

Because missed opportunities are also a risk.