Day Tripper

By popular demand, here are five reasons why you should never, ever invest in cryptocurrencies.

The first reason is the amount of time required. To successfully invest in cryptocurrencies, you must watch your investments like a hawk. So unless you want to be up on a Sunday morning at 3:00am checking on your investments (and who the hell does), you should find another destination for your money.

The second reason is the volatility involved. There is no such thing as a currency peg when it comes to cryptocurrencies. That means there is no commodity of value that dictates its worth. One day it will be worth $1000, and the next it will be worth 1¢. Then the following day it will be worth $1000 again. As there are no such market indicators, there is no way to accurately predict its value on any given day, and hence no way to reliably earn profit from buying or selling it.

The third reason is the tax burden. Given how frequently its value fluctuates, cryptocurrencies are not conducive to long-term trading. Any money you earn will be from short-term trades, which means that you will not pay capital gains taxation rates of 10-20%. Instead your profits will be treated as income, and therefore subject to income taxation rates of 30-50%.

The fourth reason is that there is no investment insurance. This is perhaps the most serious shortcoming of cryptocurrency trading. If there is a run on your cryptobank, and they go bankrupt, you will not receive a single penny of compensation from the Federal Government. It will be a 100% loss.

The fifth reason is the prevalence of margin investments in the cryptomarkets. This means that most investors are not trading with their own money, but are instead borrowing money from their local bank, and investing that borrowed money in their favorite cryptocurrency. This becomes a problem because when a margin investment begins to lose value, the bank automatically makes what is known as a "margin call" and demands their money back, triggering yet further stock sales. As a result, cryptomarket declines cascade and snowball into market routs, and even the most astute of cryptoinvestors will eventually face devastating losses.

So there you have it. Five common sense reasons why investing in cryptocurrencies is a horrible idea.