Even though cryptocurrency and blockchain have reputations as “smart products” they seem to inspire some really dumb ideas.
There are some really stupid cryptocurrency products out there. Some these products seem to run counter to the whole idea of cryptocurrency, others are just plain dumb.
Some of the Stupidest Cryptocurrency Products on the Market Today include:
A company called Tangem is planning to issue paper bills based on cryptocurrency, Hackernoon reported. The plan is to make banknotes with a chip that contains cryptocurrency embedded in them.
This product is absolutely stupid because most governments are already issuing a superior product in the form of paper fiat currency. Why not just use U.S. dollars, Euros, pounds, etc. Even if your nation’s fiat currency is worthless why not just rely upon a proven banknote such as the Euro.
After all convincing merchants to accept your paper is going to be difficult. Cryptocurrency banknotes would also have all the same basic risk as paper money; if they get stolen, destroyed, or lost the cash is gone for good. Funds in a digital wallet can always be recovered.
Wouldn’t a better solution be a crypto debit card you can use at brick and mortar stores or ATMs? Several companies have successfully tested cards that convert altcoins into fiat currencies. These cards carried the Visa and MasterCard brand names that hundreds of millions around the world accepted. More importantly, they can be used to get cash from ATMs or registers with a simple pin number.
The whole experiment seems like a waste of time to me.
Physical Cryptocurrency Coins
There are physical metal coins that contain circuitry that in which altcoins were stored. The most famous example was the Cassasscius physical Bitcoins, which contained you guessed it Bitcoin (BTC).
This idea was extremely dumb because all you can do with physical coins is store cryptocurrency in them. You can spend them, and you will need special keys to get the coins out. The coins actually contained a piece of paper with a code to get the currency.
Seriously, a cryptocurrency hardware wallet would be a far better solution because you can at least access coins by plugging it into your computer or phone. Fortunately, this dumbness seems to be gone, but like all bad ideas, it will undoubtedly reappear at some point.
Paper wallets are perhaps the dumbest of all cryptocurrency-related products because there is no such thing as a paper wallet. In fact, there is no way to store cryptocurrency on paper.
The altcoins are actually stored in a digital wallet or vault. The paper contains a code or address needed to access the coins. It is a dumb product because any crook that knows how to read and use a computer can steal your altcoins if he or she finds the paper.
Using a wallet with added security measures such as one that sends a code to your phone or email would provide far more security. Seriously, your cryptocurrency would be safer in a hardware wallet or any decent cryptocurrency wallet or vault.
Unfortunately, many cryptocurrency experts online still recommend paper wallets; which is a good reason to avoid them.
The idea here is that cryptocurrencies backed by physical commodities like gold and oil will be worth more than those that are merely digital products. The problem with this thinking is that gold and oil are commodities that trade on markets.
That means they can lose most of their value at any time just like any other cryptocurrency. What’s truly dangerous about commodity-backed cryptocurrency is that you double your risk by exposure to two different markets.
Even gold; perhaps the most-stable commodity can lose a lot of value in the market. Gold lost 11.6% of its value in 2015, 27.6% of its value in 2013, and 32.76% nearly one-third of its value (32.76%) in the worst year on record 1981, Only Gold data revealed.
Oil is even worse than gold, the price of a barrel of OPEC crude fell from an all-time high of $109.45 in 2012 to a low of $40.68 in 2016, Statista data indicates. Oil lost around 60% of its value in just two years.
There is a simple reason why commodities lose value if prices go up people make more of them. If oil prices increase; people pump more oil, if gold prices go up people mine gold.
Something to remember here is that gold miners and oil drillers make their money from selling oil and gold. If prices go up they increase production in order to make more money.
Commodity-based cryptocurrencies offer no advantage to pure cryptocurrencies like Bitcoin (BTC) or Zcash (ZEC). In fact, as I noted above they actually offer more risks.
The risk is increased by the latest and largest player in the commodity-based cryptocurrency game Venezuelan President Nicholas Maduro. Maduro is peddling his oil-based altcoin the Petro and planning a Petro Gold. Petro and Petro Gold would be bad investments because Maduro is an oil and gold producer.
Venezuela makes its money by selling oil and gold. All Maduro is doing with his crypto is increasing the size of the market so he can generate more cash by selling more oil and gold. The Petro is likely to be susceptible to huge market fluctuations just the commodities that theoretically back it.
Cryptocurrency has the potential to be an intelligent solution to some of the world problems. Unfortunately, there are many stupid uses for this very smart technology. Shrewd investors should learn to spot and stay away from them.