Cryptocurrency. What is it? Is it risky? Should you invest in it?

If you’re like most Americans, you may have heard of the new fad “cryptocurrency” being frequently discussed. However, you also likely have no idea what it is, and whether it’s something to consider purchasing, or a scam to be wary of.


As of November 2022, there are 21,844 cryptocurrencies in existence – and that number is ever-growing. Bitcoin, Dogecoin, Litecoin, Ethereum, Tether and Solana are just a few examples.

According to recent surveys, 16% of U.S. adults say they have personally invested in at least one cryptocurrency. However, men ages 18 to 29 are especially likely to have invested in crypto.

“About four-in-ten men ages 18 to 29 (43%), for example, say they have ever invested in, traded or used a cryptocurrency,” Pew Research Center reports.

According to Ramsey Solutions – the company started by well-known Christian radio personality and money expert Dave Ramsey – cryptocurrencies are “digital assets people use as investments and for online purchases. You exchange real currency, like dollars, to buy ‘coins’ or ‘tokens’ of a certain kind of cryptocurrency … Each coin of cryptocurrencies can’t be copied, which makes them easy to track and identify as they’re traded.”

Clear as mud?

Here’s another definition from Investopedia: “A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend.”

Think of it as a kind of digital money, except that this “money” is not supported by the government’s declaration that it is a “legal tender,” i.e., money that can be used to pay a debt. Therefore, it’s value is found only in what other people are willing to pay for it.

The tens of thousands of kinds of cryptocurrencies are run on decentralized networks based on blockchain technology, which is a “distributed ledger enforced by a disparate network of computers.”

One of the benefits of cryptocurrencies, in theory, are that they are decentralized and not controlled or run by any government or bank. Whereas a government can dictate the value of its currency – like dollars, yen, or pounds – it can’t do that with decentralized currencies.

However, this lack of government involvement also makes the price of cryptocurrencies extremely volatile; Hence, it’s a very risky investment.

In the summer of 2020, one Bitcoin was worth around $10,000. By the spring of 2021, the value of one Bitcoin had skyrocketed up to $60,000 – a great return on investment if you purchased and sold a Bitcoin at the right time.

However, as of publishing time, one Bitcoin is now worth $17,463 – a loss of over 70% in less than two years.

If all this technical discussion of cryptocurrency is a little over your head, at least remember this. 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 … Investing in cryptocurrency is risky … [and] is not a good way to build wealth for your future,” Ramsey Solutions summarizes.

Day Trading

Another type of risky investing is known as “day trading” or the practice of using online investing apps, like Robinhood, Acorns or E*Trade, to purchase stocks. In general, day traders buy single stocks – the stock of single companies – and then try to sell them shortly thereafter for a quick profit.

Sounds great, doesn’t it?

Unfortunately, for most day traders, it doesn’t work out as planned.

Nearly all day traders will lose money. While day trading may seem like a good way to get rich quick, “Studies have shown that more than 97% of day traders lose money over time, and less than 1% of day traders are actually profitable” (emphasis in original).

And the majority of those who do attempt to day trade eventually give up. “More than 75% of day traders quit within the first two years of trading.”

Day trading becomes even more risky when individuals trade on margin, i.e., use debt to purchase stocks or crypto.

Take Richard Dobatse for example. He used credit card advances to fund his Robinhood account with $15,000, and then took out two $30,000 home equity loans to buy more stock on the Robinhood app. In other words, Mr. Dobatse took out $75,000 worth of debt in order to try and make a profit.

When he was interviewed by The New York Times, his Robinhood balance had fallen from $75,000 to just $6,956; Of course, he still owes $75,000 in debt, but now with nothing to show for it.

“They make it so easy for people that don’t know anything about stocks,” he said. “Then you go there and you start to lose money.”

A Biblical Money Perspective

Scripture has much to say about money. Perhaps that’s because money influences and affects each one of us, every single day.

Though cryptocurrencies and day trading obviously did not exist until recently, Proverbs 28:20 warns that “whoever hastens to be rich will not go unpunished” (ESV).

When individuals, especially young men, believe they can get rich quick through using debt to buy crypto or day trade, rather than through their own labor or long-term investing – disappointment is likely to follow.

“The rich rules over the poor, and the borrower is the slave of the lender” (Proverbs 22:7 ESV).

Investment Advice

Focus on the Family is not an investment advisory institution; Consequently, we don’t give investing advice. However, Dave Ramsey has helped millions of people get out of debt, save for emergencies, and consistently build wealth over time.

Ramsey doesn’t recommend day trading or investing in cryptocurrencies as a good way to build wealth.

Instead, he commonly recommends that individuals who are out of debt and have a 3–6-month emergency fund invest 15% of their gross income into good growth stock mutual funds in tax-advantaged retirement accounts.

He also recommends that “you should never invest in anything you don’t understand.”

So, if after reading this article you still don’t understand cryptocurrency, it’s probably best to stay away.

If you want to listen to Dave Ramsey’s recent appearance on the Focus on the Family Broadcast, titled “Equipping Your Kids to Handle Money,” click here.

Additionally, If you want to buy of copy of Dave Ramsey’s bestseller, The Total Money Makeover, you can visit the Focus on the Family Store here.

Related articles and resources:

Focus on the Family Store

Equipping Your Kids to Handle Money (Part 1 of 2)

Getting a Reluctant Spouse Onboard With Budgeting

Working With Your Differences

Communicating About Investments

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