Opinion | Think you’re the one to beat the crypto crash? Think again.

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I don’t usually expect financial wisdom from college students, so when I started hearing from my kids last year that their classmates were depositing money in cryptocurrencies, I was worried. With all due respect, this is not, as a rule, a financially savvy or savvy crowd. When one of my sons skeptically asked if this was the last tulip spree in the Netherlands, one student said it was different – “You have to know when to go out.”

Well, it might not be that different in the end, because it turns out that many people lack this ability. When a stablecoin, TerraUSD – that is, a cryptocurrency that had to be pegged to the dollar or another asset – lost nearly all of its value this month, it happened so quickly that many investors lost whatever was in the market. DEI, another stablecoin, fell as low as 52 cents instead of the promised dollar. Bitcoin itself, which is not pegged to any currency, has dropped more than 50 percent from its high last fall.

In most cases, those who can least afford such loss are hit. Crypto has been aggressively marketed as a chance to catch up with groups that feel left behind in the forever unequal United States. Partisans have repeatedly proclaimed that blockchain will be a force for financial equality, and have traditionally excluded people from American wealth-building mechanisms like housing or the stock market because of race or lack of capital.

“Fortune favors the brave,” Matt Damon declared in an ad during the Super Bowl for Crypto.com, an exchange platform where people can buy and sell more than 200 cryptocurrencies. (Now, less boldly, she refuses to answer NBC News’ questions about it.) Kim Kardashian soon responded with a coin that fell 98 percent. Politicians have argued that crypto will make the financial world fairer. Representing a low-income district in the Bronx, Rep. Ritchie Torres (D) described it as “an extremely progressive case”.

Please. This is speculation at best. Despite claims that blockchain will revolutionize finance, the only thing it has developed so far is the ability to transfer money as part of cash laundering and other illegal activities. To hedge against the risk of inflation? An undisclosed theory. Instead of cash? Try using it. It is difficult and time consuming and I promise you, you will be back to traditional currency in no time.

The problems continue. There is little to no editing. Theft and fraud are rampant and victims have no recourse. If your credit card is stolen you are addicted to only $50 but if your multimillion dollar crypto wallet is taken you are SOL as they say online. And for all the talk about letting everyone take action, just over 25 percent of Bitcoin is held by 0.01 percent of the investors in it.

Still, 1 in 5 Americans of age-to-invest buys most bait that can’t afford to take that risk. Successive surveys show that young people embrace the industry more than middle-aged and older people, and Blacks more than Whites. And one more thing: According to a survey published by Grayscale Investments, a crypto management firm, Half started investing money in the industry in 2021 – in other words, when crypto was at record highs. (A survey by Cardify, a market research firm, last fall found only 14 percent of those who have invested in the industry for more than two years.)

None of this should inspire confidence. If you sincerely believe that the world is not yet harnessing the power of blockchain, or if you believe that blockchain and cryptocurrencies are Beanie Babies for Bros, as the intelligences on Twitter put it, then obscured by techno-liberal gibberish, that’s true.

Even if the full potential of Web 3.0 is realized and blockchain is its primary architecture, that doesn’t make it a good game. The railroad was a revolutionary technology that created untold fortunes for the lucky few in 19th century America, but about 25 percent of railroad companies went bankrupt after the Panic of 1873. The same thing happened again after the Panic of 1893.

The dot-com bubble teaches a similar lesson: Amazon has been so successful that its founder now owns the newspaper, but Pets.com is a punchline. As Gary Gensler, Chairman of the Securities and Exchange Commission, recently stated when discussing crypto, “I don’t think there is a long-term viability for five or six thousand special forms of money.”

This is a sign that they think they can beat it all – they will choose both the surviving and the rising cryptocurrency, or they will know just the right time to exit. All cannot be true.

Crypto hits the American sweet spot where cynicism meets absolute naivety and everyone thinks someone else is the sucker at the table. For many, when they discover that they are the bigger idiot, it is too late to do anything about it. In many cases, the fact that they’re already people making a raw deal makes it that much more painful.

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