Vanguard Explains Cryptocurrency in a Portfolio
So concise & succinct -> Vanguard Explains Cryptocurrency in a Portfolio
In Vanguard’s view, crypto is more of a speculation than an investment. This is at the root of our decision to not offer crypto products, whether our own or others. With equities, you own a share of a company that produces goods or services, and many also pay dividends. With bonds, you get a stream of interest payments. Commodities are real assets that meet consumption needs, have inflation-hedging properties, and can play a role in certain portfolios. While crypto has been classified as a commodity, it’s an immature asset class that has little history, no inherent economic value, no cash flow, and can create havoc within a portfolio.
Among all the ink spilled on the Internet about cryptocurrency, this is far and away the best write-up. I’ve dabbled with the technology since 2011. I’ve bought and sold enough cryptocurrency to understand how it all works, the possibilities, and the serious downsides.
I don’t even know the what or why of Bitcoin now. I guess it’s most similar to gold (you’re supposed to just hold it?), except it’s been around for 14 years instead of…thousands of years like gold? It correlates to growth assets…with no growth prospected. Bitcoin is even terrible at its original use case.
Some blockchains like Ethereum and Solana could be proper assets one day since their Proof of Stake methodology does provide a stream of payments, similar to dividends…if you want to speculate on those blockchains winning the race to provide the backbone for….something idk? (right now, the only regular use cases are scams, money-laundering, and speculating on other speculation).
It’s all just a weird, strange way to invest capital when there are so many other, real assets (like housing, energy, physical businesses, etc) that could use it.
