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Crypto companies losing employees, losing public trust

In early January, several firms involved in crypto-currency announced that they would be reducing the size of their workforces significantly. Genesis, Coinbase, and are all seeking to cut costs as they experience fallout from the huge decline in the value of various cryptocurrencies in 2022, and from the well publicized collapse of cryptocurrency exchange FTX. Some of these firms are laying off employees just a few months after their last round of downsizing in the fall.

Public trust in companies involved with cryptocurrency has been steadily dropping, after several high-profile firms were found to have defrauded investors of billions of dollars: some of these companies operated very much like old-fashioned “Ponzi” schemes – guaranteeing rates of return much higher than could be realistically expected, and paying out investors “profits” with funds deposited by new investors, without any underlying real business activity.

Some analysts are predicting huge returns for crypto investors this year, while others predict a decline. Just days apart, CoinShares’ chief strategy officer predicted a $15,000 to $30,000 range for Bitcoin, while Skybridge Capital’s founder foresaw prices from $50,000 to $100,000 per Bitcoin in two or three years.

Why the huge fluctuations, and price uncertainty? A recent paper by the investment firm Starkiller Capital observed that:

“cryptocurrencies have very little intrinsic value in the sense that a long track record of… valuing these assets using a generally agreed upon set of fundamental variables does not exist.”

While a Christian could perhaps use cryptocurrency as a payment system, using is not the same as investing. Because cryptocurrency has “little intrinsic value,” putting your retirement money into it is simply speculative, gambling rather than investing.

In Proverbs, Solomon reminds us of the value of hard work and diligence, and the foolishness of seeking shortcuts:

  • “Whoever works his land will have plenty of bread, but he who follows worthless pursuits lacks sense.” – Prov. 12:11
  • “Wealth gained hastily will dwindle, but whoever gathers little by little will increase it.” – Prov. 13:11
  • “In all toil there is profit, but mere talk tends only to poverty.” – Prov. 14:23

If an investment looks “too good to be true,” or promises something that no one can guarantee, perhaps we could read a few chapters from Proverbs to keep us from a foolish path.

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Economics - Home Finances

Is gambling wrong? And if so, what about buying stocks?

Some Christians won’t invest in the stock market because they believe that investing in stocks is really no different than buying a lottery ticket. Both, they argue, are examples of gambling, which God forbids. But are they really so alike? Consider these two ways in which investing in stocks differs completely from gambling. 1. You can gain without causing pain While it could be argued that the Bible doesn't specifically forbid gambling, it does condemn the roots of it including covetousness (Ex. 20:17), love of money (1 Tim. 6:10, Heb. 13:5, Matt. 6:24), and the lack of productivity (Matt. 25:14-30). Another significant problem with gambling is that a person can only win if others lose – there is no way for all the players to benefit. It is a zero-sum game, so for a gambler to walk away with more than he came with, he has to get it from the other players. God calls us to love our neighbor as ourselves (Mark 12:31), but the gambler wants to benefit at his neighbor's expense – he wants to get something while giving nothing. With stocks, it is very different. While the stock market has its ups and downs, over time the trajectory is ever upward, as the economy expands, and as we continue to learn how, through automation and other efficiencies, to become ever more productive. That means it is possible for all investors – or at least all of the patient, cautious sort – to win. An investor’s gains need not come by making others lose; instead their increase can come from helping a good company grow. An investor’s return can come from supporting companies that are creating good products, or offering wanted services, or who are in some other way being productive in a way that paying customers appreciate. And then the return he gets will be in exchange for the help he provided: it will be something for something. Of course, someone could buy stock in all sorts of evil companies too, so we’re not trying to say here that buying stocks is always good. The point is more limited: whereas a gambler can only gain by others’ pain, it’s possible for an investor to gain by helping others. 2. You are likely to gain Another problem with gambling is that it is a waste of the resources God has entrusted to us (Matt. 25:14-30) because in gambling the odds are always stacked against the gambler. Slot machines, provincial and state lotteries, 50/50 raffles, casinos: all of them are a source of revenue for governments because they are designed to pay out less than they take in. Sure, a fellow might make some short-term gains, but any gambler that keeps at it is sure to lose…and quite possibly everything he has. But in the stock market, the very opposite is true. If the economy is growing (as it is, at least over the long term) then the stock market will grow too, and see more gains than losses. If you have no other ideas as to what to do with your money, then placing it in a diversified portfolio is one of the safest ways to invest it. With minimal risk you can increase the resources God has entrusted to your care. Conclusion To sum up, whereas a gambler is always trying to win at others’ expense, stock market investors can gain by helping others do better too. And while the odds are stacked such that over time a gambler will lose all he has, stock market investments overall continue to grow over time. In these two significant ways, buying stocks is the very opposite of gambling....