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Cryptocurrencies will drive you crazy

I did a strange thing last Thursday, in the middle of the night. I could not sleep, my head was spinning. So I got out of bed, crept downstairs, and opened my laptop. Then I did what thousands, possibly millions of people all over the world were doing, and checked the price of bitcoin.

Coining it

While I was at it, I also checked the price of bitcoin cash, ethereum, litecoin and XRP by Ripple, and rooted around various message boards to see what traders were saying about them. Two hours later, I went back to bed and I still could not sleep.

If this is happening to me, it could be happening to you. Cryptocurrencies will drive you crazy if you let them.

Bitcoin never sleeps

In 20 years of investing, I have never hauled myself out of bed to check my portfolio. The London stock market only operates during working hours works but cryptocurrencies are waiting for you, 24 hours a day. When Europe sleeps, Asia trades. If the US sells, the Middle East may buy. And you can check what they are up to, every second of the day (and night).

I only have a tiny stake in bitcoin, and even tinier sums in ethereum and ripple. Like everyone else I wished I had invested more and sooner, but I wonder what the nights must be like for those who have serious money at stake, as all their financial dreams seem to be coming true. The lure of quick money is hard to resist. 

Crypto crazy

There has never been anything quite like bitcoin because millions, billions can play, they only need a computer and credit card. It could drive the whole world crazy.

Whatever its original intentions, bitcoin has relatively few real-world uses (although the underlying blockchain technology may). Cryptocurrencies exist only in our heads, where they can inflict serious damage once you let them inside.

Madness of crowds

I see the symptoms in my friends, who are setting up trading accounts and raiding their credit cards in the early hours, after a beer or two. I see them in myself. I woke up early on Sunday morning to find myself $1,000 richer than when I went to bed. On Monday I was $1,000 poorer. And I only have two coins.

I have no doubt that bitcoin is a bubble. The only questions are how long it will last, can you get out in time, and will your sanity stay intact?

I won’t put any more money into cryptocurrencies, but will return to something that does exist outside my head, in the real world, backed by physical assets: the stock market. Shares also pay billions in dividends, and that’s real money. I would suggest that most investors shun this get-rich-quick mania and focus on something that will get you rich slowly, but more surely. Then get some sleep.

Stocks and shares can make you brilliantly rich but it will not happen overnight.

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Harvey Jones holds bitcoin, ethereum and XRP by Ripple. The Motley Fool has no position in any of the currencies mentioned. Views expressed in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.