Cryptocurrency is among the latest, supposedly greatest, fads these days. According to the University of Chicago, 1 in 10 Americans surveyed bought some of the stuff in 2021. When Coinbase (the nation’s largest digital currency exchange) launched its Initial Public Offering (IPO) last April, The New York Times described it as cryptocurrency’s “coming out party.” Even my 10-year-old asked about it recently (in a rare flash of idle curiosity about what Dad does for a living).

Speculative Trades and Investor Escapades

It doesn’t matter whether we’re talking about Bitcoin, Ethereum, or any of the thousands of considerably smaller contenders whose popularity has been waxing and waning of late. Our position at Vista remains the same:

Trading in and out of cryptocurrency isn’t investing; it’s speculating.

Investing focuses on building durable wealth and consistently achieving your financial goals. Simple success is found by positioning yourself to capture the market’s broad, expected returns over time, eliminating any risks you can, and managing the ones that remain.

Speculating is a crapshoot, which lowers your odds for investment success. As financial analyst Vitaliy Katsenelson observed: “My wife’s relatives pay little attention to the US Government’s or Fed’s balance sheets. They are interested in bitcoin for one reason only – it is going up.” Like the extraordinary “winners” you’ve read about in the popular press, you may get lucky by riding a cryptocurrency’s shooting star. But what about all the rest who have lost wealth or at best broken even in the attempt? You’re far less likely to hear about these more mundane outcomes.

The Luck of the Draw

Trading in cryptocurrency resembles another trendy trade these days—vintage sports trading cards. Trading cards??? You read it right: those packs you used to get along with a stick of stale bubble gum. Earlier this year, hot off the success of Netflix’s “The Last Dance” documentary, a mint condition Michael Jordan rookie card sold at auction for $215,000, only to sell weeks later for $738,000.

These numbers are similar to the kinds of wild swings we see regularly among cryptocurrencies’ hottest hands. For example, consider year-to-date weekly numbers for Bitcoin vs. the S&P 500 Index (a proxy for U.S. large-cap stocks). The relatively smooth flow of light-green dots represents S&P 500 weekly returns. The wildly bouncing darker balls belong to Bitcoin.

What About Blockchain Technology?

In a recent post, “The IPO Enigma,” we described how IPOs do not make for good investments at their outset but are still essential to fueling overall markets. Likewise, we are not keen about trading in cryptocurrencies, but they’re not entirely for the birds.

In fact, one of the most exciting global supply chain developments we’ve seen over the last few years grew out of cryptocurrency innovations. We’re talking about the invention of blockchains, the underlying technology powering most cryptocurrency processes.

Without diving too deep, blockchains are a new breed of processes for facilitating strong, yet globally decentralized check-and-balance systems. You might compare their game-changing possibilities to the opportunities your mobile device brought over the rotary phone.

Here are a few examples to illustrate the possibilities:

Maersk + IBM—Shipping at Warp Speed: How much red tape is involved in shipping a case of avocados from Mombasa to Rotterdam? With sovereign interests, stormy seas, a perishable product, and a great deal of money involved, the answer is: a lot. What if we could build a blockchain ledger across the shipper’s, receiver’s, and customs agents’ end-to-end processes? IBM and shipping titan Maersk have been collaborating on achieving just that, hoping to save carriers up to $38 billion annually.

Walmart + Suppliers—Catching Culprits: It’s never a bad idea to be a locavore when possible. But when widespread food crises occur—such as an outbreak of salmonella in our salads—blockchain has been helping corporations like Walmart and its suppliers track sources within seconds rather than weeks. As envisioned by Frank Yiannas, Food Safety VP at Walmart, “[With blockchain technology,] a customer could potentially scan a bag of salad and know with certainty where it came from.”

Vanguard + Symbiont—Instant Index Info: The faster an index provider can share its data with global market participants, the more efficiently we can expect markets to operate. Vanguard has been partnering with Symbiont on blockchain technology accordingly. As reported here, “The partnership has enabled index data to move instantly between index providers and market participants over one decentralized database, resulting in improved benchmark tracking and cost savings for clients.”

Harness the Best, Ignore the Rest

So, yes, we’re fascinated by blockchain’s digital ledger capabilities and its many other promising applications. Integrating it into the global supply chain could improve transparency, efficiency, and cost. This could translate to increased revenue and profits, which in turn should enhance company earnings and shareholder dividends, which are the fundamental variables that drive—you guessed it—the returns you earn as an investor.

See the beauty? But once again, please don’t rush out and stock up on blockchain enterprises in your investment portfolio. No matter how exciting a venture may seem, chasing after it still runs contrary to the intent of investing.

Especially if you’re the nostalgic type, you may still enjoy swapping vintage baseball cards with your friends, for fun if not for profit. For your family’s real-life investing, we suggest skipping any card runs or crypto-crazes, and investing instead for the long run.

By holding Vista’s style of low-cost, globally diversified investment portfolios, you can expect to earn a measure of whatever wonders the next amazing technologies bring, without having to speculate on the bleeding edge of any given game.