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In mid-April I picked my 15-year-old daughter and her friend up from school and took them to Barnes & Noble. The friend found out that I do stocks for a living and immediately asked me about crypto. What cryptocurrency should I buy, she asked.

Ill tell you about the advice I gave her in a bit. But not long after I got three calls in one day from my wifes side of the familyfrom my sister-in-law (a pharmacist) and my wifes cousins (both are barbers). They were all asking me about crypto. You dont ask my advice on which number to put your chips on when you play roulette in Las Vegas, I told them. Cryptocurrencies fall into the same category.

No matter what asset class you are discussing, it feels a bit toppy when people far removed from investing start asking you for advice about it, all at once.

I feel like an old curmudgeon writing this. I know I dont get it. Crypto lovers look at me as if I am defending silent movies and treating talkies as unwelcome, short-term imposters. Curmudgeon I am.

When we discuss crypto, we need to separate blockchain technology from the so-called currencies. Though I have yet to see a mainstream application of blockchain, I get a feeling they are coming. That said, just because a technology is useful, has a lot of applications, and is widely accepted doesnt automatically mean that you can use it to create a genuine currency.

Here is an example. Venmo, which is owned by PayPal, is a very useful technology that many Americans use weekly or even daily. The benefits of widespread usage of Venmo, however, accrue to PayPals shareholders and dont lead to appreciation of the U.S. dollar or whatever other currency it transacts in.

When we talk about cryptocurrencies we have to make clear which one. Many consider Bitcoin their lord and savior. However, there are thousands of these currencies out there, with many more on the way.

Until recently Bitcoin looked like a clear winner. Even Elon Musk was touting it, and Tesla bought $1.5 billion worth. Then Musk also shared with us his love of Dogecoina literal joke of a currencyand it exploded in price. A few weeks later Musk realized that Bitcoin is a Beanie Baby that runs on coal, as Bill Maher put it. Because of Bitcoins decentralized nature, solving useless math problems to mine more coins consumes more electricity than Argentina. Musk announced that until Bitcoin starts consuming less energy, Tesla will not be accepting it as a payment for cars. If you are an ESG-oriented pension and dont want to own Exxon (evil Big Oil), I want to see how you justify owning Bitcoin. If you adjust for CO2 production in relation to societal utility, Bitcoin is arguably worse for the environment than internal combustion engine cars (at least cars get you places). For the energy cost of processing one Bitcoin, Visa can process 810,000 transactions, about 370 times faster.

One of the biggest assets the U.S. government has in its arsenal is the dollar being the worlds reserve currency. Control over our currency gives politicians the ability to make promises and not keep them, by constantly running budget deficits and printing and borrowing money to pay for these promises. We are able to run trillion-dollar deficits because the U.S. government has a dollar-printing press. Washington will not give it up without a fight. Weve started wars over less.

Cryptocurrencies are a clear and present danger to the U.S. dollar. There is a high probability that the U.S. government will outlaw the use of cryptos as currencies. Sounds far-fetched? The U.S. government did it with gold in 1933. India is threatening to ban Bitcoin. South Korea is clamping down.

I am sympathetic to some cryptocurrency investors, especially after seeing what we are doing with our fiat currency. But for many people they are just speculative vehicles. My wifes relatives pay little attention to the balance sheets of the U.S. government or the Fed. They are interested in bitcoin for one reason only: It is going up. Cryptos present these unique opportunities for people to pour their life savings into bits and bytes on far-away servers with a hope that theyll magically turn their lives into paradise on the beach.

When you go to the casino, youre not cashing out your life savings and borrowing from your mother-in-law, unless you are a compulsive gambler. The casino doesnt try to masquerade as a place where you invest. If you have an ounce of common sense, you know you are in a casino, a place where people gamble. The air is pumped in, you hear the unending ring of slot machines, and you cant readily find an exit. A reasonable person will only take as much money to Vegas as he can afford to lose.

Cryptocurrencies are a different beast. You buy them on platforms that resemble your brokerage account, where (hopefully) you invest. Youre not gambling with casino chips, you are buying currencies. Suddenly, crypto is competing not with your Vegas purse but with your 401(k). This domain confusion is dangerous. My advice on crypto has been consistent: Gamble with as much money as you can afford to lose. But remember, even when you are winning especially when you are winning you are not investing, you are gambling. Approach it as a trip to Las Vegas, not a visit to your 401(k).

Now to the advice I gave my daughters young friend. You are too young to gamble, I told her. If youd like to invest, you have to accept that its not a get-rich-fast but a get-rich-slow activity. Once she heard slow, I think she lost interest in whatever advice I had to offer. Luckily, we arrived at Barnes & Noble, so she did not have to go on listening to this curmudgeon. You dont either.

Vitaliy Katsenelson is the CEO of Investment Management Associates.

More here:
Opinion | Investing in Cryptocurrency Is No Better Than Gambling - Barron's