Here’s Why You Should Never Buy CBD With Cryptocurrency
If you see CBD products for sale, you may think they are relatively expensive. You can expect to pay more than USD 100 for a tincture containing 1,000 mg of high-quality CBD. Perhaps you are short of cash but think you can link CBD and crypto by purchasing one with the other?
At the time of writing, CBD isn’t federally legal. An incredible number of websites continue to spread misleading information regarding this point. They suggest that ‘CBD oil is legal in all 50 states.’ Unfortunately, this isn’t true, as residents of Idaho, Nebraska, and South Dakota can attest. You can find CBD in these states, but there is a slight possibility that you’ll get into trouble.
Individuals concerned about the legality of cannabidiol may try to combine CBD and crypto to make an anonymous purchase. One of the main reasons why cryptocurrencies were created was to remove the traditional banking system from the equation. The irony of using Bitcoin and others as an investment is not lost on many proponents of fiat currency.
Apart from the fact that you can easily purchase cannabidiol in most places using ‘regular’ money, there is another reason why mixing CBD and crypto in this fashion is a mistake. Volatility!
CBD & Crypto – What Will Your Asset Be Worth Next Week?
While cryptocurrency is a great idea in theory, in practice, there is an immense number of issues that remain unresolved. The main one is the extraordinary level of volatility you need to contend with. Would you buy a loaf of bread for USD 2 today, if you knew that the same amount of currency could get you three loaves next week? Alternatively, you would probably buy three loaves today if you knew the USD 6 you have today would be worth half that a week from now.
That’s the issue with trying to buy CBD with crypto. On 7 September 2020, one Bitcoin was worth around USD 10,130. Just six days earlier, it was worth over USD 11,900. That’s a fall of almost 15% in less than a week. In cryptocurrency terms, that isn’t even particularly volatile! It can rise and fall by that amount in a matter of hours.
Here are three reasons why the likes of Bitcoin and Ethereum rise and fall so rapidly.
Crypto Is Still an Emerging Market
At its peak, the cryptocurrency market was worth close to USD 800 billion. The stock market in the United States alone is worth 35 times that. As a result, smaller forces can have a significant effect.
If investors sell USD 600 million of stocks, it wouldn’t have a massive impact on the overall market. If this happens with crypto, it causes massive fluctuations. Whenever there is a huge spike or dip in Bitcoin’s price, for example, it is often due to the actions of ‘whales’ (large crypto investors) manipulating the market.
Crypto Is Completely Digital
The likes of Litecoin are not backed by a commodity, currency, or anything else that’s ‘physical.’ As a result, the price is entirely dependent on the laws of supply and demand. Bitcoin and other currencies already have a finite supply, which means the price varies according to how many people want it right now.
When investors lose faith in Bitcoin and sell, the price usually begins to fall, causing others also to dump their coins and cause a snowball effect. The reverse is true when people start to buy into the hype and buy crypto. It quickly becomes a self-fulfilling prophecy one way or the other.
It's All Speculation
Investors usually buy stocks in a company because they believe it is likely to grow in value over time. Perhaps it is an innovative organization or one that threatens to dominate its industry.
In contrast, crypto is largely about speculation. People often buy and sell depending on whether the price will rise or fall. At present, cryptocurrencies don’t really provide any service. Therefore, the market primarily exists for people to make money. The enormous number of speculative bets only increases the rate of volatility.
CBD & Crypto? Use Traditional Payment Instead!
In May 2010, someone purchased two pizzas for 10,000 bitcoins. These days, that amount of Bitcoin would likely be worth over USD 100 million, depending on market value. The point is until the market becomes less volatile, you shouldn’t consider joining CBD and crypto to make a transaction.
Instead, if you want to purchase high-quality CBD products such as the Premium Jane range, use cash or a debit or credit card. At least you know that the 1,000mg of Citrus CBD tincture you buy for USD 124 will remain a bargain a month from now!
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