The Cryptocurrency Craze: Is Debt Worth It Or Will Bitcoin Bite You Back?

Cryptocurrency is a hot topic that has catapulted it’s way into mainstream media, social media, water-cooler gossip and dinner table discussions alike.  While there is something to be said about the excitement and optimism generated from a ground breaking concept like Bitcoin and the rest of the cryptocurrencies, the bad news is that some people are risking their financial security to join the cryptocurrency craze and avoid the fear of missing out.


Cryptocurrency is a digital form of currency which changes the traditional way we store our money. Unlike paper money—which is government regulated, controlled and issued by central banks—cryptocurrencies exist without any regulations and no central authority.

Another way to explain it is to use the example of purchasing something from an online retailer.  Normally, you would rely on a third party authority like your bank, PayPal or a credit card company to verify and facilitate the payment for the product; however, using cryptocurrency, there is no third party involved.  You, the consumer, are dealing directly with the retailer as your Bitcoin, Litecoin, etc, would simply be paid from your cryptocurrency wallet.  Yes, a wallet.


The main step is setting up your cryptocurrency wallet using an online software. Think of the wallet as a bank account where you send and receive the currency. A person can have multiple wallets that are stored online, in your computer harddrive or on your mobile device. Once you have your wallet, you’re ready to invest in one or more of the 1,500 different types of cryptocurrency directly from an online exchange.


There is now a major concern surrounding the fact that people are taking out mortgages, depleting their retirement funds or savings and even using credit cards as means to invest in Bitcoin and other cryptocurrencies.

Throughout these financial crazes, people adopt either a ‘fear of missing out’ or ‘get rich quick’ mentality, as they want to get into the game that their peers and potentially friends and family are profiting from. Unfortunately, when this happens people lose sight of assessing their current financial situation and put themselves at risk in hopes of a big return. Those especially vulnerable, are people who are already carrying heavy debt loads and getting into more debt to chase a profit they may never see.

Fortunately, I have yet to come across a situation where a person’s financial distress was caused by their investment in or use of Bitcoin or other cryptocurrency. However, in my experience as a Licensed Insolvency Trustee, I know that people might be reluctant to disclose the true cause of their financial difficulties because they are too embarrassed or ashamed.


The cryptocurrency market is extremely volatile. In 2009, Bitcoin’s value was worth only a few cents. In 2017, it’s price bounced from $1,000 to $20,000 and then dropped back down to $13,000.  With that much volatility, true value is hard to pinpoint, and combined with it’s newness and not fully understood technology, these concerns make cryptocurrencies a risky investment.

Let’s be clear, there are numerous stories of people who’ve got lucky with cryptocurrency—but this risky investing is not for everybody.  Especially, since using cryptocurrencies doesn’t protect you from the risk of being scammed. In 2017, the Canadian Anti Fraud Centre reported that Canadians lost more than $1.7m through scams connected to cryptocurrencies—doubling the numbers from 2016. If you do plan on investing in cryptocurrencies, it is important you make yourself aware of potential scams such as:

  • Scammers who have attempted to extort money from people using Bitcoin
  • Scammers who have posed as tax collectors from Canada Revenue Agency demanding immediate payment through cryptocurrency


Over-extending yourself on credit to purchase cryptocurrencies or depleting your savings intended to pay down debt could potentially position you in an insolvency situation.  With household debt levels in Canada already high, people simply can’t afford to lose more money and fall deeper into further debt.

The banks are taking notice as well. TD Bank announced on February 23rd, 2018 that it would be banning the purchase of cryptocurrency with its credit cards to protect its customers as well as the bank. This ban announcement joins the wave of bans globally from other major banks.


If you are thinking about investing in a cryptocurrency or other risky investment, please consider the following steps before making your purchase:

  • Educate yourself & seek professional advice. Take the time to do the research and talk to a professional investment advisor about the cryptocurrency market.  You should have a solid understanding and realistic expectation of what you’re investing in.
  • If you don’t have the money, don’t invest. Focus your efforts on paying down your debt first or building your emergency fund/savings.  You do have control over in seeing your debt go away and having a comfortable cushion of savings.  You don’t have control over your return on investment in the cryptocurrency market.
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