Why crypto is more than an investment
Money never stands still. Those who left their savings in an ordinary savings account ten years ago saw its purchasing power steadily decline due to inflation, whilst interest rates barely compensated. Meanwhile, an alternative financial system quietly grew into a global market worth thousands of billions of euros: cryptocurrency.
Crypto is still a loaded concept for many people. It conjures up images of young speculators wanting to get rich quick, of market crashes and dubious coins. That image is only half right. Because behind the volatility lies a fundamental idea that is also relevant for sensible, self-reliant people: the ability to manage your wealth outside the traditional banking system.
Financial freedom is at the heart of the matter here. Cryptocurrency gives people the ability to store and transfer value without permission from a bank, a government or a central institution. Whether that is always desirable or realistic is another question. But the principle deserves attention, especially in a world where geopolitical tensions, inflation and banking crises regularly rear their heads.
What exactly is cryptocurrency?
Cryptocurrency is digital money that works via a technology called ‘blockchain’. Put simply, a blockchain is a shared, tamper-proof ledger of transactions that is maintained on thousands of computers simultaneously. There is no central bank or government that controls it.
De Nederlandsche Bank describes crypto assets as means of transferring value via the internet, where trading always takes place via a blockchain. Compare it to a railway line along which digital trains run.
The most well-known digital currencies
Not all crypto is the same. Broadly speaking, there are three categories:
- Bitcoin (BTC): The first and most well-known. Has a fixed maximum supply of 21 million coins, which in theory protects it against inflation. Bitcoin is often compared to digital gold.
- Ethereum (ETH): A platform for decentralised applications. Ethereum has a broader technological function than pure store of value.
- Stablecoins (such as USDC or USDT): Digital coins pegged to a traditional currency such as the dollar. Less volatile, useful as an intermediate step.
In addition, there are hundreds of other coins: from serious projects to downright speculative tokens that can plummet in value to zero.
Financial freedom: the real argument for crypto
The concept of ‘financial freedom’ sounds like marketing speak, but it has a concrete meaning. In the current banking system, your balances depend on the solvency of your bank, the decisions of central banks and the regulations of governments. During the Cypriot banking crisis in 2013, bank accounts were temporarily frozen and savers lost part of their money through a forced ‘bail-in’. In Argentina and Venezuela, citizens saw their savings largely evaporate due to hyperinflation.
💡 Origin
Bitcoin was launched in 2008 by an anonymous person or group under the name Satoshi Nakamoto, shortly after the financial crisis of that year. The timing was no coincidence: the idea was explicitly to offer an alternative to a banking system that had just demonstrated how vulnerable it is.
Cryptocurrency offers, in principle, a way out: you can store value in a digital currency that no one can freeze or confiscate. At least, as long as you control the keys. That last point is crucial, and we’ll come back to that later.
The right to financial privacy
There is a less discussed aspect of crypto that is becoming increasingly relevant: privacy. Governments and tax authorities are getting more and more tools to monitor financial flows. Since 2024, crypto companies in the EU have been obliged to share customer data with tax authorities, through European legislation (DAC8). Crypto transactions via authorised platforms are therefore anything but anonymous.
That is not necessarily wrong. Money laundering and tax evasion are real problems, but it shows that the space for financial privacy is becoming smaller. For those who take control of their own wealth seriously, that is a relevant fact.
Crypto as part of a diversified strategy
Let’s be honest: crypto is not a stable investment. Prices can rise or fall by tens of per cent within days. Those who bought at the peak in 2021 and had to sell in 2022 lost a large part of their investment. Those who held that same amount for five years are likely to be in a very different position.
Diversification is not a luxury, but a necessity
Financial self-reliance does not mean putting all your eggs in one basket. A considered approach combines multiple asset classes:
- A solid foundation in broad ETFs or shares
- Possibly physical gold or silver as a hedge against systemic risks
- A limited percentage in crypto as a high-risk component
Most financial advisers who take crypto seriously recommend putting no more than five to ten per cent of your freely invested assets into digital currencies. That is enough to benefit from potential growth, but limits the loss in the event of a crash.
Bitcoin as protection against inflation?
The idea that Bitcoin works as protection against inflation is popular but nuanced. In the short term, Bitcoin is anything but stable. In the long term – over periods of five years or more – Bitcoin has historically performed considerably better than most traditional assets. Whether that will also be the case in the future, no one knows.
How do you get started safely?
Getting into crypto doesn’t have to be complicated, but does require preparation. The biggest mistake people make is leaving their coins on an exchange.
Exchanges versus self-custody
An exchange is a platform where you buy and sell crypto. Bitvavo, Kraken or Coinbase are well-known examples. Convenient to start with, but if you leave your coins on such a platform, they are technically the property of the exchange, not yours. If the platform goes bankrupt or gets hacked, you could lose your money. The collapse of FTX in 2022 (in which customers lost billions in assets) is the best-known example.
Hardware wallets: the vault for your crypto
Those who are serious about crypto store their coins in a hardware wallet: a small physical device that keeps your private keys offline, disconnected from the internet. Well-known names are Ledger, Trezor and the Belgian NGRAVE. The latter is the first financial product in the world with the highest security certification (EAL7).
🗝️ Not your key? Not your coin!
This is a popular saying in the crypto world. As long as you control the private key, you control the money. Once a third party holds that key, you are dependent on that party.
The basic principles of secure crypto management:
- Store your seed phrase (recovery phrase of 12 or 24 words) on paper or metal, never digitally
- Always buy hardware wallets via the official website or authorised resellers
- Use two-factor authentication on every exchange
- Never send large amounts directly from an exchange: transfer them to your own wallet
Regulation: the rules are changing rapidly
The European Union has introduced a comprehensive regulatory framework with the MiCA Regulation (Markets in Crypto Assets Regulation) at the end of 2024. Crypto companies operating in the EU have since been required to have a licence and comply with strict transparency requirements.
For users, this has two sides. On the one hand, more protection: misleading advertising is prohibited, and companies must warn customers about risks. On the other hand, anonymity is further reduced: transactions between platforms must be accompanied by identity details of both sender and recipient.
In Belgium and the Netherlands, crypto services fall under the supervision of the FSMA and the AFM/DNB respectively. For private investors in the Netherlands, crypto falls under box 3: assets are taxed based on their value on 1 January of the tax year.
Conclusion
Cryptocurrency is not a miracle cure and no guarantee of wealth. It is a technology with real advantages (decentralisation, cross-border transactions, financial sovereignty), but also real risks, from volatility to regulatory changes. Those who regard it as a small but conscious component of a broader financial strategy, and combine that approach with sound self-custody, have a tool at their disposal that can have value in uncertain times. As with any investment: understand what you are buying, ensure you manage it yourself, and never invest more than you are prepared to lose.
