Why I don’t want bitcoin in my 401(k)

At long last, the company managing my 401(k) plan will allow me to bet up to 20% of my retirement funds on a digital Ponzi scheme that generates no income and has no practical use.

Fidelity Investments, the biggest manager of 401(k) plans in the country, has announced that it will soon allow bitcoin BTCUSD, +0.07% among the investible assets, alongside stocks, bonds, real-estate investment trusts and the like. This is probably terrific news for bitcoin. But whether it is equally good news for 401(k) plans remains to be seen.

Why is this good for bitcoin? Simple. It gives this very, very, very long string of 1s and 0s a further patina of financial respectability. If a company as renowned as Fidelity is going to allow it in retirement plans, it must be OK, right? 

And, naturally, this move will greatly increase the market for bitcoin, whose only use seems to be to sell it to other people. Fidelity handles the retirement accounts of 23,000 companies. Its clients have over $11 trillion in their accounts. That’s about 14 times the alleged value of all the bitcoin in the world

I asked Fidelity why they were making this move. The short answer: Because the customers want it. Fidelity manages 401(k) and other defined-contribution plans on behalf of employers. And a growing number of them have been asking for access to bitcoin — and other “cryptocurrencies” as part of the plan.

The company added: “Fidelity encourages participants to maintain an asset mix within their 401(k) that aligns with their retirement horizon and risk tolerance. 

Like any other asset within their 401(k), individuals should make sure that any investment in bitcoin is part of their overall asset allocation strategy that maps to their long-term retirement savings goals.” 

Fidelity says it will work with employers to produce “educational materials” in order to “help employees learn more about digital assets so that they can make informed investment decisions.”

I can’t wait to read them. Maybe one of them will finally explain to me what bitcoin is for. I’ve been waiting for years for someone to do this.

It doesn’t pay interest or dividends. It doesn’t earn income. And it doesn’t have any particular purpose. It’s not better than cash, Apple Pay, Venmo, credit cards, debit cards and so on for buying stuff. It’s not more useful than my bank for transferring money, domestically or internationally. 

It’s not even as good for money laundering as gold. OK, so I can see it might be useful to get your money out of a war zone or, say, Russia in an emergency. But is that a $800 billion utility?

Meanwhile, in a global climate emergency, it is an unmitigated environmental disaster. The bitcoin network uses more electricity than Poland, for no good purpose whatsoever. Ending this cryptocurrency mania would be the simplest, quickest win for the green economy.

I love it when the same people on social media “like” Greta Thunberg’s latest comments, and share the latest alarming news about climate change, and then. boast about all the cryptocurrencies they’re trading.

The sole purpose of bitcoin is making money — real money, in things like dollars — by trading it. bitcoin enthusiasts generally dismiss old skeptics like me by pointing out how much it has risen in price: From nothing 13 years ago, and about $100 a decade ago, to around $40,000 today. And of course they’re right. It has.


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