Your friend just made $400 on a coin you had never heard of until he sent you the screenshot. You're looking at it, thinking: should I have gotten in on that?
This is the crypto loop, and it runs on social media around the clock. Before you send any money anywhere, let's slow down and actually look at what's happening.
What Crypto Actually Is
Cryptocurrency is digital money that exists on something called a blockchain: a public ledger shared across thousands of computers. Nobody owns it, and there's no government guarantee behind it the way there is behind a Canadian $20 bill.
Bitcoin was the first, created in 2009. Since then, thousands of other coins have been created, ranging from Ethereum (which has genuine technology behind it) to meme coins invented last week by people you'll never meet.
A handful of crypto projects have real use cases behind them, and plenty of the rest have little more than a name.
Crypto is a speculative asset, which means its value rests almost entirely on what other people will pay for it in the future. When you buy a share of a company, which is what investing normally means, there is a business underneath it, one that earns money and can pay some of it out to you as a dividend. Underneath a coin there is no business earning money for you, whatever technology sits behind it, so the price is whatever people believe it is worth right now.
Why the Hype Is So Loud
Crypto runs on attention. Someone talks up a coin, so more people buy it. The price climbs, and the climb gives the next person something even louder to say.
Social media is the perfect machine for this. TikTok and YouTube reward high-energy predictions. "This coin is about to 10x" gets clicks, and nobody has ever gone viral saying a coin will probably sit flat until spring.
Influencers get paid to promote specific coins, and a lot of them skip the part where they say so. They post the gains and leave the losses in the drafts folder.
Crypto feels like the most exciting thing happening because it has been engineered to feel that way.
The Volatility Is Real and It's Severe
Bitcoin, the most established cryptocurrency in the world, has lost over 80% of its value twice since it was created. Between late 2021 and mid-2022, it dropped from roughly $80,000 CAD to under $25,000. For anyone who bought near the top, that was a catastrophic loss.
Smaller coins swing far harder than that.
If you put $500 in a coin and it drops 70%, you have $150 left, and for most people the missing $350 was money they actually needed. There is no waiting that out.
The screenshot your friend sent shows his gain and leaves out everyone who bought that same coin two weeks earlier and is still down 60%.
How the Scams Find You Where You Already Are
Crypto scams are sophisticated and designed to find you exactly where you spend your time.
Pump-and-dump schemes work like this: a group of people (often coordinated in a private Discord or Telegram) buy up a low-value coin without drawing attention, then start hyping it in public. The price spikes and outsiders pile in. That is when the original group sells, right at the top, and the price collapses on everyone who bought late.
Hacked social media accounts belonging to real celebrities have been used to promote coins to millions of followers. Fake investment groups promise guaranteed returns. If someone you met online offers to help you trade crypto, walk away. Same if they want access to your wallet, and same if they promise you'll double your money in a week. These are known fraud patterns costing Canadian teens real money every year.
There is no such thing as a guaranteed return in crypto. Anyone saying otherwise is either uninformed or running a scam.
Ask Whether You Could Lose All of It and Be Fine
Before you ask whether the coin will go up, ask a question you can actually answer: could I lose every dollar of this and still be okay?
Sort your money into three rough categories and the answer gets clearer.
Money you need in the next six to twelve months (school costs, rent, emergencies, your phone bill) should never go into crypto. If the market is down 50% when you need the cash, you have to sell at a loss.
Money you've set aside for bigger goals (a TFSA, savings you're building toward something specific, anything you've actually planned for) belongs somewhere stable, and a chart that can drop 70% in under a year does not qualify.
Money you could genuinely afford to watch disappear is a different conversation. Some people put a small amount there as a speculative bet, with eyes open, and that only makes sense once the first two categories are covered.
Most teens have no third category at all. Everything they have is category one or category two money, and crypto marketing is built to make them forget that.
Whose Money You Would Actually Be Risking
You don't have to make this into a big theological thing, but one question deserves an honest answer: what is this money actually for?
The biblical frame for money is stewardship: what is in your account was entrusted to you by God, and you are managing it on his behalf. That changes the questions you ask. A steward thinks about the risk before he thinks about the upside, and he is slow to put what he was handed into something he does not understand because a stranger online said to.
Proverbs 21:5 says: "The plans of the diligent lead to profit as surely as haste leads to poverty." That was written thousands of years before crypto existed. It describes crypto culture exactly.
Risk on its own is allowed. It turns into a problem when the money you're risking is money you needed and the thing you bought is something you don't understand. Buy it because you felt left out, and you have the whole crypto trap in one move.
Before You Send a Single Dollar
Before you put any money into crypto, answer these three questions out loud:
- What does this coin actually do, and did I learn that from somewhere more reliable than a TikTok?
- If I lost all of this money tomorrow, would I still be financially okay?
- Am I buying because I understand it, or because I don't want to miss out?
If you can't answer the first one clearly, don't buy. Same if the answer to the second is no. If the honest answer to the third is mostly fear of missing out, wait a week and see whether the urgency survives.
A coin with real value behind it will still be there next month, so a week of waiting costs you nothing. If the coin can't outlast the week, all you missed was the loss.