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Former President Donald Trump announced the launch of a new cryptocurrency exchange World Liberty Financial where people can buy, sell and trade digital currencies like Bitcoin. Now the exchange has also taken the next big step of issuing its very own cryptocurrency: WLFI.
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Because Trump’s name is attached, this new digital coin is drawing a lot of attention. But should you put your own money in? We spoke to two experts who gave us their take.
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Any financial advisor will tell you to put your money in an asset that has a proven record of stability and growth. Trump’s cryptocurrency is brand new and doesn’t have any history to back it up. Just because it has a familiar name attached to it, that doesn’t mean it will perform well.
“The best things that you can invest in are things that you understand, and that have a proven track record of success,” said Joe Schmitz, Jr., founder and CEO of Peak Retirement Planning. “You should not invest in things because people are speculating that it could make it big.”
Crypto has made huge gains for some, but it’s also caused huge losses, too. Some people do make a lot of money in crypto. But what worked for one person doesn’t guarantee that the same thing will work for you. If you’re considering putting money into Trump’s crypto, remember that there’s no way to know whether any new cryptocurrency will perform well.
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World Liberty Financial announced that their currency, WLFI, will become a stablecoin. That means that, theoretically at least, its value will be locked one-to-one with the U.S. dollar. This is supposed to keep the extreme price swings of regular cryptocurrencies from happening. But there are still big risks. A stablecoin relies on World Liberty Financial to keep its value. You have to trust that World Liberty Financial has enough cash reserves to back up every coin they issue.
“I do not advise putting money into Trump’s crypto or any other cryptocurrency,” said Thomas J. Brock, of RetireGuide.com. “Cryptocurrency is a highly speculative asset; it is not a prudent investment. Cryptocurrency does not yield any income, and it has no intrinsic economic value. The only way you can make money with cryptocurrency is if you can sell it to someone at a higher price than what you paid. Unfortunately, given cryptocurrency’s incredibly volatile nature, properly timing a purchase and sale is hard to do.”