Words and language are very powerful. They not only affect how an idea is conveyed, but also frame our perceptions and attach values to the idea.
Recent news reports on individuals in Singapore losing money on cryptocurrencies highlight the danger of adopting overly positive financial vocabulary to guide our actions in managing money.
In the financial world today, "investing" does not only mean allocating our money into assets that can generate a stream of income, but also refers to purchasing assets and betting on their prices to rise in the future.
While the latter may be a form of gambling, it gives us greater conviction that we are doing the right thing with our money when we describe ourselves as "investing" rather than "gambling".
When digital tokens are labelled as "cryptocurrencies" or "stablecoins", it gives us a sense of familiarity in associating them with ordinary notes and coins in our wallets.
Words such as "currencies" and "coins" give us the impression that these digital tokens can store value and function as a medium of exchange to purchase anything that we want, just like the money we hold in our hand.
It is therefore no surprise that some have highlighted the possibility of people misinterpreting "stablecoins" following the recent meltdown of the stablecoin TerraUSD and its affiliated cryptocurrency Luna.
As for the idea of "decentralised finance", it certainly sounds noble and liberating to envision a financial system that is democratised and therefore allows ordinary folk to have full control of their own finances, until we realise it also means hackers or scammers can easily steal money from our e-wallets.
The point here is not to rewrite the financial language established, but rather to remind ourselves to exercise the highest level of caution and conscience when it comes to putting our hard-earned money into financial products.
Greed will always come and knock on our doors to convince us that we are "investing" and not "gambling", and that stablecoins are just coins. Wong Wan Hoong
