There has been a lot of news in the media lately about cryptocurrencies and their potential as investments, particularly Bitcoin. If you google “Bitcoin Investment”, you’ll see that there are a wide range of opinions about the viability of cryptocurrencies as investments. The problem with these stories is that the intended purpose of cryptocurrencies and “block chain technology” was to create a more efficient medium for exchange, not to be an investment vehicle. The only reason the price of these currencies has been so volatile is because their supply is limited and they have been speculated on by consumers across the globe. Cryptocurrencies are not investments. They are not backed up the central bank of any government. They are susceptible to cybersecurity breaches and hacks. They have no intrinsic value (ability to produce income). Their price is set solely by supply and demand (Bitcoin has already had three crashes exceeding 85% since 2010). The Chairman of the SEC, the agency which is responsible for protecting consumers from securities fraud or manipulation has said that “there is substantially less investor protection” and “greater opportunities for fraud and manipulation” with respect to cryptocurrencies. Our advice is to not get drawn into the hype and frenzy surrounding cryptocurrencies. An example: when the Long-Island Ice Tea company changed their name to Long Blockchain Corp on December 20, 2017 their stock price soared by 500%. Our role is to make sure that our clients continue to focus on smart, well diversified, and long-term investments.
Carl Richards, CFP wrote a great article in the New York Times that lines right up with our thoughts about cryptocurrencies and Bitcoin.
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