Helpful miscellaneous articles
regarding our retirement plan and planning.
Like you, I review my retirement nestegg and plan from time to
time. Recently, I went though some continued
education for some credentials I maintain and it occurred to me that we all
could use a review about these issues.
So with your help, we will share and post articles and info that may be
helpful and of interest to many of you in this section.
Crypto
currency……..Worth a Look?
Crypto
currency investments are flooding the financial scene. There are many many debates going on about
the investment in Bitcoin (BTC), Ethereum (ETH) Litecoin (LTC) or the
like. The biggest arguments circulating
FOR digital currency seem to include;
1.
access and liquidity
2.
bypassing the banking system
3.
Independence from the government’s fiat currency
4.
hedge for inflation
5.
potential for investment ROI
6.
where should assets be when or if there is a collapse with the government’s
commerce system?
So
it seems when something new like this presents itself it may be time to do a
little research to see if it may or may not be right for your portfolio. Just to let you know, large scale brokerage
firms such as Fidelity and Schwab are allowing investors to stick their toe in
the water with crypto but not actually own the coins in the accounts. In order for someone to “own” crypto currency
inside ones IRA you have to look at a platform such as www.ITrustCapital.com or the like.
So below is a
simple pro and con paper to introduce us to the big concepts.
Plenty of
research needs to be done to either dive in or stay away.
The 8 Pros
And Cons Of Cryptocurrency You Need To Know
In this day and age, no matter where you
fall on the financial spectrum — whether you’re a traditionalist who prefers
hard cash or an investment aficionado — you’ve almost certainly heard of
cryptocurrency and maybe even some of the pros and cons of cryptocurrency . Cryptocurrency
has grown in popularity in recent years, with approximately 14% of the US
population owning some form of cryptocurrency as of March 2021. Furthermore,
Bitcoin is owned by an estimated 46 million people in the United States.
Bitcoin is one of the most well-known and
widely used cryptocurrencies. It’s also where cryptocurrency newbies might
consider dipping their toes into cryptocurrency investing. So, if you’re
wondering, “Is Bitcoin worth investing in?” or “Is Bitcoin a good investment?”
knowing the benefits and drawbacks of Bitcoin can help.
|
Pros
of Cryptocurrency |
Cons
of Cryptocurrency |
|
Accessibility and liquidity |
Volatility |
|
User anonymity and transparency |
No government regulations |
|
Independence from a central authority |
Irreversible |
|
High return potential |
Limited use |
Pros
And Cons of Cryptocurrency
Advantages of Bitcoin
Despite the fact that Bitcoin was launched
in 2009, it is still regarded a new type of currency with a lot of
misunderstanding. Understanding the advantages of Bitcoin will help you decide
if it’s a good investment for you.
1. Accessibility and Liquidity
One of the most appealing aspects of
cryptocurrency, and Bitcoin is no exception, is that it frequently sees no
borders. Bitcoin has the advantage of being a very accessible and adaptable
money. Because sending bitcoins to another user takes only a few minutes, it
may be used to buy products and services from the ever-growing number of
businesses who accept it. This enables spending money in another nation and
converting currencies easy, with the added benefit of low or no costs. Bitcoins
are also easy to sell at any time.
2. User Anonymity and Transparency
Bitcoin users are recognized by numerical
identifiers and can have several public keys, albeit they are not fully
anonymous. This eliminates public monitoring and prevents transactions from
being linked back to the user. Despite the fact that the transactions are
constantly visible, which provides transparency, the blockchain technology
ensures that they are protected from fraud. Furthermore, you, as the wallet
owner, would be the only one who knows how many bitcoins you have.
Even if the address for your wallet became
public, you could construct a new wallet address for greater protection and
anonymity. In contrast to a typical money system in which personal information
might be leaked from a bank, Bitcoin transactions do not require any additional
personal information, which enhances user privacy.
3. Independence From Central Authority
Bitcoin is a decentralized currency, which
means it isn’t controlled by a single government or central bank. This implies
that your coins are unlikely to be frozen or demanded by authorities. There’s
also no method to tax Bitcoin in a practical way. Because the pricing isn’t
related to government policy, this theoretically provides people autonomy and
control over their money. And, in general, cryptocurrency users consider this
to be one of the most significant benefits of Bitcoin.
4. High Return Potential
Bitcoin values are notoriously volatile,
fluctuating dramatically monthly and sometimes daily. For example, Bitcoin
was valued at $975.70 in March 2017, and it soared to $20,089 in
December after only a few months. Bitcoin’s price reached an all-time high of
$64,000 in April 2021, just a few years later.
This demonstrates that, despite
considerable price volatility, cryptocurrency users may see this as one of
Bitcoin’s advantages since it might result in a high return potential. Many
investors and businesses have opted to embrace Bitcoin because a rising number
of users believe it is a potential global currency. This contributes to a
bigger return potential, particularly for those who purchased it at a lesser
price.
Furthermore, other investors anticipate
Bitcoin will continue to appreciate in value over time, with values approaching
$500,000 by 2025. Because of the fixed supply cap of 21 million coins, this is
the case. And that supply cap will most likely occur within a certain time
frame, which many feel will boost Bitcoin’s long-term worth.
Disadvantages of Bitcoin
Despite its quick development and growing
number of users, Bitcoin has certain drawbacks to consider, particularly if
you’re thinking, “Is it worth investing in Bitcoin?” The more information you
have, the better-informed judgment you can make about whether Bitcoin is worth
investing in.
5. Volatility
When Satoshi Nakamoto invented Bitcoin, he
imposed a limit of 21 million bitcoins that could ever exist, which is why some
people consider Bitcoin to be extremely rare. This scarcity is what makes
Bitcoin so valuable, but it’s also what causes its values to fluctuate, since
the price is now the only variable that can alter in order to maintain demand.
Other variables that impact Bitcoin’s
volatility include breaking news that is seen negatively by investors,
uncertainty about the currency’s future value and usage, and security breaches.
6. No Government Regulations
Sure, a decentralized currency is one of
the advantages of cryptocurrencies, but it can also be perceived as a drawback
of Bitcoin because it means that Bitcoin investments are unregulated. Unlike a
currency regulated by a central bank, Bitcoin transactions are unprotected by
law and are often irreversible, making them vulnerable to fraud.
Another disadvantage of Bitcoin’s
decentralized nature is that there is no assurance of a minimum value. As a
result, if a huge group of investors decides to stop using bitcoins and sell
them, the cryptocurrency’s value might plummet, affecting users who own
substantial amounts of the cryptocurrency.
7. Irreversible
Another problem is the lack of security, as
Bitcoin transactions are anonymous and uncontrolled. Because Bitcoin
transactions are irreversible and final, there is nothing that can be done if
the wrong amount or recipient is sent.
There’s also the possibility of losing
money. Many Bitcoin users opt to store their money in a cryptocurrency wallet,
putting their assets at danger if they lose access to their private key. Your
cash might become unavailable or gone totally in a matter of minutes if a hard
disk crashes or a virus corrupts the data or even your wallet.
8. Limited Use
Even while an increasing number of
organizations, such as Microsoft and certain Subway locations, accept Bitcoin,
it is still not universally recognized. Unlike using a credit or debit card,
this limits where you may spend your money.
Bottom Line: Is Bitcoin Worth Investing In?
Is it thus wise to invest in Bitcoin? Despite
the numerous advantages of cryptocurrencies and the advantages of Bitcoin in
particular, many people still regard it as a dangerous investment. However,
investing in Bitcoin, like any other investment, necessitates preliminary
study.
Examining a list of Bitcoin’s benefits and
drawbacks is merely the first step. It’s also a good idea to learn how
cryptocurrencies and crypto wallets function, as well as the market’s
accessibility and the accompanying expectations and hazards. If you do decide
to invest, keep in mind that there are various tools available to assist you
track your bitcoin investments, such as the Coinbase app.
Recommended Read
·
How Does Cryptocurrency Gain
Value?
(As with any of these informative articles,
anyone who needs someone to talk to about
this
very subject contact me and I can direct you to a knowledgeable advisor).
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