03/07/2018
I have been getting a lot of clients asking about Bit Coin and Cryptocurrency. As you know, Bit Coin is a Cryptocurrency. For this post I am discussing Cryptocurrency in general. The questions I get are as you can imagine; are they a good investment? We all know what these investments have been doing these past few months. This is really something you have to decide for yourself but keep these two important things in mind.
First, there are currently no Cryptocurrencies that are regulated. This means a number of things. It is not backed by any recognized banking institution. This means it's value is virtual. It is also not represented by regulated trading institutions like Wall Street, NASDAQ, Federal Reserve, etc and you cannot buy or sell it through any of these institutions. You have to purchase and sell it through Cryptocurrency clearing houses online often referred to as Coin Banks. They are not banks though and they do not back or guarantee the amount of your Cryptocurrency placed with them or even the transaction.
Second, because it is not regulated, it has an uncertain future. Right now Cryptocurrecy is banned in at least 8 countries and there will be more countries adding themselves to this list. This is something that people in the industry have been drawing giant question marks on lately. Being unregulated and not backed by anything, why haven't more countries banned it? Why hasn't the U.S. and other countries made a push to regulate the purchase and sale of Cryptocurrencies and have them backed by something tangible or just ban them altogether. This is a move that many see as inevitable especially in the U.S. a country that even regulates the amount of foreign currency their citizens can purchase and tracks and taxes purchases or precious metals. If the U.S. bans Cryptocurrency, it will have a very short life and not being regulated or backed by anything, don't count on being able to cash it in and if it isn't banned everywhere, once it is banned in more countries, especially the U.S. which is currently the strongest economy, the value of Cryptocurrencies, ie: your investment is going to diminish.
That being said, if you are not looking at a long term investment plan and you can get out quickly if you need to, Cryptocurrency might be a good investment for you. If you are looking at it as a long term investment though, these points should be definite cause for concern.
