You have no doubt heard of Bitcoin and cryptocurrency, but may have heard wildly conflicting information about it.
There are stories about people who have made fortunes off it, and there are also plenty of experts who say it’s just a fad with no long-term investment viability.
So what’s the truth and how does cryptocurrency work?
Madison Troyer of Stacker recently tackled the subject, breaking it down into simple terms. In short, cryptocurrency is digital currency encrypted with a form of protection known as cryptography.
It is measures like this that create part of the appeal of cryptocurrency, as it ensures it cannot be stolen or fabricated like cash or credit cards.
Fred Hubler, Chief Wealth Strategist for Creative Capital Wealth Management Group says that crypto isn’t the big story, but blockchain technology is.
“Think of blockchain as the App Store, and crypto (Bitcoin/Ethereum, etc) are just apps in the App Store, built on the blockchain technology”, says Hubler.
“When I explain it to clients” continues Hubler, “I tell them that blockchain will create scarcity of any digital asset. So everything that is digital and needs to be protected (medical records, title insurance, transactions between parties that don’t know or trust each other) will benefit from using some version of blockchain”
If you are wondering if something like bitcoin provides you with all the same flexibility as making purchases on a card, it can take a couple of extra steps. You can receive it for services, and apps like PayPal will process it, but it’s still not something you can just use directly at a store.
Part of the reason cryptocurrency is harder to purchase things with is because many are still skeptical it will continue to even be used as a currency years from now.
Just like the value of the dollar fluctuates, the value of cryptocurrencies does as well, though much more drastically.
Cryptocurrency is a bit like an investment, with many holding onto it hoping for a strong upwards spike to occur like in years past before cashing it in.
Another factor that may explain why you aren’t as knowledgeable about cryptocurrency? There are currently over 10,000 types of it. Ones like Bitcoin and Dogecoin are some of the more popular ones, but there are many more options out there. So if you feel like you are in the dark about this topic, that is normal. Trying to learn about all cryptocurrencies would be overwhelming.
Unfortunately, there is no definitive answer to whether getting involved in cryptocurrency is wise for you. You will hear differing arguments about its future, so like many money matters, you may want to consult with a trusted financial advisor before making any decisions.
If you are interested in learning more about cryptocurrency, read the original article from Stacker by clicking here.
Want to know if you’re on the right path financially? Fred Hubler’s Second Opinion Service (SOS) is a no-obligation review with Creative Capital Wealth Management Group‘s Chief Wealth Strategist.
It’s simply not possible to get a reliable second opinion from the same person who gave you the first one. Click here to schedule an SOS meeting with Fred and his team.