Are you following the Bitcoin trend? It keeps hitting new highs as ever more big money managers warm to idea of cryptocurrencies. Count me out for now. It’s not that I haven’t tried to convince myself of its potential. It’s that after all my research I still haven’t found a satisfying explanation for what it’s future use is.
Bitcoin jumped on everyone’s radar screen years ago as a digital currency. Yet it fails the big test of a currency – having a stable value. Bitcoin is way too volatile. Some companies are accepting it as payment (Tesla claims it will), but the very idea of using a currency that fluctuates so much doesn’t make sense to me. Say what you want about the value of the U.S. dollar. I like that it doesn’t move much on any given day.
The best explanation I’ve heard for Bitcoin’s use is as a hedge against inflation. It could be that, but only if everyone else continues to use it that way. Without use as an actual currency, Bitcoin is only worth what the next person is willing to pay for it. I run away from “assets” like that. Give me one that has an actual use.
I’m willing to admit that there may be an actual use for Bitcoin that I don’t foresee today. My best guess is that’s what people “investing” in it today are hoping for. I only invest in things I understand. This isn’t one of them.
About the Author: John O’Connor
John has more than ten years experience as an Investment Advisor. He focuses on devising and maintaining portfolios that meet individuals’ needs, investment research, and investment strategy. John has been recognized as a “FIVE STAR wealth manager” by Twin Cities Business Magazine 2016-2020.Legal Disclaimer: These posts do not constitute an offer or recommendation to buy or sell any securities or instruments or to participate in any particular investment or trading strategy. They are for informational purposes only. CTW gathers its data from sources it considers reliable. However, CTW makes no express or implied warranties regarding the accuracy of this information or any opinions expressed by the author and may update or change them without prior notification.