What About Bitcoin?

Crypto Curiosity

Record breaking prices propelled Bitcoin into the mainstream news this spring. We have fielded more and more questions about cryptocurrencies in general and Bitcoin specifically. It appears likely that blockchain technology and maybe some cryptocurrencies may survive. Ultimately, how they are regulated and how widely they will be used as currency or for investment is another question entirely.

Price Swings

Common characteristics of reliable currencies are liquidity and stability. Extreme price swings in a currency or investment suggest the opposite of stability. Bitcoin prices, for example, just this year have fluctuated from over $63,000 to below $30,000 over the span of a few months.

Regulatory Hurdles

In 2017, Chinese authorities planned to shut-down local bitcoin trading exchanges and Chinese regulators banned the sale of initial coin offerings (ICO’s).  A growing concern with crypto currencies is the amount of energy required to mine crypto coins. The Inner Mongolia region of China has become a hotbed for Bitcoin mining. According to CNBC, local government in the region recently considered penalties for companies and individuals involved in mining to curb crypto power consumption.

Bitcoin & Tesla

Another recent development involved Tesla’s decision to accept Bitcoin as payment for the purchase of Tesla vehicles. After learning about extraordinary energy consumption and resulting environmental impact of crypto mining, Tesla CEO Elon Musk reversed a decision that allowed Tesla vehicles to be purchased with Bitcoin.

 

Disclaimer
This material is provided by Schmitt Wealth Advisers for informational purposes only.  It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product.  Opinions expressed by Schmitt Wealth Advisers are based on economic or market conditions at the time this material was written.  Economies and markets fluctuate.  Actual economic or market events may turn out differently than anticipated.  Facts presented have been obtained from publicly available sources believed to be reliable.  Schmitt Wealth Advisers, however, cannot guarantee the accuracy or completeness of such information.  Past performance may not be indicative of future results.

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