Bitcoin. Ethereum. Litecoin. Ripple. These are just four of the
The answer to that question may vary per day, week, month, or year. These altcoins are classified as commodities, not currencies, by the Commodity Futures Trading Commission. Like all commodities, their value can quickly change.1
This spring, a bitcoin bubble popped
As 2017 unfolded, the value of a single bitcoin tripled, reaching more than $3,000 in May. Just weeks later, it was down to around $2,245, sliding roughly 25%. That tumble paled in comparison to the dive it took starting in late
Ethereum went on an even wilder ride
An ether was worth $8 when 2017 started. By June, its value was hovering near $400. In mid-July, the price slipped below $200.2
If bitcoin and
As the above examples show, money invested in these commodities can also easily be lost. Extreme volatility aside, ethical and moral issues are also complicating the acceptance of altcoins.
Cryptocurrency may be revolutionary, but it is also shadowy. In the opinion of the Securities and Exchange Commission, bitcoin and other little-regulated altcoins are ripe for criminal activity, particularly fraud and currency manipulation. The Treasury Department’s Financial Crimes Enforcement Network agrees.1
Cryptocurrencies have been linked to money laundering, a common practice of drug cartels. They are also convenient for online gambling operations. Does an investor really want to risk supporting these activities? Some analysts argue that these doings have been fundamental to the rise of bitcoin and ethereum.2
You may be curious to know how the Internal Revenue Service sees
As more and more businesses are taking digital currency payments, altcoins will remain economically viable. Analysts at Morgan Stanley, however, see the cryptocurrency rally slowing soon unless governments start to provide federal oversight for bitcoin and its ilk.3
If you are nearing retirement and marveling over the rise of bitcoin and
Altcoins are spicing up the investment world these days, but you may be better off with a plain vanilla portfolio.
Robert J. Tuzzo, CLU®, ChFC®, MSFS
Total Financial Concepts, Inc
106 Apple Street Suite 204
Tinton Falls, NJ 07724
1 - tinyurl.com/y8j7q8qy [6/5/17]
2 - marketwatch.com/story/ethereum-has-lost-175-billion-in-market-value-in-4-weeks-2017-07-11 [7/11/17]
3 - marketwatch.com/story/stay-away-from-bitcoin-its-complete-garbage-2017-06-15/ [6/15/17]
4 - cnbc.com/2016/10/24/safe-investing-strategies-for-the-us-election-and-uncertain-times.html [10/24/16]
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