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What is Cryptocurrency, and is it a Good Investment?

 

Why is there all of this talk about cryptocurrencies, and should we be listening? Bitcoin began 2017 worth $1,000 per coin, but closed the year at more than $19,000. Other so-called cryptocurrencies—digital currency that is sent and received electronically—are also soaring in value. There are over 1,000 cryptocurrencies in existence.

The perceived value of one cryptocurrency over another is based on the notion that the holder of the digital currency gains exclusive access to a given type of blockchain technology,” says Mark Williams (Questrom’93), a Questrom School of Business master lecturer in finance and executive-in-residence. Blockchain uses a volunteer computer network, controlled by no one, to record cyber-currency transactions that while public, link to just an electronic address. Enthusiasts foresee blockchain technology being applied to stocks, bonds, contracts, and other assets.

Some speculators view this as a lottery ticket, and if the market adopts your blockchain type, the payday will be astronomical. But this has also created an extreme asset bubble. Betting on a particular cryptocurrency is fraught with uncertainty and high risk.

My advice to those contemplating buying cryptocurrencies: do your homework first, understand your personal risk tolerance, and if interested, commit only an amount of money that you are willing to lose and that won’t impact you financially if it is a total bust. For risk-adverse investors, stick with traditional stock and bond investing, companies that have real assets, real boards, real management, real cash flow, and real regulation.

A mandatory condition for safe investments in the crypto-economy is a basic computer literacy. If you don’t know how computers work, then think twice before putting your wealth into cryptocurrencies.

Instead of actually buying cryptocurrencies, or coins, you can invest in the building blocks of the currencies, blockchain technology.  Blockchain technology powers Bitcoin and other cryptocurrencies, but there are many ways to invest in blockchain tech without pouring your money into these digital currencies. The first place to look into blockchain startups. The second option is crowdfunding platforms, as blockchain startups in their infancy will often look into crowdfunding to get off the ground.

So, what does the Oracle of Omaha (Warren Buffet) have to say about cryptocurrencies? “In terms of cryptocurrencies, generally, I can say almost with certainty that they will come to a bad ending,” Buffett recently said on CNBC, noting that he didn’t understand Bitcoin and other blockchain-based digital assets. It’s not the first time Buffett has dismissed cryptocurrencies. In 2014, the octogenarian investor dubbed Bitcoin a “mirage,” warning investors to “stay away from it.”

If you have questions, we can help. We offer a no-obligation first consultation. You can schedule your appointment today by calling us at 216.521.1711, emailing us at Quarterback@Lineweaver.net, or by clicking here.

Most Recent

What is Cryptocurrency, and is it a Good Investment?

By Lineweaver Financial Group
June 05, 2018 Category: Cryptocurrency, Investment, Bitcoin

Why is there all of this talk about cryptocurrencies, and should we be listening? Bitcoin began 2017 worth $1,000 per coin, but closed the year at more than $19,000. Other so-called cryptocurrenciesdigital currency that is sent and received electronicallyare also soaring in value. There are over 1,000 cryptocurrencies in existence. The perceived value of one cryptocurrency over another is based on the notion that the holder of the digital currency gains exclusive access to a given type of blockchain technology, says Mark Williams (Questrom93), a Questrom School of Business master lecturer in finance and executive-in-residence. Blockchain uses a volunteer computer network, controlled by no one, to record cyber-currency transactions that while public, link to just an electronic address. Enthusiasts foresee blockchain technology being applied to stocks, bonds, contracts, and other assets. Some speculators view this as a lottery ticket, and if the market adopts your blockchain type, the

Helping You Stay Calm When the Market is NOT

By Lineweaver Financial Group
May 17, 2018 Category: Market Volatility, Investing

Investing and going it alone is easy when the markets are up, as they were last year. But its a different game when markets are volatile, as they have been this year, or when markets are down, as they definitely will be at some point in the future. We help our clients put these different stages of the market cycle in perspective. Who helps you? Our goal is the same as our clients; to develop a long term strategy and stay invested. That was easier said than done last quarter when the S P 500 dropped 10% in 11 days and then again 5% a month later. And, this quarter promises just as much excitement. Triggers for market volatility can come in many different shapes and sizespolicy uncertainty in Washington or Beijing, earnings reports, geopolitical unrest. And market swings can rattle even seasoned investors nerves. But volatility is part and parcel of investing. So put such uncertain times to good use as a motivator to help ensure your investment strategy aligns with your long-term goals,

Your Retirement Income and The New Trump Tax Plan

By Lineweaver Financial Group
April 26, 2018 Category: General

As many of you know, Congress has passed a sweeping overhaul to the U.S. tax code just a few months ago, the largest change to the U.S. tax code in 30 years. The new rules do not change long-term capital gains tax rates themselves for the 2018 tax year theyre 0%, 15% and 20%, the same as for 2017. But the thresholds have changed, as you can see below: 2018 Capital Gains Tax Rates Long-term capital gains tax rate Single Married, filing jointly Head of Household Married, filing separately 0% $0 to $38,600 $0 to $77,200 $0 to $51,700 $0 to $38,600 15% $38,601 to $425,800 $77,201 to $479,000 $51,701 to $452,400 $38,601 to $239,500 20% $425,801 or more $479,001 or more $452,401 or more $239,501 or more * Short-term capital gains are taxed as ordinary income. Essentially, that means if youre married and file jointly, and you can keep your income below $77,201 you will pay nothing in capital gains. Real Estate Tax Benefits Investment

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