Robert Swarthout joins Casey on today's new episode to discuss cryptocurrency, digital assets, and block chain. Bitcoin is growing at a fast rate, but in the finance world it is still small. 46% of households recognize the term bitcoin and there are currently 13,285 crypto assets out there right now.
Essentially, it’s a JPEG. Casey spoke about v-bucks inside a video game. You take the cash and use it only inside the game. Crypto is like v-bucks. A lot of people said that it would be the new gold, but cryptocurrency is very speculative and is only 5 years old. It does not have the history and stability that gold has.
Bitcoin tends to move with the market. If the market is at all time highs, bitcoin seems to be at all time highs. Since bitcoin is so young, it would be interesting to do some research on this.
You are taking a risk by owning cryptocurrency because it is unregulated. Most investors are emotional and make bad decisions. It is typical for individual investors to buy crypto at the top and sell at the bottom. If you’re going to do it, put a few thousand into the fund and then just walk away so that it can sit over time.
At Wiser Wealth, we do not use crypto in our portfolios. This is because there is not a good vehicle for that right now. The market is waiting on a Bitcoin ETF or Mutual Fund - a basket would be preferable. Owning 1% of this in a portfolio would be best for now. Coinbase is currently the best way to purchase crypto as of today.
What are the tax implications? If you buy crypto and it goes down, on paper it’s a loss. It’s the same tax treatment as stock, but you can also do long-term gains on top of that. The hard part is that you have to monitor it yourself. Congress is starting to wake up and bring bitcoin attention to the SEC. Regulation is going to come eventually, but it will take time.
Just like buying any stock, there is opportunity. In this case, you need to have a plan that lays out when to purchase and when to back out. Some more practical uses of blockchain besides digital art are public voting, supply chain movement, initial litigation options and property deed management.
4:24 How does Cryptocurrency work?
7:52 Does Bitcoin follow the market?
10:57 The Risk with Cryptocurrency
13:41 Not sure how to begin investing in Crypto?
20:17 When will regulation come?
25:35 There is Opportunity
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