Treading Carefully in the Crypto Rush

Throughout history, people have loved Gold. Civilizations and entrepreneurs have risen and fallen in their quest for more.

For a long time, people used gold as money. Of course, that got pretty heavy to carry around, so eventually people moved to using pieces of paper that were worth a certain amount of gold.

Even when countries stopped using gold as the standard for their currency, people still turned to gold. Gold keeps its value, protecting investors from inflation, so it became an important tool as a “storehold of wealth.”

Worth Its Weight In Gold?

Gold has played an incredibly important role in history. And it’s tempting to romanticize its past. Tales of the Gold Rush and normal people striking it rich have appeared in books and movies.

But this wasn’t everybody’s story.

Some people struck it rich by finding new veins of gold. Some people became wealthy by selling pick axes. And some people went back home empty handed, having given up everything for their shot.

Photo by Dmitry Demidko on Unsplash

The New Gold Rush?

Now, with the price of Bitcoin and other cryptocurrencies skyrocketing in recent months, it seems like there is a new gold rush on our hands. In fact, the word for creating new units of these currencies is even called “Mining”!

There’s a lot of excitement around these new technologies. Not only have they survived for over a decade, but some parts of the world use them regularly, with cryptocurrency ATMs appearing in over 80 countries.

With new trading platforms, it’s easier than ever to purchase these cryptocurrencies, which can feel like taking part in a historic moment. And people are flocking to this new Bitcoin Rush.

But what are the chances that you’ll actually strike it rich? What are the chances that you’ll lose it all?

What Does Ray Dalio Say About Bitcoin?

Recently, Ray Dalio published an essay covering his views on Bitcoin. With so many in the press pointing to specific quotes of his as proof he was for or against cryptocurrency, he wanted to clear the air and explain his views.

After surviving for over a decade, he gave kudos to the creators behind the different technocurrencies, and acknowledged that they are starting to play a role that is similar to gold as a “storehold of wealth.”

At the same time, Dalio pointed out many of the risks that the cryptocurrency community hasn’t solved yet. Potential government regulation, the threat of hackers, and the limited supply of the cryptocurrencies pose major hurdles for the technology in the future.

Dalio summarized this at the end by saying: “Bitcoin looks like a long-duration option on a highly unknown future that I could put an amount of money in that I wouldn’t mind losing about 80% of.”

Is Bitcoin Right for Me?

Here at Plan & Act, we categorize Bitcoin as an alternative investment type of asset. Deciding whether it has a place in your portfolio depends upon your risk tolerance and objectives. Talk to your financial advisor when trying to incorporate a new asset into your investment portfolio.

If you’re ready to invest, but aren’t sure where to begin, sign up for a FREE Bronze Account today. You’ll gain access to a Financial Assessment that will give you a sample portfolio allocation to get you started.

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