Cryptocurrency: New Business Model Implementations, Not for Amateurs
The modern world of economics now includes cryptocurrencies where there are lagging, coincident and leading indicators. In the arena of new business model implementations, there are innovators, early adopters, the late majority and the laggards. In the stampede to understand (and hopefully take advantage) cryptocurrencies for financial gain (e.g. Bitcoin, LiteCoin, Ethereum, etc.), I’d suggest the leading indicator for you to be aware of might be that the innovators are cashing out at the expense of the early adopters.
This past week when I was in New York City, I overheard a group of doormen and associated service providers discussing “buying” Bitcoin, some with their bonuses and some on credit cards. I find this unnerving, as I believe these laypersons (financial amateurs) are exposing themselves to great market risks.
I’d suggest the leading indicator for you to be aware of might be that the innovators are cashing out at the expense of the early adopters
What We Do With Cryptocurrency
Owning cryptocurrency is much different then transacting with it. At Morris+D’Angelo, we receive payments for services via cryptocurrency on a regular basis and we treat it just like any non U.S. Dollar payment, meaning we convert it at that day’s rates to US Dollars, as these are funds for operating our business and we do not want to risk the market volatility of any dramatic price swings.
Some speculators are buying cryptocurrency to profit on anticipated future price increases (“buy low/sell high”). These are not investors; they are speculators. Bitcoin has increased in value dramatically and could fall just as fast, if not faster. It is currently thinly traded and has many of the indicators of a “conceptual bubble”. Any money that you invest must be risk capital. It’s a lot like going to Vegas except in Vegas you have some idea of what your odds are while you participate.
Digital currencies are excellent tools for commerce. In the long run, the future of cryptocurrency should be secure and their pricing will always be subject to the whims of buyers and sellers. My advice is and has been to benefit from its “Greatness” (speed, low cost to utilize, liquidity, etc.) and avoid holding it in any volume that is outside your ability to suffer a complete loss (what can you afford to lose).
When the “Leading Indicator” becomes the Doormen-of-the-World, when they begin to join in with the crowd to buy cryptocurrency in volume, this, is a leading indicator to me that “Experienced and Knowledgeable” people are selling.
Accordingly, be forewarned before investing your 401(k) in such currencies as your investment may disappear in a nanosecond.
Please come talk to us at Morris+D’Angelo. We have become very familiar with Best Practices on current strategies on cryptocurrency utilization (use).
Daniel frequently provides Media Content via Workshops, Podcasts and Printed Articles on topics like Cross-Border Transactions, Wealth Preservation and Planning, Global Banking and many other high-level financial topics that serve and demonstrate the Value of our Global Network that should be of interest to those who need Private High-Wealth Services. If you wish for Daniel to speak to you or your Professional Group, please contact us.
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