What is a cryptocurrency? Where can I purchase Bitcoin? How will this affect my investments? Is Bitcoin a stock?
These are a few of the questions clients have posed to financial professionals as the craze for cryptocurrency, particularly Bitcoin continues to draw the attention of casual investors.
Cryptocurrencies are not a new trend but Tesla’s purchase of 1.5 billion dollars worth of Bitcoin has highlighted how many misconceptions the public has about the market.
A common belief is that these currencies are purchased and held similarly to a stock.
“Bitcoin is not a stock, it’s not a publicly-traded company. It’s a form of currency, a hedge against the U.S dollar,” says Senior Investment Advisor Allan Small.
Despite a lack of knowledge, public interest continues to grow for the market of cryptocurrencies, fueled by a mix of people who are either prepared for the gamble or scared of missing out.
However, there lies a great deal of uncertainty in a market that has a very short history.
The process of obtaining bitcoins has become far more extensive and often results in purchasing from third parties that can be fraudulent.
In addition, the opportunities to exchange cryptocurrencies for goods and services are not very common. Without an established purpose, it remains a very volatile market to engage in and one that Small believes is “not for the faint of heart.”
Bitcoin will have to wait to see recognition from all areas of the public before it can shake some of the negative factors that are associated with it.
