Crypto currencies, especially BitCoin, have been an interesting research topic of mine for the last three years. Logically, these currencies make sense as the problem with most fiat currencies including the US dollar, the British Pound, the Euro, etc. is that national monetary policy will effect their value against your local currency. Crypto currencies that are not aligned with a single national government are a step away from nationalism, but you must be careful and cognizant of the risks, and possible benefits.
Risks & Benefits
The risks associated with crypto currencies are many, such as:
- Fraud, scams
- Technical difficulty, and hackers
- Few protections
I won’t in depth on these because they have been discussed by the SEC in its alert entitled “INVESTOR ALERT: BITCOIN AND OTHER VIRTUAL CURRENCY-RELATED INVESTMENTS” issued May 7, 2017, FINRA’s alert entitled “Bitcoin: More than a Bit Risky” updated May 7, 2017, and the Consumer Financial Protection Bureau (CFPB) consumer advisory from August 2014 entitled “Risks to consumers posed by virtual currencies“.
Let’s face it, there is one exceptional reason for us all to be interested in crypto currencies – making money. But let’s take a look at some of the other benefits:
- Transfer fees are low since crypto currencies are transfered person to person via the internet, without going through a bank or clearing house.
- The software for BitCoin at least is open source and is open for anyone to see.
- International transactions are fast and don’t require banks to get in the middle.
- Your identity can be protected, which is also a risk – national authorities don’t like it when you can’t be tracked.
So how do you make money other than with the fruits of your labors (work man, work)? Well currency trading of course – buying crypto currencies like BitCoin with a national currency like the US dollar and riding the value of a crypto currency up (like the early part of May 2017 when BitCoin went increased $1,364.05 to $2,348.71, as of this writing). Of course the opposite is also true when in the last week the price of BitCoin dropped preceiptiously).
I have a lot more to say about crypto currencies, and especially about BitCoin and LiteCoin, which are two crypto currencies that I have gotten into recently. First, take a look at these sites:
- bitcoin.org – An open source site about BitCoin.
- We Use Coins (weusecoins.com) – Related to bitcoin.org
- Litecoin.com – the official website for LiteCoin.
- Ethereum.org – the official website for the ethereum crypto currency, “a decentralized platform that runs smart contracts…“
Here are some tools that I use:
- Coinbase – a wallet that currently supports BitCoin, LiteCoin, and Ethereum.
© 2017 by Robert C. Rhodes and Rhodes Holdings LLC, all rights reserved.