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Cryptocurrency 101: Understanding the Basics

April 15, 2021 by Bautis Financial
Cryptocurrency 101

The rise in the price of bitcoin and other cryptocurrencies has piqued the interest of investors, financial advisors and the media alike. But what really are they? Here are some things to consider before investing.

Cryptocurrency is hot right now. People are excited, and they’re diving into this new market for lots of different reasons. 

Here, Bautis Financial’s Wealth Advisor John Williams shares the top three things to know about cryptocurrency.

What is Cryptocurrency?

Cryptocurrencies, also often referred to as coins, are virtual currencies that are created by encoding strings of data into units of currency. Unlike traditional currencies, they are not issued by the government, they are not regulated and they don’t have a physical form. It’s like buying virtual tokens or credits that you can only use in certain places — and that you can’t necessarily cash out when you want to. 

Why Are People Buying Cryptocurrency?

As with any hot investment fad, there are lots of different reasons people might invest in cryptocurrency. Some companies invest in it as a way to hedge against inflation. Some investors like that it’s fast, confidential and has low fees. Some like the idea of taking currency creation away from the government. Some folks are speculators hoping to use the wide swings in value to profit.

What Do You Need to Watch Out For?

Here’s where you want to be careful. Cryptocurrency is risky for several reasons. It’s a new market and extremely volatile — investing in this market is definitely a gamble. Also, since cryptocurrencies aren’t regulated, they aren’t protected by the FDIC or any government body. This makes them a prime target for hackers and scammers. 

Another risk factor? If you lose or forget your password, you can get locked out of your digital wallet for good. In fact, there’s about $140 billion in bitcoin that’s currently inaccessible because it’s stuck in stranded or locked wallets.

One of the reasons you work with a professional is to help you make informed decisions.

If you have more questions about cryptocurrency, or if you’d like to talk about other financial decisions you’re considering, schedule a complimentary consultation with our advisors.

Category: Finance News, InvestmentsTag: Bitcoin, Cryptocurrency, Financial Trends, Investing Strategies, Investing Trends, Virtual Currency, What is Cryptocurrency
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