Are you all looking at Bitcoin at all? I keep seeing a lot about it, and I’m curious about your thoughts on it.
I’ve never read a rational explanation for why bitcoin will be worth anything in years to come. It has the most public exposure, but it’s the least efficient digital asset in existence, and it doesn’t solve any problem that other digital assets don’t solve better. Diehard bitcoin people say it will be “the digital store of value” like gold is in the real world, but I don’t see how or why that would be a certainty.
The blockchain, however, is the technology underlying bitcoin which bitcoin proved works, and it will probably change everything, though most end-users won’t even realize that anything changed. There are hundreds of other projects utilizing the blockchain, each with their own digital assets (often called tokens) that rely on a totally new application of economic theory to create value called “tokenomics.” While I do believe the foundations of tokenomics are sound, they have yet to prove that they work in reality. As obstacles to adoption continue to be overcome, I believe the blockchain will prove to be a paradigm-shifting technology.
I view buying bitcoin now as similar to buying a call option – you’d be betting that existing, centralized fiat currencies will experience a catastrophic collapse before the blockchain infrastructure reaches maturity and ultimately dethrones bitcoin as the digital “gold standard”.
Bob Gardner, AAMS®
Financial Advisor
Armada Investment Partners of Raymond James
Disclosures: Opinions expressed are not necessarily those of Raymond James & Associates. The information provided is general in nature, is not a complete statement of all information necessary for making an investment decision, and is not a recommendation or a solicitation to buy or sell any security. Investments and strategies mentioned may not be suitable for all investors. Prior to making an investment decision, please consult with your financial advisor about your individual situation. The prominent underlying risk of using bitcoin as a medium of exchange is that it is not authorized or regulated by any central bank. Bitcoin issuers are not registered with the SEC, and the bitcoin marketplace is currently unregulated. Bitcoin and other cryptocurrencies are a very speculative investment and involves a high degree of risk. Investors must have the financial ability, sophistication/experience and willingness to bear the risks of an investment, and a potential total loss of their investment. Securities that have been classified as Bitcoin-related cannot be purchased or deposited in Raymond James client accounts.
