Our Year End Update & Bitcoin FAQ!Submitted by Washington Wealth Advisors | Falls Church and Ashburn, VA on December 27th, 2017
Thank you for being part of the Washington Wealth Advisors family! As we wrap up the year as a firm, we want to thank you for completing our Annual Client Satisfaction Survey. We heard you and appreciate your feedback! We’ll be making exciting changes in 2018 to serve you better.
Additionally, we are excited to talk to you about the topics you suggested in 2018 to include Investment Strategies, Retirement Income Planning and Tax Strategies for Investing. One hot topic is Bitcoin, which we’ve received a lot of questions about. Please see below for frequently asked Bitcoin questions.
Year-End Market Update
It’s been a fantastic year for investors. The global economy is experiencing a relatively steady expansion amid low inflation. U.S. fiscal policy is supportive of growth and the recent tax bill will allow for greater gains in 2018. A shift toward tighter global monetary policy may boost market volatility, underscoring the importance of diversification.
Bitcoin Q & A
We all know that currency holds value because we believe that it does. We trust that our piece of paper with George Washington’s face on it has purchasing value, and the United States government regulates and backs up that value, so we trust it. But with advancements in technology, will we still need paper currency, banks, or governments to help us complete financial transactions? The growth of Bitcoin and the confusion around it has financial advisors, investors, (and most people really), scratching their heads. Here are some quick answers and resources to help you understand this Bitcoin business and what it means to you.
What is Bitcoin?
Bitcoins are digital currency. More specifically, cryptocurrency, meaning each Bitcoin is encrypted so that it can never be copied and double-spent. Using a mobile app or computer program as your “wallet” you can store, receive, and spend Bitcoins with ease around the world.
Where Do Bitcoins Come From?
First, let’s think about gold. Gold is a limited resource. During the gold rush, miners flocked to California to make their fortune. Bitcoins are “mined” too, but instead of using shovels, these people use their powerful computers to solve math problems. The fewer users who are “mining,” the easier the math problems. The more users who are mining, the more difficult the math problems. This theoretically works to steady the value of Bitcoins and prevent inflation. Like gold, Bitcoins are a finite resource – issuance will halt at 21 million Bitcoins because of how the Bitcoin system is set up. Once the 21 million Bitcoins are issued, miners will likely make money by verifying transactions for small fees.
How Do I Earn Bitcoins?
You can mine Bitcoins as described above. If you own a business or provide a service, you can choose to accept Bitcoins as payment. You can also find a Bitcoin exchange, a sort of digital marketplace, and buy Bitcoins with dollars, euros, and other currency.
How Does Bitcoin Work?
Bitcoins have value because of the people who use and accept them. There is no government creating, regulating, or backing Bitcoins, and rather than using a bank to process financial transactions, Bitcoin uses a peer-to-peer network to verify purchases. Bitcoin transactions are recorded using a public ledger called a blockchain.
What Are The Advantages of Bitcoin?
Bitcoins are not tied to politics or government, so they are not as vulnerable to economic collapse as the currencies we recognize now. All the frustrations connected with banks can be avoided as well. Bitcoins can also be used globally with relative ease. There are no borders for Bitcoins, users can control the fees based on transaction speed, and the process is very transparent – fraud is almost impossible. There is also so much opportunity in Bitcoins. This technology is brand new. Many compare Bitcoins to technological innovations like email. There was a time when email did not exist as an option, but now it’s revolutionized the way that we all communicate. Will Bitcoin do the same for how we run our economy?
What Are The Drawbacks of Bitcoin?
While Bitcoin transactions are relatively secure, the Bitcoin exchanges have proven to be highly-vulnerable to hackers and scammers. Bitcoin also offers anonymity to its users, leading many to worry that it will become a haven for illicit and illegal behavior. Also, by the very nature of being so new, Bitcoin value is volatile, which is not desirable when transactions can take some time to complete. There are many unknowns around this technology.
Should I Invest in Bitcoin?
If you plan to put money into Bitcoin, you should consider yourself more of a speculator than an investor. Do not risk your financial future on Bitcoin, but if you want to try your luck with a cautious amount of money, Bitcoin could be an opportunity for you. This is brand new territory, and no one can truly predict what will happen next.
Do you have questions or have friends or family who need our help? Schedule a meeting today by calling 703.584.2700 or emailing email@example.com. You’ll be in good hands!
About Washington Wealth Advisors
Washington Wealth Advisors is an independent registered investment advisory firm serving high net worth families and small businesses. We focus on holistic financial planning and comprehensive investment management. Leveraging our core strengths of unbiased, active investment management together with a detailed annual financial planning capability, we serve your comprehensive investment and financial planning needs.