Stableford Capital Insights

Is it Time For You to Look at a Cryptocurrency Investment?

Since entering the financial sector, digital currency has seen its fair share of value fluctuations. But this hasn’t deterred cryptocurrency investment from becoming a $417 billion industry with a significant stake in the investment world.Wondering if you should invest in the cryptocurrency market and if so, when? You’re not alone. The idea of cryptocurrency has intrigued some investors while turning others off as they see it as a risky investment. Cryptocurrency investment is an ever-evolving hot topic and something to watch closely.

What is Cryptocurrency?

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Cryptocurrency is a digital or virtual currency that can be exchanged. The “crypto” part stems from cryptography, which is the process of securely verifying transactions. This peer-to-peer system of commerce is independent of banks and financial institutions, allowing users to make payments online faster than they could via banks.

How Does Blockchain Figure into the Equation?

Transactions are processed via a blockchain network, a decentralized system that manages and records every deal but keeps those details from being copied. Commonly called a “digital ledger,” blockchains are designed to create a safer transaction for everyone involved.Essentially, cryptocurrency transactions are put into a “block,” and computers in the network solve a complex mathematical problem. Once the problem is solved, and the network agrees that the solution is correct, that block is added to the chain and the transaction is completed.Multiple transactions in a single block make it difficult to edit a single transaction, as the network is continuously re-confirming the blockchain on its way to the latest block and will notice if a suspicious edit is made to a transaction in another block.Blockchains are an integral part of cryptocurrency investment. Although blockchains were originally created to use with Bitcoin, the most well-known cryptocurrency, its versatility has led to the creation of several cryptocurrencies, including Etherium, Litecoin, Monero, Ripple and Zcash.

To Some, Cryptocurrency Means Control

If cryptocurrency only exists in a digital form, why would anyone use it?

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One reason early adopters liked Bitcoin, for example, was that they could buy and sell the cryptocurrency anonymously. It had a practical benefit, too. Users made online payments faster and cheaper than they could through their bank.Some users like it to buy and sell physical goods. Several retailers, including Subway, Expedia, Microsoft and, accept Bitcoin as payment.Perhaps the biggest draw to cryptocurrency is it enables users the freedom to store and control their own money. It is free from penalties, restrictions and fees commonly imposed by financial institutions. Allowing users to take personal responsibility for their savings without relying on a third party is something that has never existed before.

Is It Time for a Cryptocurrency Investment?

Whether or not in invest in cryptocurrency is something everyone must decide for themselves.One drawback to cryptocurrency investment is there are no consumer protections. A regulatory equivalent to the Federal Deposit Insurance Corporation (FDIC) – protecting money in banks and saving institutions – does not oversee Bitcoin and other cryptocurrencies. And there are few regulations in place, although some states are taking steps to regulate currency exchanges.Being digital, the industry is not immune to hackers. To date, billions of dollars of cryptocurrencies have been lost on exchanges – what holds a user’s virtual wallet – due to hackers.Another reason to pump the brakes on cryptocurrency is the idea of “crypto gambling.” The most recent example of this happened last year. In mid-January, 1 Bitcoin, or BTC, was worth under $1,000. By late December, it had reached nearly $20,000 in value. It then fell significantly since that height. Today, 1 BTC is only worth around $6,400.

The Bottom Line

The technology that cryptocurrency is built on is a positive development. Blockchain will transform investing and business practices in the future as the nature of the network is seen as safer and businesses – especially those with valuable assets – are interested.At this point however, many financial experts like those at Stableford Capital believe Bitcoin and other cryptocurrency is not a viable investment option because it is still in its infancy, which makes the market too volatile. Some even liken the mad dash to invest in cryptocurrency as a “gold rush.” Just think of it as crypto gambling and don’t invest more than you can afford to lose. Are you interested in making portfolio changes or discussing a potential cryptocurrency investment? Contact Stableford today by calling 480.493.2300 or contact us online.*The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought.

Andrew Brinkman
Andrew J. Brinkman is the Founder of Stableford Capital. Over the course of his 45+ year career, he built A.J. Brinkman & Co., a leading foreign exchange arbitrageur and institutional floor broker, was a managing partner of Petros Capital, a long/ short institutional hedge fund and, for the past ten years, he has been a discretionary asset manager for high net-worth families. Andrew Brinkman has been a member of the Chicago Mercantile Exchange, the New York Futures Exchange, and the Chicago Board of Trade. A 1978 graduate of Cornell College with degrees in Economics and Political Science, he was a board member for ChildHelp USA, a board member of the Berry Center for Economics, and former trustee of Cornell College.