Cryptocurrency investment advisor
Meet the Bitcoin & Cryptocurrency Wealth Financial Advisor Robert Pagliarini, Ph. D., CFP®, EA has over 24 years of financial planning and investment. My Crypto Advisor is a Web3 consultancy dedicated to educating, onboarding, and helping learners at any stage navigate digital assets and the next. DACFP provides financial advisors, executives and managers in the financial services industry with training, advice and consulting service. HOW TO CHANGE THE DATA DIRECTORY IN ETHEREUM
Does that mean you should convert your entire portfolio? Not at all but using a diversification strategy can mitigate risk and also offer upside returns that might not otherwise be available. Alternative Investments offered by Financial Advisors, whom established a foundation of skills and expertise to guide their clients in their most important journey: financial success!
Bitcoin is a consensus network that enables a new payment system and a completely digital money. It is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. From a user perspective, Bitcoin is pretty much like cash for the Internet. Bitcoin can also be seen as the most prominent triple entry bookkeeping system in existence. The first Bitcoin specification and proof of concept was published in in a cryptography mailing list by Satoshi Nakamoto.
Satoshi left the project in late without revealing much about himself. The community has since grown exponentially with many developers working on Bitcoin. The Bitcoin protocol and software are published openly and any developer around the world can review the code or make their own modified version of the Bitcoin software. Who controls the Bitcoin network? Nobody owns the Bitcoin network much like no one owns the technology behind email.
Bitcoin is controlled by all Bitcoin users around the world. In order to stay compatible with each other, all users need to use software complying with the same rules. Bitcoin can only work correctly with a complete consensus among all users. Therefore, all users and developers have a strong incentive to protect this consensus. How does Bitcoin work? From a user perspective, Bitcoin is nothing more than a mobile app or computer program that provides a personal Bitcoin wallet and allows a user to send and receive bitcoins with them.
This is how Bitcoin works for most users. The authenticity of each transaction is protected by digital signatures corresponding to the sending addresses, allowing all users to have full control over sending bitcoins from their own Bitcoin addresses. In addition, anyone can process transactions using the computing power of specialized hardware and earn a reward in bitcoins for this service. To learn more about Bitcoin, you can consult the dedicated page and the original paper.
Is Bitcoin really used by people? There are a growing number of businesses and individuals using Bitcoin. This includes brick-and-mortar businesses like restaurants, apartments, and law firms, as well as popular online services such as Namecheap and Overstock. While Bitcoin remains a relatively new phenomenon, it is growing fast.
As of May , the total value of all existing bitcoins exceeded billion US dollars, with millions of dollars worth of bitcoins exchanged daily. How does one acquire bitcoins? As payment for goods or services. Purchase bitcoins at a Bitcoin exchange. Exchange bitcoins with someone near you. Earn bitcoins through competitive mining. While it may be possible to find individuals who wish to sell bitcoins in exchange for a credit card or PayPal payment, most exchanges do not allow funding via these payment methods.
This is due to cases where someone buys bitcoins with PayPal, and then reverses their half of the transaction. This is commonly referred to as a chargeback. How difficult is it to make a Bitcoin payment? Bitcoin payments are easier to make than debit or credit card purchases, and can be received without a merchant account.
What are the advantages of Bitcoin? Payment freedom — It is possible to send and receive bitcoins anywhere in the world at any time. No bank holidays. No borders. No bureaucracy. Bitcoin allows its users to be in full control of their money. Choose your own fees — There is no fee to receive bitcoins, and many wallets let you control how large a fee to pay when spending. Higher fees can encourage faster confirmation of your transactions. As these services are based on Bitcoin, they can be offered for much lower fees than with PayPal or credit card networks.
This protects merchants from losses caused by fraud or fraudulent chargebacks, and there is no need for PCI compliance. Merchants can easily expand to new markets where either credit cards are not available or fraud rates are unacceptably high. The net results are lower fees, larger markets, and fewer administrative costs. Security and control — Bitcoin users are in full control of their transactions; it is impossible for merchants to force unwanted or unnoticed charges as can happen with other payment methods.
Bitcoin payments can be made without personal information tied to the transaction. This offers strong protection against identity theft. Bitcoin users can also protect their money with backup and encryption. Transparent and neutral — All information concerning the Bitcoin money supply itself is readily available on the block chain for anybody to verify and use in real-time. No individual or organization can control or manipulate the Bitcoin protocol because it is cryptographically secure.
This allows the core of Bitcoin to be trusted for being completely neutral, transparent and predictable. What are the disadvantages of Bitcoin? Degree of acceptance — Many people are still unaware of Bitcoin. Every day, more businesses accept bitcoins because they want the advantages of doing so, but the list remains small and still needs to grow in order to benefit from network effects. Volatility — The total value of bitcoins in circulation and the number of businesses using Bitcoin are still very small compared to what they could be.
Therefore, relatively small events, trades, or business activities can significantly affect the price. In theory, this volatility will decrease as Bitcoin markets and the technology matures. Never before has the world seen a start-up currency, so it is truly difficult and exciting to imagine how it will play out. Ongoing development — Bitcoin software is still in beta with many incomplete features in active development. New tools, features, and services are being developed to make Bitcoin more secure and accessible to the masses.
Some of these are still not ready for everyone. Most Bitcoin businesses are new and still offer no insurance. In general, Bitcoin is still in the process of maturing. Why do people trust Bitcoin? Much of the trust in Bitcoin comes from the fact that it requires no trust at all.
Bitcoin is fully open-source and decentralized. This means that anyone has access to the entire source code at any time. Any developer in the world can therefore verify exactly how Bitcoin works. All transactions and bitcoins issued into existence can be transparently consulted in real-time by anyone. All payments can be made without reliance on a third party and the whole system is protected by heavily peer-reviewed cryptographic algorithms like those used for online banking.
No organization or individual can control Bitcoin, and the network remains secure even if not all of its users can be trusted. Can I make money with Bitcoin? You should never expect to get rich with Bitcoin or any emerging technology. It is always important to be wary of anything that sounds too good to be true or disobeys basic economic rules. Bitcoin is a growing space of innovation and there are business opportunities that also include risks.
There is no guarantee that Bitcoin will continue to grow even though it has developed at a very fast rate so far. Investing time and resources on anything related to Bitcoin requires entrepreneurship. There are various ways to make money with Bitcoin such as mining, speculation or running new businesses. All of these methods are competitive and there is no guarantee of profit. It is up to each individual to make a proper evaluation of the costs and the risks involved in any such project.
Is Bitcoin fully virtual and immaterial? Bitcoin is as virtual as the credit cards and online banking networks people use everyday. Bitcoin can be used to pay online and in physical stores just like any other form of money. Bitcoins can also be exchanged in physical form such as the Denarium coins, but paying with a mobile phone usually remains more convenient. Bitcoin balances are stored in a large distributed network, and they cannot be fraudulently altered by anybody. In other words, Bitcoin users have exclusive control over their funds and bitcoins cannot vanish just because they are virtual.
Is Bitcoin anonymous? Bitcoin is designed to allow its users to send and receive payments with an acceptable level of privacy as well as any other form of money. However, Bitcoin is not anonymous and cannot offer the same level of privacy as cash. The use of Bitcoin leaves extensive public records. However, there is still work to be done before these features are used correctly by most Bitcoin users. Some concerns have been raised that private transactions could be used for illegal purposes with Bitcoin.
However, it is worth noting that Bitcoin will undoubtedly be subjected to similar regulations that are already in place inside existing financial systems. Bitcoin cannot be more anonymous than cash and it is not likely to prevent criminal investigations from being conducted. Additionally, Bitcoin is also designed to prevent a large range of financial crimes.
What happens when bitcoins are lost? When a user loses his wallet, it has the effect of removing money out of circulation. Lost bitcoins still remain in the block chain just like any other bitcoins. However, lost bitcoins remain dormant forever because there is no way for anybody to find the private key s that would allow them to be spent again. Because of the law of supply and demand, when fewer bitcoins are available, the ones that are left will be in higher demand and increase in value to compensate.
Can Bitcoin scale to become a major payment network? The Bitcoin network can already process a much higher number of transactions per second than it does today. It is, however, not entirely ready to scale to the level of major credit card networks. Work is underway to lift current limitations, and future requirements are well known.
Since inception, every aspect of the Bitcoin network has been in a continuous process of maturation, optimization, and specialization, and it should be expected to remain that way for some years to come. As traffic grows, more Bitcoin users may use lightweight clients, and full network nodes may become a more specialized service. For more details, see the Scalability page on the Wiki. Is Bitcoin legal?
To the best of our knowledge, Bitcoin has not been made illegal by legislation in most jurisdictions. However, some jurisdictions such as Argentina and Russia severely restrict or ban foreign currencies. Other jurisdictions such as Thailand may limit the licensing of certain entities such as Bitcoin exchanges. Regulators from various jurisdictions are taking steps to provide individuals and businesses with rules on how to integrate this new technology with the formal, regulated financial system.
Is Bitcoin useful for illegal activities? Bitcoin is money, and money has always been used both for legal and illegal purposes. Cash, credit cards and current banking systems widely surpass Bitcoin in terms of their use to finance crime. Bitcoin can bring significant innovation in payment systems and the benefits of such innovation are often considered to be far beyond their potential drawbacks. Bitcoin is designed to be a huge step forward in making money more secure and could also act as a significant protection against many forms of financial crime.
For instance, bitcoins are completely impossible to counterfeit. Users are in full control of their payments and cannot receive unapproved charges such as with credit card fraud. Bitcoin transactions are irreversible and immune to fraudulent chargebacks. Bitcoin allows money to be secured against theft and loss using very strong and useful mechanisms such as backups, encryption, and multiple signatures.
Some concerns have been raised that Bitcoin could be more attractive to criminals because it can be used to make private and irreversible payments. However, these features already exist with cash and wire transfer, which are widely used and well-established. The use of Bitcoin will undoubtedly be subjected to similar regulations that are already in place inside existing financial systems, and Bitcoin is not likely to prevent criminal investigations from being conducted.
In general, it is common for important breakthroughs to be perceived as being controversial before their benefits are well understood. The Internet is a good example among many others to illustrate this. Can Bitcoin be regulated? The Bitcoin protocol itself cannot be modified without the cooperation of nearly all its users, who choose what software they use.
Attempting to assign special rights to a local authority in the rules of the global Bitcoin network is not a practical possibility. Any rich organization could choose to invest in mining hardware to control half of the computing power of the network and become able to block or reverse recent transactions.
However, there is no guarantee that they could retain this power since this requires to invest as much than all other miners in the world. It is however possible to regulate the use of Bitcoin in a similar way to any other instrument. In this regard, Bitcoin is no different than any other tool or resource and can be subjected to different regulations in each country. Bitcoin use could also be made difficult by restrictive regulations, in which case it is hard to determine what percentage of users would keep using the technology.
A government that chooses to ban Bitcoin would prevent domestic businesses and markets from developing, shifting innovation to other countries. The challenge for regulators, as always, is to develop efficient solutions while not impairing the growth of new emerging markets and businesses. What about Bitcoin and taxes? Bitcoin is not a fiat currency with legal tender status in any jurisdiction, but often tax liability accrues regardless of the medium used.
There is a wide variety of legislation in many different jurisdictions which could cause income, sales, payroll, capital gains, or some other form of tax liability to arise with Bitcoin. What about Bitcoin and consumer protection? Bitcoin is freeing people to transact on their own terms. Each user can send and receive payments in a similar way to cash but they can also take part in more complex contracts. Multiple signatures allow a transaction to be accepted by the network only if a certain number of a defined group of persons agree to sign the transaction.
This allows innovative dispute mediation services to be developed in the future. Such services could allow a third party to approve or reject a transaction in case of disagreement between the other parties without having control on their money. As opposed to cash and other payment methods, Bitcoin always leaves a public proof that a transaction did take place, which can potentially be used in a recourse against businesses with fraudulent practices. The way Bitcoin works allows both individuals and businesses to be protected against fraudulent chargebacks while giving the choice to the consumer to ask for more protection when they are not willing to trust a particular merchant.
How are bitcoins created? This process involves that individuals are rewarded by the network for their services. Bitcoin miners are processing transactions and securing the network using specialized hardware and are collecting new bitcoins in exchange. The Bitcoin protocol is designed in such a way that new bitcoins are created at a fixed rate.
This makes Bitcoin mining a very competitive business. When more miners join the network, it becomes increasingly difficult to make a profit and miners must seek efficiency to cut their operating costs. No central authority or developer has any power to control or manipulate the system to increase their profits. Every Bitcoin node in the world will reject anything that does not comply with the rules it expects the system to follow.
Bitcoins are created at a decreasing and predictable rate. The number of new bitcoins created each year is automatically halved over time until bitcoin issuance halts completely with a total of 21 million bitcoins in existence. At this point, Bitcoin miners will probably be supported exclusively by numerous small transaction fees. Why do bitcoins have value? Bitcoins have value because they are useful as a form of money.
Bitcoin has the characteristics of money durability, portability, fungibility, scarcity, divisibility, and recognizability based on the properties of mathematics rather than relying on physical properties like gold and silver or trust in central authorities like fiat currencies.
In short, Bitcoin is backed by mathematics. With these attributes, all that is required for a form of money to hold value is trust and adoption. In the case of Bitcoin, this can be measured by its growing base of users, merchants, and startups. The price of a bitcoin is determined by supply and demand. Some knowledgeable advisors would rather take one of these indirect approaches instead of actually helping you own cryptocurrency.
Of course, the high level of risk associated with crypto-assets doesn't automatically mean that they're gambling and not an investment. There are plenty of so-called "real" assets that come with loads of risk, as well. Still, if cryptocurrencies do take their place among conventional investments, then advisors will have to catch up with those who waded into the fray long before them.
Because of the mathematical limitations built into cryptocurrencies, it is very difficult for any person or government to inflate them. How to Buy Crypto If you've spent time studying blockchain technology and you want to invest in it for what it is—and not as just another investable asset—you may have to do the heavy lifting and buy the cryptocurrency yourself. To do so, you need a digital wallet, such as a Bitcoin wallet , in which to store your cryptocurrencies securely.
To convert any cryptocurrency into cash, look for an exchange that supports trading the currency you want to purchase, such as San Francisco-based Coinbase , one of the more well-known exchanges. This digital currency exchange allows you to buy and sell Bitcoin, Ethereum, and other crypto products in your local currency, called fiat currency. President Biden issued an executive order in March requiring their regulation. The President has suggested a new regulator be created.
Start with well-known names such as Coinbase, Kraken , or Gemini , and do your homework before investing any of your cash. However, even the best crypto exchanges are not entirely without a blemish. Examine each exchange's history of freezing and closing of accounts, outages, and its close ties with some traditional banking establishments. To buy or sell cryptocurrencies, all you need to do is log into your account on the exchange you have selected, either in its mobile app or on its website.
For maximum security, you may want to set up your own cryptocurrency wallet to hold the currency, rather than use one provided through the site. Before starting, you'll want to learn the safest ways to store your bitcoin and other cryptocurrencies.
What Is a Crypto Advisor? A crypto advisor is an asset manager who understands the workings of cryptocurrency and the appropriate ways for investing in it. Professionals who stay abreast of the rapid developments in cryptocurrency and blockchain, crypto advisors may be registered as investment advisors, registered representatives, or hold a credential like the Certified Financial Planner or Chartered Financial Analyst. There is currently no "official" way to be licensed as a Professional Cryptocurrency Advisor.
However, most U. Crypto retailers fit this definition, though not tremendously comfortably, requiring the licensing gives the states and the Financial Crimes Enforcement Network FinCEN authority to take action against fraud and money laundering.
Individuals are not required to get licensed to work at an MTB. Cryptocurrencies are a good investment for those who believe in the future of digital currencies and for those who wish to protect themselves in the online financial arena. Cryptocurrencies are also relatively immune to political manipulation or inflation. Most have a cap enforced by mathematical algorithms, preventing dilution of value.
Finally, of course, if you have spare assets with which you want to speculate, crypto is a great place to do it. Some advisors will list crypto on their website, but there is always the chance they listed it strictly for marketing purposes. Feel free to ask them some probing questions about blockchain or Bitcoin and see if they are able to engage in intelligent discussion. Some advisors wishing to be well-versed in crypto might pursue the Certified Digital Asset Advisor designation.
The Bottom Line The rhetoric in this article will likely be adjusted on an ongoing basis as the crypto landscape is still unfolding. New coins are added every day, and the once niche concept of blockchain is gaining real-world traction and government attention. New taxes are likely to come into play as the regulatory bodies gain more understanding of how to tax crypto.
It is becoming ever more important for advisors to understand the asset class, yet many are hesitant to do so, and even more hesitant to recommend it. This makes finding an advisor well-versed in crypto difficult, but not impossible. Article Sources Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts.
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