Ask an Adviser -What is Your Opinion of Bitcoin as a Currency For The Future?

Top answer provided by:

Eric Walters

Hi James,

This question is probably more in the domain of a treasury expert than a financial adviser I suspect however, it is asked of us and the response is based on information and commentary that has been aired or published on various media over the past few years. 

Over the time since Bitcoin became publicly known, it has moved from being a curiosity to being accepted as an asset class to be seriously considered, with some Institutional investors and Investment Banks taking an interest in it as an investment to be included in portfolios.  Recent fluctuations in the value of Bitcoin have made it difficult for private investors to embrace it in ‘average value’ portfolios, with volatility on a daily basis exceeding 30% all too often.

As a currency of the future, governments (and/ or unions of governments such as the European Union), would be wary about seeing it as a universal replacement for the fiat currencies they currently issue.  This is purely on the basis that they would lose control of their budgeting and financing authority.  However, as a currency of the future utilised in its current capacity, I suspect that it is here to stay.

Whilst acknowledging that your question doesn’t extend to cyber currency generally, that could be an interesting discussion, given that in that more generic concept, those governments (and their associated Central Banks) might be able to exercise a level of control that would be politically acceptable to them and to their populace – and indeed, it has been very recently reported that some countries are exploring opportunities to create their own blockchain supported currencies.

I believe that there is a lot more water to flow under this bridge before we will see these currencies adopted on a broad scale basis and incorporated into investment portfolios.  For now, they are more of an asset for speculators, day traders and ‘true believers’ who hopefully have a thorough appreciation for the risk they are taking with such a trade or investment.

 

Eric Walters FCPA (FPS)

Continuum Financial Planners Pty Ltd

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Article by:

Eric Walters

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