Should You Buy Bitcoin?

FAMILY UPDATE

We’ve been using the Walmart delivery service lately. You just hand the phone around so everyone can add what they need to the cart, and it shows up at the door like magic. This week, though, we forgot to check what the kids had added before placing the order, and when it arrived, half the haul was cookies, ice cream, doughnuts, and enough candy to stock a gas station. Lesson learned: next time, somebody’s reviewing the cart before we hit "order." This weekend is the big annual orchid sale at the Sarasota Municipal Auditorium, and I’m excited to be entering two of my own plants into the competition. The category I’m competing in is a tough one, but I’m hopeful — these blooms have really outdone themselves this year. If you’re in the area, I highly recommend stopping by. Even if orchids aren’t usually your thing, the display is absolutely stunning. The colors, the variety — it’s a real feast for the eyes and a lovely way to spend an afternoon. All for a mere $5. 

Every so often, I get a quiet question from a client that goes something like this: "So... what exactly is Bitcoin? And should I have any of it?"

And I get it. It’s one of those things that’s always in the news, always going up or down, always being argued about, but rarely explained in a way that actually makes sense.

So today, I want to give you a simple explanation of what Bitcoin is, how it works, what it's used for, the good and the not-so-good, and whether it has a place in your portfolio.

Let’s start with the basics. Bitcoin is a kind of digital money. You can’t hold it in your hand, and there’s no physical coin with a "B" on it; that’s just a symbol people use. Instead, it lives entirely online. It was created back in 2009 as a way for people to send money to each other without using banks or governments. In other words, it’s designed to be money that isn’t controlled by anyone.

That may sound strange, but it was a reaction to the 2008 financial crisis. There was a lot of anger at the banking system back then, and Bitcoin was created by people who thought, "There must be a better way."

Unlike dollars, which the government can print more of whenever it wants, there’s a fixed number of Bitcoins that can ever exist, 21 million, total. That limit is part of the appeal. People see it as a form of "digital gold," something that can hold its value over time and can’t be inflated away.

Now, that doesn’t mean Bitcoin is simple or safe. One of the things that makes it attractive to some people — its lack of regulation and anonymity — also makes it a favorite tool for some very unsavory activity. Bitcoin has been used for drug deals, ransomware attacks, illegal weapons sales, money laundering — you name it. That doesn’t mean everyone who uses it is up to no good, of course. But it does mean governments are paying very close attention.

On the flip side, there are also perfectly legitimate uses. In countries where the local currency is collapsing or the government is seizing people’s savings, Bitcoin has been a way for ordinary folks to preserve their money. And some companies now accept Bitcoin as payment, though it's still rare to see that here in the U.S.
Most people who own Bitcoin today aren’t using it to buy anything. They’re holding it as a speculative investment, hoping the price will go up over time.

That’s the biggest challenge with Bitcoin: the volatility. It can soar or sink on rumors, headlines, or tweets. It doesn’t generate income like a dividend-paying stock. It doesn’t provide stability like a bond. It just sits there, and its value depends entirely on what someone else is willing to pay for it tomorrow.
So, should you own any?

I don’t think anyone needs Bitcoin to have a successful retirement. It’s not essential. But I also don’t think it’s inherently bad. If you understand the risks, and if you’re curious, there’s nothing wrong with putting a little bit of money into Bitcoin.

By the way, if you bought a coin right when it started, you would have experienced a total of a 8,900,000% return.

Be Blessed,

Dave