Crypto Legitimacy

A tweet from President Donald Trump in July of last year, suddenly revealed his apparent dislike for cryptocurrencies because it is unregulated and based on “thin air.”  

These reasons are also why most investment managers and financial planners will stay away from cryptocurrency investments. The idea of it being unregulated relates to the fact that transactions are virtually impossible to trace, which means that people often use the currency for illegal activity. 

The reason Trump may have said it’s based on thin air is because the currency isn’t backed by anything, which means it has no intrinsic value. No government or asset is used to maintain the value. Instead, computers solving complex algorithms are how cryptocurrencies are “made”.  Cryptocurrency has proven to be very volatile and hard to predict. Over the last few years, the price has ranged from $1,000 to $20,000.  It’s about $6,000 now. 

While the President’s tweet may have created some publicity, don’t expect that to result in financial advisors investing in cryptocurrencies any time soon – they still prefer investments based on more than ‘thin air’.