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How to talk to clients about Bitcoin

Fear of missing out is a powerful force in investing. And it’s difficult to ignore an asset that has gained more than 500,000% in just a few years, eliciting headline-grabbing commentary from Elon Musk and Warren Buffett, among others.



Bitcoin and other cryptocurrencies have captured the imagination of investors, putting financial professionals, plan sponsors and consultants at the center of an increasingly frenetic discussion about whether to jump into the fray or steer clear.



Sure, it may be tempting to dismiss Bitcoin as a passing fad and tell clients it’s inappropriate for their portfolios. But simply discounting it won’t be an adequate answer for some. Moreover, dhaka the question itself presents an important opportunity for you to better understand your clients’ risk tolerance.


Bitcoin traces its roots to 2008, when an anonymous programmer operating under the pseudonym Satoshi Nakamoto published a white paper outlining the technology and code needed to enable the cryptocurrency.




“If you have a client who really wants to buy Bitcoin, just saying ‘don’t do it’ is a disservice,” says Barbara Burtin, an equity investment analyst at Capital Group who covers the banking industry. “In fact, owning a small amount can be a learning experience — for you and the client.”


Sources: Google Trends, Refinitiv Datastream. As of 5/6/21. Search volume data represents Google search volume relative to the highest point for the given time period. A value of 100 is the peak popularity for the term. A value of 50 means that the term is half as popular as the peak. Bitcoin prices are shown on a logarithmic scale and expressed in U.S. dollars.


What is Bitcoin?



Bitcoin is by far the most popular variation among a class of assets designed to create a digital currency through advanced cryptography bd. Other popular cryptocurrencies include Ethereum, Ripple and Litecoin. Unlike traditional currencies, Bitcoin operates without central authority or banks and is not backed by any government.





Most important, the paper described the process of “mining,” which creates a supply of new bitcoins. Bitcoins are mined using computer algorithms that solve a series of calculations. These time-consuming computations verify bitcoins and allow for the creation of new ones. Only 21 million bitcoins can be mined, and they become more time consuming to create as the supply grows.