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Should You Buy Bitcoin?

In general, many financial experts support their clients’ desire to buy cryptocurrency, but they don’t recommend it unless clients express interest. “The biggest concern for us is if someone wants to invest in crypto and the investment they choose doesn’t do well, and then all of a sudden they can’t send their kids to college,” says Ian Harvey, a certified financial planner (CFP) in New York City. “Then it wasn’t worth the risk.” The speculative nature of cryptocurrency leads some planners to recommend it for clients’ “side” investments. “Some call it a Vegas account,” says Scott Hammel, a CFP in Dallas. “Let’s keep this away from our real long-term perspective, make sure it doesn’t become too large a portion of your portfolio.” In a very real sense, Bitcoin is like a single stock, and advisors wouldn’t recommend putting a sizable part of your portfolio into any one company. At most, planners suggest putting no more than 1% to 10% into Bitcoin if you’re passionate about it. “If it was one stock, you would never allocate any significant portion of your portfolio to it,” Hammel says.

How to Use Bitcoin?

n the U.S. people generally use Bitcoin as an alternative investment, helping diversify a portfolio apart from stocks and bonds. You can also use Bitcoin to make purchases, but the number of vendors that accept the cryptocurrency is still limited. Big companies that accept Bitcoin include Overstock, AT&T and Twitch. You may also find that some small local retailers or certain websites take Bitcoin, but you’ll have to do some digging. That said, PayPal has announced that it will enable cryptocurrency as a funding source for purchases this year, financing purchases by automatically converting crypto holdings to fiat currency for users. “They have 346 million users and they’re connected to 26 million merchants,” says Spencer Montgomery, founder of Uinta Crypto Consulting. “It’s huge.”

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