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Should You Invest in Bitcoin?

The Rise of Cryptocurrencies

Written by Jason Williams
Posted September 9, 2016

For several years — ever since it became part of the mainstream lexicon, in fact — I’ve been asked if I think people should invest in Bitcoin. The answer I’ve always given is a resounding “No!”

bitcoins smallYou see, I couldn’t imagine investing in anything that fluctuated that much over such a short period in time. It’s cost less than a penny and more than $1,100! Even just in 2016, it’s bounced between $300 and $800!

And while I’m still skeptical as to the investment merit of bitcoins, I’ve changed my tune a bit as to the future of cryptocurrencies (of which Bitcoin is one). Why, might you ask?

Well, even while I was telling my friends, family, and readers that Bitcoin was a terrible place to put your money, I was also seeing that the future demands a currency that can be used for instant transactions. It also demands a currency that is not tied to the success or failure of any one nation-state.

Even when I was working in investment banking and my colleagues were trashing the entire idea of cryptocurrencies, I stood by my belief that it was an inevitability and that we’d soon see a replacement for Bitcoin that would even be accepted by the international banking system.

Big Banks Buying In

And late last year, two major U.S. investment banks proved me right. Both Goldman Sachs and Citi announced their progress in designing a cryptocurrency that could be used to settle trades instantly.

You see, currently, trades are booked one day and settle about three days later — that’s the fastest banks can transfer such gigantic sums of money. Even using the Federal Reserve’s system, known as Fedwire, while the money appears in your account within minutes, it’s not really there for another three days. That’s a long time to be out millions (sometimes billions) of dollars. A lot can happen in three days. The person who bought the securities from you could go bankrupt and the money could vanish before you get to see it.

Goldman and Citi want to do away with that risk and also cut down on the number of people who have to monitor all these things going on in the background to settle a trade.

Last month, several international banks around the globe took things a step further. They partnered up to create a universal cryptocurrency that can be used for instant settlement of payment around the world.

Four of the biggest banks in the world are working together to facilitate a new currency that’s based on the same technology as Bitcoin. That’s huge as far as the acceptance of cryptocurrencies... and also a death knell for Bitcoin.

You see, it still takes a good amount of time to settle transactions with Bitcoin, and even longer to convert it to cold, hard cash you can deposit at the bank or use at the grocery store. And the big banks I’m talking about (GS and Citi, and the new partners UBS, Deutsche Bank, Santander, and BNY Mellon) don’t accept it.

The new currency will be accepted by all banks, and the platform used to transfer it will accept the cryptocurrencies of other banks (but not Bitcoin).

So while I can’t give you a way to invest in this new currency and profit just yet, I am telling you that it’s going to kill Bitcoin. And that means any you may already own will become practically worthless. They’ll be a digital collector’s item. Who knows? In a few decades, our kids or grandkids may see them on Antiques Roadshow and vaguely remember hearing stories about them.

Bitcoin was a fad. And while some people were lucky enough to make some serious money from trading them, more lost out big. Before any more big losses hit, if I were you (and owned any Bitcoins), I’d sell them as fast as I could and get that money ready to be converted to the new international banking currency.

To investing with integrity (and insight),

Jason Williams
Wealth Daily

Follow me on Twitter @AllBeingsEqual

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