Cryptocurrency is a term you’ve probably heard about, but what does it mean?
Financial experts describe cryptocurrency as a digital form of money not issued by the federal government.
People who use cryptocurrencies are able to securely transfer funds at a fraction of the cost most banks charge for wire transfers and processing fees.
Depending the type of account you have, some financial institutions offer domestic and international wire transfers at no charge.
The average cost of domestic and international wire transfers range between $10 to $30.
Cryptocurrency users will pay anywhere from $0.11 to $4.
As of 2017, there are about 5 million active cryptocurrency wallets, according to the Cambridge Centre for Alternative Finance.
Today, there are more than 1,000 cryptocurrencies on the market. Some of the major digital currencies are Ethereum, Ripple, Litecoin and Bitcoin, which sits high at the top of the list.
Although Bitcoin is front and center, only 5 percent of Americans have invested in the digital currency.
Some of those investors are right here in Southwest Florida. Clifford Mitchem is one of the instructors of the MeetUp group, BitCoiners of Southwest Florida.
“We have the largest MeetUp group in Southwest Florida,” said Clifford. Attendees range from recent high school graduates to Baby Boomers.
“For as little as $20 to $100 they have potential in the world of cryptocurrency," Clifford explained.
But on the flip side, former investment banker Eric Bretan views digital currency as a risk no one should invest in. “To me its more gambling and speculative than a true investment. Most corporations and investors shouldn’t even consider owning [cryptocurrency].”
Bitcoin Highs and Lows
Bitcoin has been spinning since its creation in 2009. It is now considered one of the most popular cryptocurrency to date. People started paying more attention to Bitcoin in August 2016 when its price grew from $572 to $4,764 in one year.
Bitcoin’s highest moment was Dec. 16, 2017 where its value hit $20,000. But the celebration was short lived. Its value dipped sharply to $13,800 on Dec. 22, 2017.
Since then, Bitcoin’s value has been experiencing mini spurts of highs and lows ranging between $5,000 to $8,000.
On Sept. 8, 2018, Bitcoin opened at $6,183.38.
“You hear news that Bitcoin is never coming back,” said Clifford. But he’s confident Bitcoin, and other digital currencies, isn’t going anywhere anytime soon. “People all around the international community is already using it,” Clifford explained.
Where can you spend digital dollars?
“Currently, you can’t really buy anything with it,” Eric said. “You can’t go to your local Walmart, Winn-Dixie or Publix and buy anything with it.”
While you may not be able to use digital currency at big box retailers, Clifford said people can make purchases online. “There are over 100,000 retailers that have the option to pay with Bitcoin.”
In August 2017, Overstock.com announced it would start accepting cryptocurrencies as payment. The online retailer said it would take Bitcoin, Dash, Ethereum and Litecoin.
And since then several companies followed, including; Expedia, Microsoft, PayPal, PizzaForCoins, Shopify and the fast food restaurant franchise Subway.
Pros & Cons to Cryptocurrency
Although Eric Bretan is skeptical of investing in cryptocurrency, he suggested to “get in on the ground floor” and to “avoid the collapse of the U.S. Dollar.”
Once invested, Eric said to be aware of scammers because cryptocurrency is easy to steal. And since it is not protected by the Federal Deposit Insurance Corporation, FDIC, you won’t be able to recoup your losses if your digital currency was ever stolen.
Another disadvantage of investing in cryptocurrency is that it doesn’t produce any interest.
Clifford said the biggest misconception of investing in Bitcoin is that you can get rich quick. “You can make money, but like with any investment, you have to have patience,” he advised. “But if it sounds too good to be true then it most likely is.”