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Cryptocurrencies - What are they?

Hi i'm Laura Rotter of True Abundance Advisors.  

This past weekend bitcoin was on the cover of Barrons and yesterday Coinbase, a cryptocurrency  exchange, went public at close to a hundred   billion dollar valuation. So I figured it was  time for me to talk about cryptocurrencies. What is a cryptocurrency? It's a virtual currency,  it's created on computers, it's held in digital wallets and it's put in circulation by a network of computers called a blockchain. 

No central bank issues the currency and no regulatory body or nation state stands behind it. And it's important to know  that ,in the case of bitcoin, there's a limited supply which is projected to run dry sometime in the year 2140, so you've got some time. So, why are virtual currencies so popular? Well, first of all, like I just said ,no nation state and no regulator controls it and people like that, and people like the privacy that it provides. And you might have  noticed recently that people are enjoying   speculating. Gamestop and other meme stocks have gone up dramatically, and so it's attracting the same kind of  people to virtual currencies. And frankly, virtual currencies are becoming more mainstream,  and many people see them as representing a historic breakthrough in how we use currency and  how we use exchange, and it very well might be.  

But this begs the question: what role  should virtual currencies play in your investment portfolio? and here I want  to differentiate between an investment   and a speculation. In its relatively short  history, bitcoin has been extremely volatile. It's gone up by 40 and down by 40 percent  within a month or two. So that is to say, it is NOT a reliable store of value. Bitcoin cannot be used as a cash substitute.  And by the same token, it's not a good inflation  hedge because of its volatility. What it is, is a speculation, and if you're drawn to speculating I  recommend putting no more than one or two percent   of your portfolio in virtual currencies and be  prepared to lose a lot of money. I would like to end with the fact that, it sticks in my head  the saying: when they're yelling you should be selling. When something is on the cover of Barrons and everybody is talking about it, including me, that is probably NOT the time to establish a large position in that particular name or speculation. I hope this has been helpful. Please go  out there and Live Your Life On Purpose