Bitcoin has caused waves recently, with prices rocketing from $100 per bitcoin in mid-2013 to a peak of more than $19,000 in December 2017, Medscape writes. Most experts agree that investing in bitcoin is too risky — but investing in the technology that makes bitcoin possible may prove lucrative, according to the publication.
Invest in the Underlying Technology, Not Cryptocurrencies
Bitcoin is one of a number of cryptocurrencies traded online that do not fall under the regulations of the U.S. Securities and Exchange Commission or any other institution, according to Medscape. Cryptocurrencies, such as bitcoin, ethereum and litecoin, have been likened to the dot.com or housing market bubbles due to their volatility, the publication writes. Because of this, and the fact that they have no tangible value, “doctors could very likely lose all—or nearly all—of their money” if they invest in cryptocurrencies, Kathy Stepp, a founder of Stepp & Rothwell, tells the publication.
Karen C. Altfest, of Altfest Personal Wealth Management, also advises against investing in cryptocurrencies as they are “too volatile, too speculative and... it's difficult to assess a value," she tells Medscape. She also has concerns about security as digital keys can be lost, and there is the possibility of fraud without an “authority like a bank to appeal to," the publication writes. This sentiment is shared by the SEC,, according to Medscape.
Physicians certainly shouldn’t dip into retirement accounts to invest in bitcoin, Albert J. Zdenek, Jr. of Traust Sollus Wealth Management, tells the publication. For those who insist on getting into such a risky investment, “there's no harm in investing in bitcoin if you're truly prepared for a possible loss,” Altfest tells Medscape.
The technology that underpins bitcoin is known as blockchain, which is a digital ledger of transactions that is transparent, publicly accessible and continuously updated, the publication writes. In theory, this ensures authenticity and prevents fraud, according to the publication. Investors can purchase bitcoin through an exchange such as coinbase, but it is is blockchain technology that facilitates and records the transactions, Medscape writes.
Blockchain, rather than cryptocurrencies, are expected to have an impact on businesses with “advanced financial applications… in development," Ernst & Young tells the publication. Despite it being in its early stages, blockchain is expected to be seen in finance very soon and in healthcare after several years—as a way of storing information for insurance companies to approve payments, Zdenek tells Medscape.
If physicians want to invest in the technology, without the risk of cryptocurrencies, then they should look toward blockchain as this “is the real opportunity," Zdenek tells the publication. Buying bitcoin does not mean buying into blockchain, and physicians should instead find a startup that plans to make use of the technology—and be careful that companies claiming to be investing in blockchain are legitimate, Medscape writes.