Is Digital Currency Being Used by Wealthy Individuals?

Is Digital Currency Being Used by Wealthy Individuals?

In general, wealthy folks are more open to taking risks with non-mainstream investments because their portfolio is diversified and deep enough to withstand the volatility of high risk/high reward investing. Yet many affluent individuals continue to be wary of investing in cryptocurrency.

This may be partly due to the fact that the first form of digital currency, Bitcoin, was introduced just over a decade ago, and questions remain about whether it will continue to maintain its relative value over time. Like paper money, or flat currency, digital currency has no actual intrinsic value. Unlike flat currency, it is not issued by the government of any country, nor does the government maintain the supply of cryptocurrency that is in circulation.

Using Bitcoin as the example, supply depends not on a centralized network, but rather on a type of database called a blockchain, which is accessible to all users. Although the process for doing so is complicated and laborious, any user can contribute transactions in blocks of data that, when combined, form a decentralized ledger that determines supply. No single person or group has control of this database.

Let’s Talk about Volatility

Though there has been some digital currency volatility, the trend since its inception has been mostly positive. The value of a single Bitcoin, which was $196 in 2013, has risen to close to $50,000 as of March 2021. Still, for some HNWI’s, who are used to going through traditional channels, the risks and complexities involved with digital currency may be too much.

There are other options when investing in digital currency that may be more palatable, such as new investment strategies that are only partly supported by cryptocurrency. One such platform called BOND allows investors to buy shares in a diversified asset portfolio that contains property bonds and real estate in addition to cryptocurrency assets.

Protect Your Money

As a high net worth individual, when considering digital currency or any other type of investment, you’re likely open to some amount of risk in order to grow your portfolio. The aspect of your overall financial strategy in which you cannot afford to take any risks is safeguarding your assets from financially damaging litigation. An attorney can offer asset protection legal advice and devise a plan to protect your money from this outcome.

Contact our law office in Newport Beach, Orange County for a virtual consultation to start the process of putting an asset protection plan in place.

Posted in Updates.