What is it? Is it safe? Why does it matter now? Are there benefits and what are the drawbacks to having or using a cryptocurrency in your transactional life?

Many programmers and companies have long sought to create something known as the “Universal Currency”. One that can be spent anywhere and at the same time tracked or accounted nowhere but the spender’s own personal ledger. But who is to own this system of currency if there is not one universal ledger but many, one for each holder? The answer is, no one – yet.

Cryptocurrency is uncontrolled by any one system. There are many cryptocurrencies today. The big two are Bitcoin and Etherium. But now there are many more “altcoins” (digital money forms) coming to market. The lure of cryptocurrency is that this money is not in the global banking industry. The major money centers siphon the funds that move through them. Security is another reason to hold cryptocurrency. It is a great way to hide money. The only problem is whether it will be there when you need to cash it into your local currency.

The market for digital currency is wild. It fluctuates on the turn of world events. The swings in the value of Bitcoin have been astronomical. Today it is well over $5000 and last year it was well under $2000.

The real problem is there is no intrinsic value in cryptocurrency. The value of a currency is relative to the underlying issuing body’s ability to pay. This is one reason you do not own the cash in your pocket. It is owned by the issuing government’s promise to pay you the value of the currency when you need to collect it. Cryptocurrency is much the same but it can be a much slower process to get real spendable funds from your crypto dollars. The value of cryptocurrency is how much someone will pay plus the processing cost. It is possible that one day it could become valueless. World calamity could shut off all electronics, and the currency would disappear. (Precious metals do not have that problem but they have inherent risks of their own.)

There are many investment seminars, clubs, and groups who invest specifically in cryptocurrency. To me, it’s a gamble. It is worth it if you have extra money above and beyond what you have to save or invest. Why? I like the block-chain technology that is the backbone of cryptocurrency. Also, it’s a good idea to be invested in current technology. The players will change or consolidate eventually, but if you have the extra saving/risk dollars, it is worth investigation. Right now, it is the best game in town to beat the banking system. The value may swing widely but those who hold on long-term and those who buy low and sell high gain the most for their savings ahead.

Cryptocurrency is currently is a speculative investment. Plan your cryptocurrency investment as a speculation until you realize the true value and process it takes to earn with it. Remember that there is no guarantee you will get a return on your investment.

Let me suggest an alternative that does have intrinsic value. Gold, specifically, but precious metals, in general. Gold is a commodity used in manufacturing and also for ornament. It can be bought as a hedge against inflation or a “flight to safety” if the world turns sour. If you have it, others will pay handsomely for it. This is the case with anything you and someone else both hold as valuable. Silver is much the same, but as with all real commodities, you have to factor in the secure storage of the commodity.

All investments involve two important concepts. The first is safety, or the ability to lose your principal investment. The other is the return on the principle (interest, capital gain). Measure these anytime you are considering an investment.