“Price is the least interesting thing about Bitcoin.”
–Roger Ver
“Bitcoin breaks $11,000, less than 24 hours after passing $10000.” Business Insider, Nov 29, 2017.
I remember selling 15 bitcoins at $250 in 2014, proud of my 2x return. Hindsight 20/20, I could have held on and sold them for over $300,000– enough to pay off my entire house! Why was I such a fool to sell?
You probably have that one friend who brags about making $30k off Bitcoin, Ether, ICO’s, or Alt-coins -the term for the hundreds of alternative crypto-currencies out there. Gobs of easy money made overnight by doing almost nothing – it makes me feel FOMO just writing about it. Why didn’t you get in sooner?
Is it too late to make money off this trend?
Now that prices are back down to $8000/btc, is it time to buy? Or are we facing the next dot-com bust?
Did you get in at the right time?
“19-year-old bitcoin millionaire offers investing advice.” CNBC.com, Jan 24, 2018
The lure of bitcoin is that it seems like an easy way to get money to grow your business. Opening a wallet takes minutes. Purchases are instant on credit cards. Transaction fees are very low. And, if you search, you can find stories of “overnight” bitcoin millionaires.
Just think – you could earn a quick $50-$500k and jump start your business! But how many successful companies were built on get-rich-quick schemes?
Why is bitcoin a bad idea for your business?
Murky regulation
The relationship between government and cryptocurrency is constantly changing. At least 8 countries have banned the use of the currency in their borders entirely. The U.S. recognizes it as an asset but is considering additional taxes and regulation.
For those already dealing in this space – do you know the tax consequences of your trading?
Because bitcoin is not backed by any government, countries are very leery of allowing trading using the currency within their borders. Both China and Russia have banned the use of bitcoin. They feel the use of the currency is suspicious and potentially illegal. South Korea is currently pushing it into the black market. Each of these bans has led to a sudden decrease in the currency’s value.
Instability
For many, the beauty of bitcoin is that the value continues to change. For the small business owner, that’s like partnering with a supplier who unpredictably changes their prices. As an owner, you need to understand your cash flow, and with crypto, that changes hour to hour.
The price of a bitcoin continues to fluctuate. After hitting a high of $20,000 per coin, prices recently have plunged by more than half, closing near $6200 on February 5. Imagine feeling prosperous on Monday, then being at-risk of bankruptcy on Tuesday. There’s no long-term strategic planning for a CEO facing those challenges.
Lack of central authority
Trust is the only thing that matters in financial transactions. Since bitcoin and other cryptocurrencies are not backed by any government entity or tangible assets, it’s difficult to trust that it’s worth anything.
Central authority matters.
Governments control currency with one goal in mind – stability. The stability to stimulate investment and spending, to manage fiscal policy and the business environment and avoid out-of-control inflation. To abandon that stability and move into crypto is like going back to the gold standard.
Bitcoin plunges
Until the bitcoin market levels out, all the hype is just words.
Over the past few weeks, the bottom has started to drop out of the bitcoin market. As of February 7, bitcoin has lost over 50% of its value in the past month. Remember that friend bragging about making $30k? He won’t be bragging about losing $50k now, he’ll keep that to himself, embarrassed and ashamed.
Do you really want to ride that roller coaster?
There may be a place for cryptocurrency in your portfolio. As a method for raising capital or acceptance for transactions, it’s a gamble.
If you’re willing to ride the rush – you need to be willing to handle the crash.
What can you afford to lose?
There are better ways to raise capital or manage cash flow. Let us show you the time-tested systems that long-term businesses master.
Want to learn more about the new tax law? CFOshare can help. With more than a decade of experience, our team provides worry-free financial and operational services to entrepreneurs, small businesses, and nonprofits. Contact us for a free 6×60 review today. We’ll sit down with you for an hour to discuss your specific needs.
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