Cryptocurrency is a form of digital money that operates independently of governments and banks. The most well-known example is Bitcoin, which was created as an alternative to traditional currency.
While people often talk about crypto as a single category, it is really a mix of different technologies. Some act like digital money, and others act more like tech startups with specific purposes. It all runs on a decentralized system called blockchain, which basically records every transaction securely and publicly.
To some or many Americans, it may seem to be a fad, but Rob West, CEO of Kingdom Advisors, and host of "Faith & Finance" on American Family Radio (AFR), says Bitcoin appears to have crossed the threshold into mainstream acceptance.
"It now makes up 60% of the total crypto market. It has SEC-approved (US Securities and Exchange Commission) exchange-traded funds (ETFs). We've got one the most pro-crypto president ever with President Trump, and it's being adopted by institutional investors," informs West.
West likes to compare it to what he calls “digital gold” because of its scarcity and its role as a potential storer of value.
"Remember there's only ever going to be 21 million Bitcoins created, and so it has some of those same attributes of money," reminds West.
Meanwhile, other cryptos are less certain. In fact, West says that many are experimental.
"They have no guarantee of long-term survival, so I would just say that, while Bitcoin seems here to stay, most of the crypto universe is still in the prove-it phase," West says.
If an investor is going to include crypto is her/her portfolio, West says that he would "stay with Bitcoin for right now" as he described everything else as “the wild wild west.”
“If we look at Bitcoin as digital gold and we put it in that category, I would say that you want no more than 10% in our gold or precious metals category, and I would take a portion of that and allocate it to Bitcoin,” explains West. “So, we're still talking about probably no more than 5% of your portfolio, and even then, you need to understand it's highly volatile. So, you need to be a sophisticated investor willing to weather those ups and downs."
