| Hi Taylor:
So help me, I've tried to understand cryptocurrency and even invested
in a few different coins, but I just can't wrap my head around it
and it all seems so volatile. Am I doing something wrong, or should
I just stay away? - Martin
Hi Martin: Pretty sure you're not doing anything wrong. I talk
to other investors who absolutely LOVE crypto and they're suffering
through the same rises and falls as you are. That said, it's important
to understand what you're investing in, and the unknown frontier of
these coins makes that a little tricky. Here are two big sticking
points for me when I'm discussing cryptocurrency with clients.
doesn't equal good. Except in the cases of Bitcoin and Ethereum,
name recognition doesn't have any staying power with these coins.
Dogecoin had its moment in the sun while Elon Musk was tweeting
about it, but it's worth less than two dimes at the moment and
no one wants to talk about whether or not they bought it during
the craze. If the only reason you know about a particular crypto
brand is people are talking about it, but you don't know why they're
talking about it, I think that's not something you need to buy.
It's easy to get sucked into the giant price swings and the stories
of people making millions overnight, but that's not investing
2. Web 3.0. All of this raises the big question: what is cryptocurrency
good for? You'll hear a lot of different answers to this, and
it's too early to know which school of thought is most correct.
Something I heard recently actually brought me a little clarity,
when a friend said we need to stop thinking about crypto as the
future of money and instead as Web 3.0. The allure of cryptocurrency
is the decentralization; a form of finance that steps outside
our current institutions. That's the same philosophy behind the
Web 3.0 or Web3 movement-where the way we use the internet becomes
less reliant on Google, Amazon, and Facebook. The same blockchain
technology that undergirds Bitcoin and most of the other coins
will serve as the foundation for this new, more independent web.
There are still infinite question marks about how this will unfold,
but it seems a little more tangible than digital currencies that
swoop in and replace the fiat money we use now. As you look at
different coins, learn about their ecosystem and what that iteration
of crypto is doing that might set it apart from the rest.
| If you choose
to invest your money in stocks and bonds and real estate because those
things make more sense to you, then do so! A good rule of thumb is
to invest in things you like and understand. If you don't want to
miss the crypto train, keep reading about it and look into Web 3.0
development. Thanks for the question!
© Taylor Kovar
February 4, 2022
More "Go Far With Kovar"
Information presented is for educational purposes only and is not
an offer or solicitation for the sale or purchase of any specific
securities, investments, or investment strategies. Investments involve
risk and, unless otherwise stated, are not guaranteed. Be sure to
first consult with a qualified financial adviser and/or tax professional
before implementing any strategy discussed herein. To submit a question
to be answered in this column, please send it via email to Question@GoFarWithKovar.com,
or via USPS to Taylor Kovar, 415 S 1st St, Suite 300, Lufkin, TX 75901.