Excerpt of article below:
It’s difficult to deny the call of cryptocurrencies when their astronomical rise in value has turned many into overnight “millionaires.” I put that in quotes, because there is a debate around whether cryptocurrencies like bitcoin and ethereum should be considered money. Cumberland Advisors’ David Kotok says it shouldn’t. He explained in a client note:
We can think of a given cryptocurrency as a way to transfer money using a methodology that bypasses the traditional banking system payments we are accustomed to. Cryptocurrency transfer is a version of an electronic debit card. So it does permit the classic function of money as a medium of exchange.
But money is also a store of value. At least that is true of a currency with low or no inflation. And money is used to measure and account. Thus we have price references denominated in dollars or euro or yen. Bitcoin has not yet attained the ubiquity needed to meet those tests… So Bitcoin and all the other cryptocurrencies combined barely meet the threshold of anything other than a speculation for an investor. For now, at Cumberland, we do not hold any cryptocurrency in any managed account, and we do not hold any ETF that represents a cryptocurrency.
Read the full article at Barron’s: http://www.barrons.com/articles/in-bitcoin-we-trust-1501097792
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