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BITCOIN & CRYPTO CURRENCIES

Good Morning Readers!  So…is Bitcoin here to stay?  Is it a legitimate currency or is it simply another fiat or fad currency?  We have been researching and discussing the craze and issues surrounding Bitcoin and crypto currencies, and wanted to share what we learned with you.  It seems that everyday people we speak with tend to have many of the same questions…such as:

  • How does it work?  (Click HERE for a basic introduction to Bitcoin)
  • Is it a real and viable currency?
  • Is it a bubble?
  • Is is sustainable?
  • What backs this and other crypto currencies?
  • Will crypto currencies put the banks out of business?
  • Should I invest in crypto currencies?
  • Is it safe?

Trying to answer all these questions isn’t possible in one post.  Rather we simply want to address these questions, but from a broad or macro spectrum.  Listed below are a few links from some pretty smart people who have a good understanding of the economic, financial, geo-political and social perspectives who also share their thoughts on crypto currencies.  Just take some time and listen to what they have to share.  You don’t have to take their word for it, just balance what they’re presenting and addressing and compare it to the many, many crypto currency proponents out there in order to get a more balanced view.  That’s all…  So, take a listen to these interviews (some of these interviews cover a multitude of economic areas other than crypto currencies, but what they have to say in these other areas shape their views on crypto currencies.  Then we’ll highlight a few of our own points to consider further down in our post:

CAUTIOUS PERSPECTIVES ON BITCOIN AND CRYPTO CURRENCIES:

POINT #1 – There are so many questions and issues related to Bitcoin and crypto currencies as to whether or not they’re a legitimate form of currency.  Before we go any further in expressing our opinions, let me be very, very clear on this…  GMS Business Consulting, Inc. is NOT an investment advisory firm. We do NOT give clients investment advice…period.  We provide business advice and are compensated for providing business advisory services and guidance. Because we have financial backgrounds at international investment firms and international consulting firms, we are simply choosing to exercise our freedom of speech by expressing our OPINIONS on various sorts of issues, events, and matters including Bitcoin and crypto currencies to our readers.

So…our short answer as to whether or not Bitcoin is a legitimate currency or not is…in our opinion is…yes, it’s “currently” a legitimate yet limited form of currency as evidenced by some businesses and individuals accepting Bitcoin as a form of payment for goods and services provided.  That said, this crypto currency has never been tested in a financial crisis nor can it be “directly” purchased or redeemed at your local bank (yet).  You can purchase crypto currencies directly through a crypto wallet (such as Coinbase) by using your bank account or debit card/credit card to purchase the crypto currency itself and storing it in your crypto wallet.  However your local bank doesn’t currently “issue/sell/redeem” Bitcoin.  Once you have the crypto currency in your crypto wallet, you may then use these to pay for products and services from businesses who accept Bitcoin or other crypto currencies for payment.  The funds used to purchase crypto currencies do come directly from your bank account in the form of U.S. dollars (or whatever your local currency is such as euro’s/ sterling/etc.), and the crypto currency can then be sold and stored in your crypto wallet to purchase other crypto currencies such as Ethereum or Litecoin…or… the proceeds may be converted back into your local currency and redeposited back into your local bank account.

POINT #2 – Now…as far as “investing” in crypto’s is concerned, there is no doubt that many, many individuals have made a lot of money investing and trading these crypto currencies over the last few years, especially in 2017.  That said, many, many people will lose a lot of money as well investing/trading Bitcoin and others, just as many individuals made and lost money in the .com bubble and the real estate bubbles.  Both of those bubbles had viable companies and assets, but many companies were not viable or they increased to such highly inflated values with nothing to to back their valuations, resulting in their downfall.  Did some .com companies and real estate survive the 2008 financial crisis and still exist today?  Of course some survived and thrived!  But not all survived nor made money.  Given that crypto currencies are relatively new, untested, highly volatile and to a great extent still somewhat of a mystery as to how they actually work and what backs the value of these crypto’s at the end of the day, we would approach investing in crypto’s with caution.  Invest only what you could afford to lose.

POINT #3 – As far as “trading” crypto currencies, it all comes down to buying low and selling high…it’s about TIMING!  It’s about “when” you buy and when you sell.  If you don’t have knowledge about the investment vehicle you’re trading AND a discipline to manage your trading, then you’re simply gambling your money blindly with the hopes and dreams of making money.  It’s called greed…  As humans, we tend to be motivated by two emotional states of mind…greed and fear.  Right now, 9 years after the real estate bubble, and 16 years after the .com bubble, many people have forgotten the the golden rules…the principles of investing…buy low, sell high.  The question is…how high will Bitcoin and other crypto currencies go?  Nobody knows!  If you believe you have an adequate knowledge of crypto currencies and the discipline to successfully trade these crypto currencies, then by all means exercise your freedom to do so.  If you don’t have either one, then I  would make three recommendations:

  1. Get informed on both sides (research the pro’s and cons/risks of investing in crypto currencies) from knowledgable, experienced sources, and…
  2. Implement a disciplined investing/trading system to identify changes in the momentum of the particular crypto currency you’re interested in investing or trading, and lastly…
  3. Invest only what you can afford to lose…period.  As mentioned before…these crypto currencies have NOT been tested in a financial crisis.

POINT # 4 – When it comes to really understanding the mechanics of crypto currencies, I still have not seen nor heard a “clear” definitive description or seen a diagram adequately explaining just how these actually work, (terms such as “distributed ledgers” and “blockchain” technology etc.)  How do they really work?  We’ve read the definitions, but even with our financial and consulting backgrounds, it’s still challenging to comprehend the meaning and processes involved given that the definitions are filled with crypto coding language to decipher in order to understand a single point in the definition itself!  Could YOU describe these terms to your colleagues so that they really understand how they work?  Can you explain it to the average person on the street in detail that perhaps even to a high school student to understand?  Or…are they so complex that only coders may understand?  That was the problem with derivatives… People could use the lingo, but they really had no idea of how they actually worked.  In my view, if you can’t explain it in plain…clear…English, then the person describing it really doesn’t understand it either.

POINT #5 – What actually backs these crypto currencies?  Other worthless forms of fiat currencies?  In a melt-down or an extreme loss of confidence, what is actually protecting and backing the value of this currency?  Who is backing it?  Enough said about that…

POINT #6 – Also, please consider the following points related to Bitcoin and crypto currencies:

  • If you believe investing or trading in crypto currencies will not become controlled and regulated by Wall Street and the central bankers of the world, the IMF or the BIS…think again.
  • If you believe Wall Street and the central bankers of this world are going to hand over or transfer their oversight/regulation/money-making control and power of international banking to unregulated crypto currencies to the individual or to the wild west internet?…think again.
  • If you believe Bitcoin or these crypto currencies can continue increasing in value without revaluations/corrections etc…think again and don’t forget the lessons of history.

POINT #7 – All that said, in this post, we’re simply wanted to present the cautionary-side of Bitcoin and crypto currencies by some very seasoned professionals with different backgrounds, and to give you some food for thought before jumping on the bandwagon of crypto currencies.  We wanted to provide the cautionary side because there are dozens and dozens of people singing only the praises of Bitcoin and other crypto currencies.  As mentioned earlier, you can watch dozens and dozens of people endorsing crypto currencies all over the internet.  And who knows, they may be spot-on with their research and analysis, but many are simply trying to sell you something without explaining the downside risks or providing a sound foundation of information for the individual.  We’re not concerned with Wall Street or the central bankers or the individuals who have already made their fortune by investing on the ground floor of these crypto currencies.  We’re mostly concerned about the average person, professional or laborer, who works hard for their money trying to make a living, and are considering crypto currencies.

POINT # 8 – Lastly, we do believe crypto currencies and blockchain technology are here to stay, but not in their current state…  Whether we like them or not, they’re part of our future in one form or another.  The issue is how will these crypto currencies be valued, protected, backed, as well as, how and who will regulate them?  Which of these will survive?   Have you considered that perhaps the central banks of the world, the IMF or the BIS are in the process of creating their own crypto currencies?  Do you think they haven’t been exploring this already?  Our thoughts and recommendations are simply to do your own research, speak with your investment adviser, and then proceed with caution.  We hope this post is of value to you because you are valuable to us…  Keep an eye out for our upcoming post in a few weeks about Hashgraph…will it replace blockchain technology?

GMS BUSINESS CONSULTING – provides lawyers and business professionals with Accounting Services, Business Development Services, Business Optimization Services and Digital Marketing Services to help business professionals successfully organize, grow and operate their businesses more effectively and efficiently.  We do NOT provide investment advice.  Contact Us  if you are interested in learning more about our services, and in particular about M.A.P.(our 3-phase business development solution), designed to help you strategically focus and tactically grow your business.  We would welcome the opportunity to speak with you.

info@gmsbusinessconsulting.com

707-218-3135

John 14:15

 

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Cyber Security – Part Two

Jim Rickards – THE DAILY RECKONING

Hello everyone…this is Part 2 of 3 of our series called Cyber Security.  In 2016, Accenture Consulting published a cyber security white paper (geared towards large organizations) that we thought would be of interest to business owners like you.  This study goes into a more in-depth analysis supported by industry interviews and statistics.  You can download this white paper in two formats; either the Executive Summary or the Complete Report.

Having worked for a forensic accounting firm for several years, I understand some of the challenges and vulnerabilities all organizations face, and that we as consumers face regarding cyber security.  The challenge is, there doesn’t appear to be much access to simple, step-by-step, practical standards of cyber security available to small business owners to readily implement.  This is a real problem!  The white paper focuses its attention on cyber security threats of larger organizations, but we as small business owners can learn from their challenges, approaches and solutions.  The small business owner (and individual alike) needs access to practical, actionable standards of practice against cyber security threats and the protection of their data.

When we think of cyber security from the perspective of a small business owner or as an individual, think about it in terms of our smartphones/ tablets/ and computers.  We either grant permission for auto updates or regularly receive promptings to update and “accept” software company’s “terms and conditions” to either download or update the software on our devices.  This “acceptance” grants those software companies access to our data through our phone cameras, microphones, phone records, pictures and access to other data files.  It’s quite obvious that we have been conditioned to accept whatever terms and conditions are asked by these software companies in order to comply with their downloading/updating standards.   Why should you grant access to all these requests for your smartphones solitaire game?  What this means is that our data and our privacy are at risk.  Our privacy and security are practically non-existent because we have blindly “accepted” software providers terms and conditions.  We therefore have either knowingly or unknowingly relinquished our privacy, our data and control of our information, how it’s managed, secured and shared with others.  This can and does have serious repercussions!  How could we be then surprised that our information could be stolen and disseminated all over the globe?  We have only ourselves to blame.

We would recommend reading the white paper referenced above by Accenture Consulting, and think about how large organizations are approaching this eminent risk.  What can we as small business owners learn and implement from these organizations to better protect our privacy and data (and client data), and to help mitigate cyber security threats and breaches?  We’ll post a follow-up in Part 3 of this series in a few weeks to address how we as business owners (and individuals) can take some practical and actionable measures to better control the security and privacy of our data.  Well I should say, as best we can given that we live in a state of technological acquiescence…whether we choose to believe it or not.  Until then, we hope you enjoy reading the white papers by Accenture Consulting.  Back to you in a few weeks…

Contact Us if you would like to discuss business strategies for your business.

GMS BUSINESS CONSULTING provides lawyers and business professionals with Accounting Services, Business Development Services, Business Optimization Services and Digital Marketing Services to help business professionals successfully organize, grow and operate their businesses more effectively and efficiently.  We do NOT provide investment advice.  Contact us if you are interested in learning more about our services, and in particular, about our M.A.P. (our 3-phase business development solution) to help you strategically focus and tactically grow your business.  We would welcome the opportunity to speak with you.

info@gmsbusinessconsulting.com

707-218-3135

John 14:15

 

GMS Business Consulting No Comments

Cyber Security – Part 1

Jim Rickards – The Daily Reckoning

Cyber Security may be the number one economic threat to individuals, businesses and to our nation.  Recently, there was a massive breach in cyber security for some of the largest companies in the world.  For the most part, it was brushed over on mainstream media for a few days.  Nothing substantial was revealed in terms of understanding the nature of this particular cyber hacking, and the potential threat and depth of damage this may have lead to.  Jim Rickards wrote an interesting post on his blog, THE DAILY RECKONING regarding cyber security that we thought would be of interest to our clients and readers.  Jim gives a macro perspective on the three degrees of the cyber security threats that currently exist in the world today.

We’ll post a follow-up to this in a few weeks to address how cyber security experts are strategizing about how to best address this imminent threat currently and for the future.  Hopefully their insights will enable us as business owners and individuals to take practical and actionable steps to better control the security and privacy of our data (well, as best we can).   Given that we live in a state of technological acquiescence (whether we realize it or not), have you ever seriously considered just how quickly and easily we “accept” the terms and conditions of downloading new software or software updates to our smart phones?  Do we really understand the access rights we are granting to these organizations, and what they’re doing with our data and who they’re sharing our data with?  Think about it…  Until then, we hope you enjoy reading the article by Jim Rickards.  Back to you in a week or two…

 

GMS BUSINESS CONSULTING provides lawyers and business professionals with Accounting Services, Business Development Services, Business Optimization Services and Digital Marketing Services to help business professionals successfully organize, grow and operate their businesses more effectively and efficiently.  We do NOT provide investment advice.  Contact Us  if you are interested in learning more about our services, and in particular about M.A.P. (our 3-phase business development solution), designed to help you strategically focus and tactically grow your business.  We would welcome the opportunity to speak with you.

info@gmsbusinessconsulting.com

707-218-3135

John 14:15