Bitcoin millionaire now

CHANCES are you're feeling behind.

You probably know that Bitcoin has been surging. You also probably know that it's a cryptocurrency, that it suddenly becomes everybody's favourite subject when its value spikes or sinks, and that it's been around long enough that you should probably know more about it than you do now.

Worry not. We've gone back to the basics with financial advisers to bring you up to speed and help you answer a question that may be burning in the back of your mind lately: Should I buy Bitcoin - and how?

Every time Dan Herron typed "how to invest in Bitcoin" into Google, he got "10 million sources and no authority". This concerned the financial adviser at Elemental Wealth Advisors in San Luis Obispo, California. He wanted to learn about the cryptocurrency for his millennial clients and, of course, had been watching the asset's price spike this autumn. So he recently attended a two-day Bitcoin conference. Even that left him with more questions than answers and a sense that the culture around the currency might be a little too "bro-tastic".

Then he found Coinbase. The digital currency exchange - the largest in the US and most commonly used in the UK - increasingly represents the mainstream route for individual investors to buy Bitcoin in many countries. The bourse is registered in the US with the Financial Crimes Enforcement Network and has an E-Money Licence from the Financial Conduct Authority in the UK. Other major exchanges include Kraken, Bittrex and Binance, the world's largest spot crypto exchange by trading volume.

Exchanges typically charge fees of several per cent to deposit funds and trade. Users may also need to pay exchange-rate fees if the bourse only operates in a foreign currency.

For Mr Herron, setting up an account was a lot like signing up for Robinhood, the digital stock-trading platform. Over the Thanksgiving holiday, he input his local bank details, verified his identity and then bought US$ worth of Bitcoin by transferring money into his new account. The trading fee was around US$3.

New cryptocurrencies

Bitcoin may be the world's most famous digital currency, but it is far from the only coin in the universe.

In recent years a slew of new cryptocurrencies have entered the space, including Ethereum, Ripple and Tether. Even Facebook launched a cryptocurrency project in , then called Libra, but almost immediately drew regulatory blowback. The association behind the project has now changed its name to Diem.

Bitcoin as a longer-term investment

Billionaire investor Mike Novogratz has said he's seeing "tonnes of new buyers" amid "little supply" for Bitcoin.

The founder of Galaxy Digital hasn't been shy about his views on the cryptocurrency and said last month that it could reach US$65, (it's at about US$19, now).

He was replying on Twitter to Maisie Williams, who plays Arya Stark in Game of Thrones. She asked her million followers if she should invest in the digital currency.

Other celebrities who have previously backed cryptocurrencies include Snoop Dogg, Ashton Kutcher and Mike Tyson.

Elemental Wealth's Mr Herron sees Bitcoin as part of a larger conversation, particularly with younger investors who have a time-horizon of years and a penchant for digital finance.

He wouldn't recommend anybody rush to put their emergency savings in the cryptocurrency. But he does see it as part of an overall mix that might "juice your returns a little bit" in today's low-rate environment. "You might consider it if you have the ability to maybe put 5 per cent of your portfolio in there and just let it rise and see what happens," he said.

Future investment

Theresa Morrison, founder and partner at the Tucson-based financial advisory Beckett Collective, also sees the cryptocurrency as an investment in the future.

She feels that as "the native currency of the Internet", it may work well as an inflation hedge if clients hold small amounts, such as around one per cent of their portfolio's value.

Others worry about its volatility

On the other hand, Bitcoin "lacks some of the basic integrity of a real market," Gary Cohn, a former economic chief to Donald Trump and ex-Goldman Sachs Group honcho, said this week.

"Part of the integrity of a system is knowing who owns it and knowing who has it and knowing why it's being transferred," he said. "The Bitcoin system today has no transparency to it. So there are a lot of people that question, why would you need a system that does not have an audit trail."

The Bitcoin blockchain records every transaction in a public ledger. It does not, however, reveal the names of the people or organisations buying and selling the digital asset, only a string of random characters.

Dana Menard, the founder and CEO of Twin Cities Wealth Strategies Inc, is bullish on the currency's performance but has regulatory concerns.

"Without the SEC's blessing, the difficult thing for Bitcoin is the lack of oversight and Wild West speculation that has caused prices to make large moves in short periods of time," he said, referring to the US Securities and Exchange Commission.

What's more, Mr Menard urges caution when consulting advice about Bitcoin online. "It's unregulated, so anyone and everyone can give advice," he said, adding that not everyone will have the individual investor's best interests in mind.

"To me it looks like fools' gold," said Mike Caligiuri, founder and chief executive of Caligiuri Financial in New Albany, Ohio. The fee-only planner worries foremost about the currency's volatility. "It's a relatively new asset class that has a relatively unproven track record."

Because of this, Mr Caligiuri takes issue with a common refrain of Bitcoin advocates: that it serves as a helpful hedge in a portfolio because it is not correlated to the performance of stock or bond markets or commodities. BLOOMBERG

READ MORE: Buying Bitcoin: The basics