How Bitcoin is penetrating RIA portfolios by looking riskier to ignore than embrace

Dangers remain but security, acceptability and upside all seem to have evolved just in the past few months, experts say Brooke’s Note: I recall when RIABiz was getting started up that our webmaster, Nevin Freeman, 21 at the time, suggested I buy bitcoins. Channeling my inner Warren Buffett who says to never buy anything you don’t understand or anything pitched by a person under 22, I ignored him. Now here we are writing about RIAs investing in Bitcoin (upper case when discussing the system and lower case when referring to the ‘coins’ themselves) on behalf of clients and a whole cottage industry springing up to assist advisors in doing so. Sanders Wommack says he is now much more disposed toward investing in Bitcoin than before writing it this story. One major point in its favor seems to be that we are no longer talking about Bitcoin but about Bitcoin 2.0, if you will. After some very public disasters for this open-source software, it has – by many accounts – been largely debugged. What is Bitcoin’s value proposition? Nothing less than the idea of the ultimate business disruption of banks and credit cards and areas where you otherwise get gouged unmercifully: money transfers, currency exchange and credit card fees.
David J. Dunn was like most financial advisors when it comes to Bitcoin: he didn’t want to touch the bizarre cyber-store-of-value with a barge pole.
Mind you, the president of Kingsbridge Wealth Management Inc., which manages $130 million of assets and is based in Las Vegas, was intrigued. He’d heard the hype. Then, last November, a venture capitalist that his firm invests with made a major investment in Ripple, a major Bitcoin payments company. That was the first time he thought there might actually be legitimate substance behind all the Bitcoin ballyhoo.
This post was published at Riabiz on September 8, 2014.

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