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Casa: What do Financial Advisors Need to Know About Bitcoin

Nick Neuman is the CEO of Casa, a secure way for high net worth individuals to store their bitcoin. Here he shares his thoughts on what he believes financial advisors need to know about Bitcoin.

Nick Neuman, CEO and Cofounder, Casa
Nick Neuman, CEO and Cofounder, Casa

Bitcoin is the punk rock of money. It’s brash, it breaks the rules, and the financial establishment doesn’t like it one bit. And like punk, Bitcoin has a strong do-it-yourself ethic, especially when it comes to education. You can see why personal financial advisors (PFAs) might be wary of getting involved in this revolution, especially if they think they’re neither needed nor wanted.

In fact, the opposite is true. Financial advisors are very much needed in the world of cryptocurrency investment, which moves so fast it’s hard to keep up and easy for people to make mistakes. Without the right advice, these knowledge-poor enthusiasts risk making a catastrophic error, either in the way they invest or in how they protect their coins.

If financial advisors are ahead of the curve and can show they match their clients’ needs in this new world, they will play a crucial role in Bitcoin’s development, and set themselves apart from their slow-moving competitors.

The Bitcoin Moment

Why bother learning about Bitcoin at all? Surely it’s just a fad whose moment in the sun has passed following its post-Elon Musk plunge?

Forget that Bitcoin has been written off many times in its short lifetime before roaring back to new heights; ignore the fact that Bitcoin is still trading higher than it did at the turn of the year. Because an obsession with the short-term peaks and troughs is a rookie mistake – in fact, exactly the sort of error that financial advisors are excellent at helping their clients avoid.

In reality, Bitcoin has never been stronger, thanks to major de-risking over the last 18 months or so. There are several factors that derisked it as an investment. First, there’s adoption by major institutions: not just risk-taking visionaries like Tesla, but including deeply conservative financial players like MassMutual and other insurers.

Secondly, once an asset class passes $1 trillion – as Bitcoin did earlier this year – it becomes large enough that big players can make significant investments without moving the market. This level of liquidity is often a requirement for institutional investors, and now Bitcoin has reached the mark. Meanwhile, publicly-listed companies like MicroStrategy, Coinbase, Square and many others are converting their corporate treasuries to Bitcoin, making it increasingly hard for regulators and central banks to restrict access to Bitcoin, as many feared earlier in Bitcoin’s life.

Finally, there’s the looming spectre of inflation. Consumers don’t need to read the Wall Street Journal to know that inflation has risen to its highest levels since 2008, they see it everyday at the gas station or grocery store. So while the Fed “talks about talking about” raising interest rates, many ordinary people are already preparing for this unprecedented era of low inflation to draw to a close.

For everyone from institutions to ordinary savers, the Bitcoin Moment is right now. And that’s equally true of PFAs; in fact, the world needs their expertise more than ever.

Experts needed

There’s one thing the naysayers have got right: the crowded cryptocurrency market is a bubble. Like the tech boom at the end of the last century, there are a host of competing coins – most of them vastly overpriced and heading for oblivion, but not before taking their investors’ money with them.

That’s why we need smart, self-educated PFAs to steer investors away from bad choices and help them tell the Amazons from the Altavistas. We don’t want PFAs to be evangelists for Bitcoin or any other cryptocurrency; activists make poor advisers. But we hope to see them take the time to develop an understanding of Bitcoin’s technology and philosophy, and to understand why so many people are investing in digital gold as a way to secure their wealth.

The first duty of any PFA is to be able to tell their clients how an asset has performed over time and to give some indication of the likelihood of whether this performance will be replicated in the future. Let’s be completely honest: Bitcoin won’t be as safe a bet as General Motors stock any time soon. Only by understanding wider economic and market trends, however, can PFAs give clients expert, informed advice on the risks and rewards of investing in Bitcoin.

But understanding the economic argument isn’t enough. Bitcoin represents a digital revolution in money, and that requires some degree of technical knowledge. Because while stocks can lose their value, Bitcoiners are vulnerable to losing their entire investment through theft or fraud. Financial advisers, therefore, need to know at least a little about these risks and how investors can guard against them – for example, by protecting their cryptographic keys effectively.

Such technical knowledge pays dividends. The more you learn about the technical aspects of Bitcoin and the blockchain, the quicker you realize that Bitcoin’s long-term value is driven by the ever-increasing utility it brings to a range of financial, business and consumer applications.

Developments like these are powering the Bitcoin revolution, which will take place with or without PFA participation. But it would be so much better for everyone if financial advisers engaged with and learned about Bitcoin. Without their impartial expertise, we’ll see more investors following celebrities and other false prophets, investing more than they can afford in things they don’t understand.


  • Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.

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