#Everyoneneedsaplan when speculating with bitcoin

What do you know about bitcoin?

Dean has a few tips to help you understand:

• Bitcoin is similar to a currency (cash) and is used to pay for goods and services, usually Internet purchases;
• The difference is bitcoin is not regulated by any government and therefore governments don't control the supply;
• There is massive speculation that bitcoin will replace cash for purchases (specifically on the Internet) and this is fuelling the price;
• Bitcoin is difficult to exchange for actual cash;
• Bitcoin is difficult to value as an investment because it has no real assets;
• Almost all Investment Advisers have recommended not to invest in bitcoin at this time. 

Remember: if it sounds too good to be true it usually is too good to be true!

The Australian published the following article - James Kirby The Australian 5:11PM December 13, 2017

RBA's timely warning on bitcoin.

A severe and timely warning on bitcoin speculation from the RBA comes not a moment too soon as Australia's million-strong DIY super fund operators swamp advisers with enquiries about cryptocurrency.

Though trading in bitcoin has so far been limited to day traders and casual speculators, there are no rules expressly banning SMSF funds from buying, hoarding or trading cryptocurrency.

But there are complex rules covering SMSF compliance relating to bitcoin ownership which can easily create trouble for fund operators who are clearly being tempted to join what RBA governor Philip Lowe has branded as
'speculation mania'.

The RBA warning may well have been timed to follow what is regarded as the most important development in bitcoin this year the opening of futures trading in the alternative currency earlier this week in the US.

Many in the market believe the trading of bitcoin on established markets such as the Chicago Board Options Exchange increases the possibility that any crash in the bitcoin price will trigger negative sentiment across wider
investment markets.

The price of bitcoin (bitfinex exchange price) is currently close to the $US17,000 mark after another period of highly volatile trading possibly accelerated by the arrival of 'big money' such as hedge funds into the market.

As fears grow among conservative investors that bitcoin creates risk across all securities markets, accountant Ray Itaoui an SMSF specialist at Hayes Knight in Sydney has warned that SMSF investors suddenly enthusiastic to join
the cryptocurrency boom may be inadvertently breaking compliance rules on bitcoin: "We are getting inquiries all across the practice. But it is very difficult to buy bitcoin through a super fund and I expect some people buy using
personal credit cards this immediately creates issues because SMSF activities should be entirely separate from personal activities. There is a clear risk of fines or further trouble with the regulators in this area.'

Itaoui also indicated the crucial 'sole purpose' test which says all SMSF activity must be for the benefit of fund members could be tested by speculating in the regulation-free world of cryptocurrency.

Many of the stated attractions of bitcoin posted prominently on cryptocurrency exchange websites were directly disputed by Governor Lowe. Bitcoin supporters will no doubt read the defence of the current system from
incumbents such as Governor Lowe or other central bankers around the world as a conspiracy to arrest the success of cryptocurrencies. However, it is clear Lowe's observation that the number of payments that can be handled by
bitcoin is relatively low remains true. It also beyond doubt the enormous amount of electricity needed to mine the currency is not a positive development on a range of fronts including energy security.