As awareness of bitcoin grows, it’s increasingly likely that some of your clients will ask you questions about it, if they haven’t already.

Assuming you aren’t informed on the subject, even a superficial understanding of bitcoin and its vehicle, blockchain technology, may involve rearranging some mental furniture in your mind’s economic living room.

But, while getting your head around bitcoin may involve a lot more time and intellectual energy than most advisors care to invest, it could keep you from appearing uninformed in client meetings.

Bitcoin has an undeniable PR problem that’s doubtless influencing some clients’ opinions. Yet, these opinions are often uninformed, as bitcoin is still a mystery to much of the public.

Incidents of fraud and manipulative hype, along with wild swings in value, have resulted in the popular myth that bitcoin is inherently risky, fraudulent and without any legitimate use. In some ways, this is like saying that all securities are necessarily high-risk because of frauds perpetrated to boost value, or that the almighty dollar itself is corrupt because of criminal acts to get it. To see this, to separate fact from fiction, clients need some basics about what bitcoin is and how it works.

Here are five talking points for client meetings:

• Bitcoin is a technology, a currency and a payment network. It was conceived for the Internet and the digitally connected world we now live in, and is unlike existing means of transmitting value, most of which were created long before the Internet existed. Bitcoin’s launch in 2009 marked the first time in history that it became possible to transfer currency person to person (P2P) anywhere in the world nearly instantaneously and at little cost, without an intermediary such as a bank.

• Bitcoin can potentially reduce the cost of remittances to close to zero. Every day, immigrants throughout the world stand in line to cash their paychecks and wire money back to their families in their native countries. Despite all the new technology that has been created, the average cost to send those funds sits at about 7 percent, with banks charging the most—an average of 10.44 percent. That means for every $100 sent, the immigrant’s family ends up with only about $90, sometimes even less.

• Bitcoin enable privacy that other payment methods don’t. Every time you use your debit or credit card (with or without a chip), a complex series of behind-the-scenes transactions and data transfers occur. At each step in the process, your private banking information is exposed to potential security breaches. In the last few years, Target, Home Depot and most recently, Saks Fifth Avenue and Lord & Taylor, all arguably using outdated payment systems, have been hacked, exposing the credit card data of millions of individuals.

Bitcoin is fundamentally different. When making a payment using bitcoin, what you’re transmitting to the world over the blockchain network is nothing more than a digital message that can only be unlocked by the recipient, using a private key. So, unlike traditional credit or debit card payments, bitcoin transactions contain no sensitive data. If a hacker steals the information in the transaction, all they will know is originating and destination addresses—nothing more. Thus, there’s nothing to hack in transactions. In some highly publicized incidents, private keys stored on exchanges have been hacked, but these exchanges were insecure. Careful bitcoin owners prevent this by using one of the more secure exchanges or storing bitcoin themselves, using recommended security protocols.   

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