Am I Invested in Cryptocurrency?
As interest in Bitcoin and other cryptocurrencies continues to grow, some Woodward Financial Advisors clients are curious whether their portfolios include investments in these loosely regulated holdings. While it's important to understand the basics of cryptocurrency and the underlying blockchain technology, we want to clarify that our investment approach does not include direct exposure to cryptocurrencies like Bitcoin. Instead, our client portfolios generally include companies involved in blockchain infrastructure—firms that support the broader technology ecosystem without the volatility associated with crypto assets themselves (think NVIDIA, IBM, Amazon, etc).
Cryptocurrency is a form of digital currency that operates independently of traditional banks and governments. The most well-known example is Bitcoin, but there are thousands of others, each with its own features and use cases. These digital assets rely on blockchain technology—a decentralized, secure digital ledger that records transactions across a network of computers. While blockchain has the potential to drive innovation in various industries, cryptocurrencies themselves remain highly speculative and volatile, and without inherent value. Cryptocurrency does not produce earnings, interest, or dividends, which is why we choose not to include them directly in client portfolios.
We thought this short article and visual would be a great way to think about the current unpredictability of cryptocurrency versus traditional investments: