Should you add bitcoin to your retirement plan? | Personal Finance

Cryptocurrency, which only exists digitally, works by utilizing an encrypted algorithm to send payments, which makes it more secure and without the need for a third party such as a bank or financial institution.

It is important to understand cryptocurrency and the pros and cons of using it for investing, and especially for retirement planning.

This value is based on a seller’s willingness to accept it for the goods sold or how much investors are willing to pay for a Bitcoin.

A single Bitcoin may be worth $39,000 and can be subdivided, depending on the value of the transaction, down to a trillionth of its value.

All cryptocurrencies use blockchain technology, which is a digital system that has the total history of all past transactions from the beginning to the present.

Because cryptocurrency is digital, there is no physical cash that can accessed.

In addition, cryptos are not correlated to the stock market which means that they may help offset a stock market crash while providing a risk-adjusted return.

If you are retiring in 15 to 20 years, then crypto may be a wise choice if you can manage downside risk.

As a last word of caution, do not plunge into the unknown with cryptocurrencies unless you have done your homework and understand the risks.

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