If you’re a U.S. expat, or if you’re planning to retire/repatriate elsewhere, you may have heard some talk online, and in the media, about Bitcoins, read on….
If you aren’t totally sure what Bitcoins are, they are basically a type of currency based in a digital form. They’re safe, secure, portable – but not yet widely used.
For a general overview, here’s a YouTube video posted by the people at Bitcoin:
Advantages of Bitcoins
Being a new currency in the digital age, there are definitely some advantages to using Bitcoins. These advantages don’t necessarily make the currency perfect in any sense, but they might provide you some promise if you’re looking for alternatives to traditional currencies.
Advantages of Bitcoins include:
– Low inflation risk – makes it (for now, at least) reliable
– Safe, simple and cheap to use
– Highly portable – you can fit billions of Bitcoins on a thumb-drive
– Transparent exchange rate – cannot be manipulated by central banks or governments (which is, ironically, one of the reasons the government isn’t a big fan)
Risks of Bitcoins
Of course, anything new (and old, for that matter) has its disadvantages. Expats who choose to use Bitcoins do run some risks that those who choose traditional currency do not.
These risks include:
– Still a very new form of currency – lots of work needs to be done to prove itself as viable.
– Easy to lose – next to impossible to replace if lost.
– Volatility in the valuing system. (From January to July of this year the value of one Bitcoin has varied between $14 and $266).
– There are very few places to use them, and few exchanges exist to convert into other currencies.
This list is by no means comprehensive, and you should always do your own research prior to deciding if something like Bitcoin is right for you and your particular needs.
Being so new (even though Bitcoins have been around four years) there aren’t a lot of people out there who fully understand Bitcoins. Asking for advice from your financial or retirement planner may get you blank stares, and going to your bank with questions about Bitcoins might get you the same reaction.
The untraceable factor – something governments don’t like no matter how you use Bitcoins.
There is one element of Bitcoins that can be seen as an advantage OR a risk, depending on your perspective – the fact that Bitcoins are highly untraceable. Government organizations can’t trace the source of your funds, and in many parts of the world (especially where governments are corrupt) this can be an advantage toward protecting your money.
However in countries with reasonably honest governments, the fact that Bitcoins are untraceable can quickly bring unwanted government attention no matter how honest your lifestyle is.
Bottom line on Bitcoins for expats
Unless you are extremely tech savvy and follow the latest financial and world news, you may want to avoid exchanging much (or any) of your U.S. currency into Bitcoins. The risks, at this point, outweigh the benefits and it doesn’t look like this will change any time soon.