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How to Protect Your Retirement Savings before the US Economy Implodes Again

Far too many investors were essentially wiped out in the 2008 economic collapse. Those who got back into the stock market and invested well have ridden a historic bull market to impressive gains. The real estate market has also largely recovered and benefitted those who bought when prices were at a rock bottom. But, no bull market lasts forever. We saw a little bit of that prophecy come true in the last couple of weeks as stocks corrected impressively. In this article we are not so much concerned with how far the market will rise again or how quickly it will correct again. We are wondering how to protect your retirement savings before the US economy implodes again. Why are we asking this question?

Adding on to the US and Other National Debts

US News warns that a crisis is coming. They warn about asset price bubbles, mispriced credit and excessive debt on a global scale.

Another key ingredient for a global economic crisis is a very high debt level. Here too today’s situation has to be very concerning. According to IMF estimates, today the global debt-to-GDP level is significantly higher than it was in 2008. Particularly concerning has to be the fact that far from declining, over the past few years Italy’s public debt has risen now to 135 percent of GDP. That has to raise the real risk that we could have yet another round of the Eurozone debt crisis in the event that we were to have another global economic recession.

Today’s asset price bubbles have been created by many years of unusually easy global monetary policy. The persistence of those bubbles can only be rationalized on the assumption that interest rates will remain indefinitely at their currently very low levels. Sadly, there is every reason to believe that at least in the United States, the period of low interest rates is about to end abruptly due to an overheated economy.

High interest rates will choke off the US economy even as tax cuts may be providing a temporary boost. In addition, Seeking Alpha has a good article about America’s impending debt crisis and how it will end badly for stocks.

The U.S.’s enormous spending addiction has created a massive debt bubble that is going to lead the economy to its next financial crisis.

Consumer, government, credit card, auto loan, mortgage, student loan and just about any other debt you can think of is at a new record – and it won’t end well.

America’s impending debt crisis is likely to materialize within the next few years, and when it does, its destabilizing effects will be felt deep throughout the financial system.

So, how do you protect your retirement savings before the US economy implodes again?

Income versus Growth

Along the way to retirement you want to see your portfolio grow. Certainly if you invested in tech stocks like the FANG darlings in the last years you have been successful. However, with growth comes risk which is what you want to avoid when you are no longer drawing a paycheck. Dividend stocks with an unbroken history of payments are ideal. Utilities are an example of stocks that produce a steady and reliable source of income over the years. If interest rates go up the price of a utility stock will often fall but the dividend will typically remain the same and because you want income during retirement that is what is important.

Fundamental analysis is crucial to success in picking investments that will weather an economic storm. What can you expect from each and every investment in the case of a major economic downturn? And how can you prepare? Your home may have appreciated in value since the crash. If you are planning on downsizing for your retirement years it might be wise to make that move while the economy is still OK and then put your excess cash to work in a ladder of short term bonds or a well-chosen dividend stock.


Are Tax Free Municipal Bonds a Good Idea?

For years a tried and true investment was a tax free municipal bond. If you were in a high tax bracket you could write off your federal taxes and sometimes even your state and local taxes on the interest gained. With a carefully chosen bond you could get a better return than with a US Treasury. And in an era when the top tax rate was 89% it made perfect sense to go the tax free municipal bond route. Now there is talk of fixing America’s ailing infrastructure using seed money from the federal government and bonds issued by state and municipal governments. Are tax free municipal bonds a good idea today? Especially are they a good idea when interest rates may be going up while states are strapped with debt?

How to Invest in “Munis”

Years ago we wrote about how to invest in municipal bonds AKA “Munis”.

Municipal bonds are an attractive investment for many and can be invested in by buying individual bonds, shares of bond funds, or shares of unit investment trusts. How to invest in municipal bonds may vary with how much money the investor has to invest and his or her level of income. Tax free municipal bonds are typically more attractive to high income investors.

The two types of municipal bonds are general obligation bonds and revenue bonds. General obligation bonds are sold to cover expenses of states and municipalities. The taxing power of the issuing authority is your protection against default. Revenue bonds are what are issued for infrastructure projects. And revenue from the project such as tolls for roads or bridges provides the income stream to pay interest and eventually principle on the bonds.

Creditworthiness

Be careful when investing in municipal bonds, tax free or not. Some municipalities and states are so strapped for cash that not only repayment of the principal but also payment of interest may be at risk. Standard & Poor’s and Moody’s provide credit ratings where Aaa and AAA are ideal ratings and D, DD or DDD are for bonds that are in default. Tax free municipals are not a good idea if the issuer is in default.

Where Are Interest Rates Going?

Municipal bonds are long term instruments. If you put all of you investment into a bond today and interest rates go up you will be stuck with an interest rate that is less than the current market and that will last for years. An approach that long term bond investors take is to create a bond ladder. They invest a set amount each year in bonds, hold to maturity, and reinvest when the bonds mature. This passive approach to bond investing provides a long term income stream and an average interest rate over time.

What Is Your Tax Bracket?

If you are in today’s top tax bracket you will pay 39.6% federal tax on the last dollar of adjusted gross income for a single person. In 1963 you would have paid 53%. But back in the 1960’s a person with an adjusted gross income of $10,000,000 would have paid 89% on the last dollar earned. Today the rate does not keep going up after a single person makes half a million. The point of these numbers is that tax free municipals were a great idea for folks in the really high income brackets for much of the 20th century up until the Reagan tax cuts in the 1980s. Today you need to take out paper and pencil and calculate how much of a benefit you will gain from having the last dollar you earn be tax free from federal taxes and perhaps from state taxes.


Three Ways to Protect Your Investments in a Bear Market

Stock markets across the globe plunged at the beginning of the week . They recovered somewhat and then resumed their slide today. More and more analysts are saying that a bear market is on the doorstep. CNBC warns of a big bear market.

The dramatic stock market sell-off earlier this week should be viewed as a turning point, according to analysts.

“Our ongoing concerns about the recovery’s tenure have been thrown into sharper focus by the steepest market sell-off since the credit crunch,” Eoin Murray, head of investment at Hermes Investment Management, said in a research note published Thursday.

On Monday, the Dow dropped 1,175.21 points, having briefly declined more than 1,500 points during the session. And while U.S. stocks have since pared some of the losses sustained during a cascading market plunge earlier this week, the Dow, S&P 500 and Nasdaq are all down more than 4 percent since Friday.

If indeed a bear market is about to take hold what should you do? We offer three ways to protect your investments in a bear market.

Be Happy with the Profits That You Have Made

As a bull market comes to its end there are always investors who want to eke out that last little bit of profit. Because a dying bull market is often volatile those investor will wait for one last upswing before getting out. The problem is that too many investors wait too long and then see their portfolios evaporate as they wait for one last rally. The old saying is that you do not have a profit until you have taken a profit. If you got in or back into the market after the 2008 crash you have probably seen a very nice profit on your investments. If you agree that a bear market is in the wings, one of the ways to protect your investments is simply to sell part of your portfolio and hold onto cash until the correction or crash occurs at which time you can reinvest.

Crash-Proof Investments

Years ago we wrote about investing in beer. When times are good people drink beer to celebrate and relax and when times are bad people drink beer to drown their sorrows. Companies that brew and distribute beer are like companies that make and sell soap, household cleaners and other basic household necessities. When a recession hits consumer goods companies continue to make money. And their stock prices often go up because investors move their money out of stocks that are hurt by a recession and into stocks that remain stable. Another way to protect your investments in a bear market is to find crash-proof and recession-proof stocks.

Beware of Bonds and Stay Short

US monetary policy is about to tighten. Quantitative easing is gone and quantitative tightening is on its way in. The Fed will be borrowing less money and it lets its bond portfolio expire and rates are likely to go up. If you sell stocks or real estate because you fear a crash you may want to make a little interest on the cash you are holding. The problem is that you might get trapped in a low yield bond as rates go up so stay with short term issues.

How about Offshore?

We wrote recently about investing offshore. There are good reasons to diversify outside of the USA, especially with ADRs. But all markets are likely to fall if the US market crashed. For now cash is your friend as you evaluate investment opportunities for after the market bottoms out.


End of Bitcoin or an Opportunity to Buy?

Is this the long-predicted end of bitcoin or an opportunity to buy before the price skyrockets again? A couple of weeks ago we asked will bitcoin survive the crackdown. Governmental regulation has always been a background threat to cryptocurrencies as the feeding frenzy continues and we asked what should bitcoin be worth. Now, it would appear that investors are taking seriously the risk of governmental intervention and regulation. Reuters reports that the cryptocurrency selloff intensifies as bitcoin and others fall.

The currencies have come off their lows but analysts said the sell-off was probably not over.

This week’s slump brought the total market value of cryptocurrencies down to around $400 billion, half the high it reached in January, according to industry tracker Coinmarketcap.com. The market value of cryptocurrencies is calculated by multiplying the number of digital coins in existence by their price, although many question whether that is the right way to value them.

Bitcoin, the biggest and best-known cryptocurrency, fell as much as 15 percent on Friday to a two-month low of $7,625 on the Luxembourg-based Bitstamp exchange BTC=BSP. It clawed back some losses and was down around 4.1 percent at $8,623.50 in mid-morning New York trading.

The virtual currency is down by close to 25 percent this week and almost 40 percent in 2018.

The most recent threat of regulation came as India joined China and South Korea in threatening to limit or ban aspects of cryptocurrencies in their nations. The question is this just another setback from which bitcoin and the others will recover? That has certainly happened before and while the volatility in this sector has caused many to lose money, others have profited handsomely. The question really is if more governmental regulation will enter the picture and how that might affect cryptocurrencies. A useful way to look at this might be to consider bitcoin futures.

Coindesk reports that the US Commodities Regulator is strengthening is Bitcoin futures review.

The Commodity Futures Trading Commission (CFTC) is developing a “heightened review process” for cryptocurrency futures though it will continue to allow exchanges to self-certify products, Chairman J. Christopher Giancarlo announced last week.

Others have been scrutinizing the process as well, including some members of the U.S. Congress.

Yesterday, top Senate Agricultural Committee members sent a letter to Giancarlo requesting information on the CFTC’s oversight of bitcoin futures and options markets. The senators specifically requested information regarding the Commission’s market surveillance and its implementation of safeguards against bitcoin’s volatility.

“American taxpayers deserve strong safeguards against fraud, manipulation, and abusive practices in the futures and options markets,” the letter stated. “The CFTC plays a critical role in protecting customers and the markets from harm.”

A small amount of regulation may or may not hurt the value of bitcoin and other cryptocurrencies. But, the threat of increased regulation may be enough, for now, to drive investors out of the cryptocurrency market and thereby drive prices down. On the other hand outright bans on cryptocurrency trading across the globe could spell the end of the bitcoin feeding frenzy.

What Are the Smartest Investments for 2018?

As the year begins we all try to see the future and then invest accordingly. What are the smartest investments for 2018? Will the FANG tech darlings that have led the rally continue to lead? Should you be considering safe investment options in anticipation of a big market correction? Should you be looking for investments that are helped by the tax code overhaul? Long term investors always look for fundamentals and value. Forbes published its list of Top U.S. Stocks for 2018 and their explanations. Their picks from first to fifth are these.

United Health Group
Fedex
Viper Energy
T-Mobile
Microsoft

United Health Group

United Health Group started as an HMO in Minnesota. They broke up into a health care arm and a management arm years ago because the state of Minnesota did not allow HMOs to be profitable ventures. Then United Health proceeded to look at how health care was delivered, how it was paid for, where the savings could be found in the system and how to deliver services more effectively and cost efficiently. They then packaged those findings as services which they sold to other entities in the health care field. Over the years this company has bought its way into direct health care where it could be done for a profit and has become the giant in the field for healthcare-related information technology. No matter which way the sector goes this company will continue to grow and make money. We agree with Forbes that United Health Group is one of the smartest investments for 2018.

Fedex

Fedex is like United Health in that it has focused on improving its information technology and as a result made its business more effective and more profitable. The other part that makes Fedex attractive as the bull market gets more and more overpriced is that their business is tied to delivery of consumer goods. In the days of the California Gold Rush it was typically a better strategy to sell picks and shovels than to pan for gold. The combination of strong information technology and a tie-in to the consumer goods sectors makes Fedex one of the smartest investments for 2018.

Viper Energy

After hitting a low point below $30 a barrel the price of crude has slowly but surely risen over the last couple of years into the $65 range. There has been a lot of shaking out of inefficiencies in the energy sectors and in the oil fracking business especially. Viper is one of the survivors and well positioned in the Permian Basin to profit from more efficient fracking and higher oil prices. This makes Viper one of the smartest investments for 2018.

T-Mobile

We think that T-Mobile will be likely be profitable in 2018 but it is not necessarily one of the smartest investments. Its success is based on a change in how people will pay for their phone service. This sort of move is typically copied by competitors and then price competition sets in and decreases profits.

Microsoft

Don’t we all wish we had invested in Microsoft when it went public thirty years ago! But how could this mature company be a good bet for 2018? The key is that Microsoft has remade itself over the last few years. They are still an operating system provider but have moved into the cloud solutions business as the leader. This is similar to United Health and Fedex in using information technology to increase efficiency and profits and makes good old Microsoft one of the smartest investments for 2018.

Should You Be Concerned about the Inverted Yield Curve?

As the bull market has ranged higher and higher, the bears have repeatedly predicted its demise. And they have been wrong again and again. Nevertheless, all bull markets do finally end or at least experience a substantial correction. What are the signs you should look for as tip offs that the economy and stocks are about the experience a setback? In an article about slowing cash flow in the corporate world Bloomberg notes that investors should be concerned about the inverted yield curve.

Concerns over a flattening U.S. Treasury yield curve – a sign to some of a coming economic slowdown – have quieted down for the moment, thanks to the recent pick-up in longer-dated yields. But the potential slowdown message has an echo in diminishing corporate cash flows, SocGen strategists including Andrew Lapthorne have highlighted.
There’s been a “steady” decline in the growth of net operating cash flow in U.S. stocks, excluding the financial and energy sectors.

The slowdown for the broader group of companies is noteworthy because it’s coincided with both a slump in the dollar and a decline in the yield curve, said the strategists. An inverted yield curve, which will occur if the trend continues, has historically come before economic slumps like the one that started about 10 years ago. And a falling dollar could reflect relatively more positive investor sentiment about economies outside the U.S.

How about the inverted yield curve? What is it and should you be concerned? Investopedia writes about the inverted yield curve.

An inverted yield curve is an interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the same credit quality. This type of yield curve is the rarest of the three main curve types and is considered to be a predictor of economic recession.

Typically investors demand a higher interest rate if they are going to tie up their capital in a long term bond or CD. When investors start losing faith in the stock market and want to hold cash instruments they will flock to long term bonds and CDs and drive those rates down. Thus an inverted yield curve is indicative of a lot of investors starting the hedge their bets in expectation of economic and stock market downturns.

Broad Based Indicators

Congress just passed legislation to increase the debt ceiling and remove the government from a shutdown. And the market rallied. Many investors are still excited about the Trump and Republican tax cuts. But there is an underlying concern. And that concern is seen in the inverted yield curve. Many investors are slowly but surely moving their money out of stocks and short-term bonds into long term bonds. They are doing this for a variety of reasons, all based on their belief that the economy and the stock market will falter. The value of the inverted yield curve as an indicator is that it is broad based thus indicative of a lot of people who have arrived at the same conclusion by a variety of routes. This is why you should be concerned about the inverted yield curve.

Will Bitcoin Survive the Crackdown?

Most of our concern about bitcoin and other cryptocurrencies has been the fact that they have no intrinsic value to fall back on when the bubble pops. Now another factor has been added to the bitcoin equation. Regulators in China and South Korea are talking about shutting down cryptocurrency exchanges. That news threw bitcoin and others into a tailspin as investors pulled their assets from the world of cryptocurrencies. Nations like China are trying to keep wealthy investors from moving assets offshore. Unfortunately for the governments, investors can use bitcoin to move millions without government oversight, taxes or regulations. As bitcoin and others have grown they have become an issue for governments across the globe and regulation of the cryptocurrency world is overdue. For those with investments in this area will bitcoin survive the crackdown?

CNBC notes that bitcoin plunges below $12,000 on the news.

Bitcoin plunged to a six-week low Tuesday after comments from South Korea’s finance minister renewed worries about a crackdown in one of the largest markets for digital currency trading.

On Monday, Bloomberg reported that authorities in China were planning to block domestic access to Chinese and offshore cryptocurrency platforms that allow centralized trading. Regulators will also target people and companies that provide market-making, settlement and clearing services for centralized trading, the publication said, citing unnamed sources.

And on Tuesday, a Chinese central bank official reportedly said that authorities should ban the centralized trading of digital currencies, adding weight to concerns of further suppression of the country’s cryptocurrency market.

People first got into bitcoin because of the argument that it was a new way to move money and hold assets efficiently and privately. Then, as the value bitcoin grew it became a mania as people emptied their bank accounts and put second mortgages on their homes to get in. People who are so desperately leveraged will be the first to bolt for the door when it appears that various crackdowns will drive the price down. That sort of rush for the exits tends to accelerate as the price falls turning the demise of assets like bitcoin into self-fulfilling prophecies.

Will There Really Be a Crackdown on Cryptocurrencies?

A valid question for folks with assets tied up in bitcoin and other cryptocurrencies is if various governments will really close centralized cryptocurrency exchanges. China is likely to take action and the reason will be its concern about capital flight and the damage that loss of investment capital would cause China’s economy.

The business news is full of reports and speculation about capital flight out of China. Foreign investment was essential to China’s rapid growth over the last decades. Foreign investors are pulling money out and wealthy Chinese are moving their money offshore. Will capital flight kill the Chinese economic miracle?

China’s foreign currency reserves have shrunk at the same time that its public and private debts are soaring. Many who made their fortunes on China’s rise as an industrial power are hedging their bets and moving money offshore. This comes at a bad time for China because they need to increase internal investment and liberalize their economy. That will not happen if there is a shortage of cash. One of the routes out of China for capital is the world of bitcoin. Thus it is likely that China will shut down exchanges or at least demand more transparency in order to control capital flight.

Invest in Gene Editing Companies

The world of medicine is about to change. Diseases that had no treatment and conditions that cause lifelong suffering may well be cured at the source. Biotechnology has advanced to the point where the human genome can be edited and fixed! Companies that are on the leading edge of this new technology will not only change the world of medicine and your life. They can be profitable as well. Three gene editing companies in particular are worth your attention as noted in an article in the Motley Fool.

If you’re looking to invest in stocks positioned to benefit from a literally game-changing technology, check out stocks of biotechs that are focused on gene editing. The future of medicine is likely to be radically transformed by therapies that involve the insertion, deletion, or replacement of DNA.

Three of the hottest gene-editing biotech stocks on the market right now are Sangamo Therapeutics (NASDAQ:SGMO), Editas Medicine (NASDAQ:EDIT), and Intellia Therapeutics (NASDAQ:NTLA). But which of these is the best pick for investors? Here’s how these three gene-editing stocks stack up.

As always with new technologies, the issue of profits depends on how well the technology works, how efficiently it can be applied, how large a market its product will have, and whether or not a company will control its market niche or have to compete with other similar technologies. The other issue for medical treatments is passage through the FDA process to demonstrate effectiveness and safety of use.

Here are the three companies highlighted in the article and the diseases their therapies are intended to treat.

Sangamo Therapeutics: Hemophilia A, amyotrophic lateral sclerosis, beta-thalassemia
Editas Medicine: Sickle cell disease, beta-thalassemia, cystic fibrosis, Duchenne muscular dystrophy, and editing of T-cells in treating cancer.
Intellia Therapeutics: gene-editing therapies to target treatment of up to 10 indications and using gene editing in hematopoietic stem cells and chimeric antigen receptor T-cells

The company with the most solid results so far is Sangamo. In order to invest in gene editing companies and make a profit you may want to pick the most likely winner with a treatment that is far along the FDA pipeline. However, the stock will have a higher price the closer its treatment is to going on the market. If you are going to invest in gene editing companies in the search of the highest profit you need to get in early and consider investing in several or order to catch the eventual winners when their share prices are cheap. The current state of the art technology that is driving the world is gene editing as called CRISPR-Cas9.

CRISPR-Cas9

According to New England Biolabs CRISPR-Cas9 is the newest and best tool that has opened the door to effective gene editing.

The development of efficient and reliable ways to make precise, targeted changes to the genome of living cells is a long-standing goal for biomedical researchers. Recently, a new tool based on a bacterial CRISPR-associated protein-9 nuclease (Cas9) from Streptococcus pyogenes has generated considerable excitement.

This was first noted in the 1980s but not confirmed until the last decade. Using this tool from nature will allow bio tech companies to design treatments for wide range of genetically based diseases. One issue is patent rights to use the treatment and in that regard Editas has won court battles for patent rights which opens the door for them to develop and sell gene therapies based on the CRISPR technology.

Why Apple Will Not Be Hurt in a Crash

As the stock market moves higher, more and more analysts are predicting a correction if not a stock market crash. If you have made money in this bull market is it time to make some adjustments just in case? Last year we wrote about how to prepare for the next stock market crash. Tech has been the leader in driving the market. Consumer stocks are the traditional refuge when the market tanks. If tech has been the leader then we might expect tech stocks to take the biggest hit with a correction or a crash. One of the tech leaders is Apple, AAPL. Its share price has gone up nearly fifty percent in the last twelve months. One might expect AAPL to take a big hit during a market correction. But, unlike other tech leaders, Apple does not have a stratospheric P/E ratio. In fact, Apple’s P/E ratio of 18 is amazingly tame in comparison to Netflix at 193 or Amazon.com at 511! Another reason to trust that Apple will not correct significantly if the market falls is the company’s cash hoard offshore of more than $200 billion. But, the biggest reason that Apple will not tank in a market correction is that Apple is not just a tech stock but a consumer stock as well.

People Cannot Live Without Apple Products

Warren Buffet generally avoids tech stocks because he says he cannot predict how much they will worth 5 and 10 years in the future. Unlike a tech product, a Snicker’s bar or bottle of Coca Cola, is predictable. So, why does the Oracle of Omaha own so much Apple stock? He says the stock is more of a consumer stock than a tech stock. Apple has amazingly strong brand name and extremely strong customer loyalty. This is because the company has focused on the customer and ease of use of its products. And it has built a range of interlocking products and services such as ITunes and various useful apps. Many people cannot live without their iPhone and other Apple devices and services. This brand loyalty to a wide range of products and services is what will help Apple retain earnings even if the wider market crashes. And those earnings, as well as repatriated offshore cash, are why Apple will not be hurt in a stock market crash.

Will Apple Be the First Trillion Dollar Company?

At its current rate of growth Apple will pass the trillion dollar mark in market cap in 2018. In fact, if more people buy Apple due to its consumer stock aspects, it could still pass a trillion dollars even if the market crashes.

What Could Go Wrong?

There is speculation that Apple could buy Netflix according to Investor’s Business Daily.

Analysts at Citi said there is a 40% likelihood that Apple (AAPL) will buy Netflix. Apple is expected to repatriate $220 billion in cash under the new tax laws. The Citi analysts said Apple has more than enough cash to buy Netflix.

On one hand this would make sense as an addition to Apple’s range of services. On the other hand it could raise Apple’s P/E ratio (Netflix=193 vs Apple=18). We asked if the new tax code would help with your investments. Here is an example of how Apple’s offshore cash could fund an outright purchase of Netflix with no other cost to AAPL.

Hackers Create Fake Bitcoin Wallets

Our attention to the current bitcoin feeding frenzy has been focused on how closely it resembles previous boom and bust cycles. (Could You Be a Bitcoin Billionaire, What Should Bitcoin Be Worth?) But there is another concern as more and more investors pile into cryptocurrencies. Hackers create fake bitcoin wallets to steal your money. How does this work?

A Virtual Currency

If you have money deposited in a bank in the USA your money is backed by the full faith and trust of the US government. Your deposits are insured by the FDIC (Federal Deposit Insurance Corporation) up to $250,000. And, instead of depositing your money in the bank you can receive paper currency and coins and hold your money in your hand. In the case of a virtual currency like bitcoin and others neither of these is the case. If someone hacks the computers of your bank you can still get your money back via the FDIC. If hackers hit your virtual currency you are toast.

Hacking of Cryptocurrencies

Every year there are several hacks of cryptocurrency operations ranging from a few million to hundreds of million worth of value. For this to happen, the cryptocurrency company has to have neglected its security and a hacker has to have had the skillset to get into their system and transfer currency out of wallets into another wallet under their name. But there is a simpler way for hackers to steal your bitcoins. They can set up a fake wallet. How does that work?

Folders, Wallets and Virtual Compartments

When you save a document on your computer you put it in a folder. There is no physical folder but rather computer code that designates where the computer can find and retrieve your document. And, of course, there is no document but rather computer bits and bits that when retrieved look like a real document on your computer screen. In a similar fashion there is no real bitcoin or other cryptocurrency wallet but rather computer code that allows the system to keep track of how much cryptocurrency value is yours.

Fake Bitcoin Wallets

CNN Tech has a good article about how hackers take advantage of Bitcoin.

“Whenever something gets this much publicity and popularity and there’s a potential to make what appears to be free and easy money, the criminal aspects of the world are going to take advantage of it,” said Mike Murray, vice president of security intelligence at mobile security firm Lookout.

In order to use bitcoin, you need a digital wallet to receive, send, and store cryptocurrencies. By creating fake wallets, hackers can take advantage of people new to bitcoin and other digital currencies who might not realize the difference between legitimate companies and fake apps.

Unsuspecting people hear about the bitcoin feeding frenzy and decide to get in. They find an app on Google Play or somewhere else, download it, and send money. Unfortunately, these apps are set up by hackers who have nothing to do with cryptocurrencies and are simply stealing your money. To the fact that bitcoin is due for a crash please add the fact that hackers create fake bitcoin wallets to your list of concerns when investing in cryptocurrencies.


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