Blockchain technology is blossoming as it matures.  The blossoming is scaring the financial sector because it will cause major disruption.  The world of family financial planning is not exempt from a major change on the horizon.  Bitcoin is now a household name and the most relevant and imminent Blockchain technology that will affect the financial planning industry.

The question most people are asking is, is Bitcoin trustworthy?  Currently, major US banks like Bank of America are banning Bitcoin. Several countries have banned it.  In 2017, People have seen the price of Bitcoin increase wildly, and government and financial institutions reject or monitor it with extreme caution. Needless to say, Bitcoin is controversial.

Regardless of its controversy, the Bitcoin change is imminent.  The family financial planning world should be educated about the topic and understand the implications, dangers, and opportunities that the Bitcoin revolution presents to us and our clients.  We need to be educated in order to answer the questions that our clients will surely have about Bitcoin, altcoins and the many changes we will see happen in our industry due to blockchain technology.

Bjerg (2015) talks in his article about the validity of Bitcoin.  He attempts to answer the question, how is Bitcoin money?  He wrestles with whether it is real, symbolic or imaginary.  On the surface, it appears to be magical internet money (Comm & Wright, 2017) with nothing to validate it, like the other forms of money has had historically.

Because Bitcoin doesn’t fit into any traditional mold for conventional currency, Bjerg (2015) likens it to concepts that we can understand.  He says that Bitcoin is like the gold standard, but without the physical precious metal.  Just like miners could only discover a limited amount of gold because it is a scarce commodity, there is only a limited amount of Bitcoin and is, therefore, a scarce commodity.  But unlike gold, Bitcoin has no intrinsic value.  Bjerg (2015) calls it “…a more honest form of gold money.” (p. 60)

He then describes how Bitcoin is like fiat money without a state.  Fiat money has a country, a central authority, who is issuing paper bills, and in return creating demand for that same currency in form of taxes (Bjerg, 2015).  In other words, fiat money has a built-in demand because of taxes.  Yet Bitcoin is only viable if people or businesses are willing to accept Bitcoin as payment.  There is no centralized authority ordering people or businesses to conduct business using Bitcoin.  Unlike traditional fiat money, Bitcoin users are all voluntary (Bjerg, 2015).

Lastly, he suggests Bitcoin is similar to the electronic money primarily used in bank transactions today, but without the debt behind it (Bjerg, 2015).  Bitcoin critics say that it is created out of thin air, and therefore its value is questionable.  Bjerg (2015) compares how miners create Bitcoin through the use of mathematics and computers to how banks electronically trade throughout the business day using mathematics and computers and do not actually clear transactions using fiat money until the end of the workday.  He also questions the difference between miners debuting newly discovered Bitcoin and the government debuting newly printed dollar bills (Bjerg, 2015).  It appears to be like the electronic money Americans are used to but without the debt or inflation associated with the US Dollar.

Regardless of what governments and institutions say about Bitcoin, the market is saying that Bitcoin is indeed money.  And it will likely grow in popularity.  The peer to peer decentralized network is a revolutionary technology that will likely change the way the financial world does business.  As financial planners, we should be aware of this trend and ready for the tides of change.


Bjerg, O. (2015). How is Bitcoin Money? Theory, Culture & Society, 33(1), 53-72. doi: 10.1177/0263276415619015

Comm, J., & Wright, T. (2017, November 22). Re: Episode 53: Magical Internet Money [Web log comment]. Retrieved from