Club hears expert's take on Bitcoin

After a lunch, an engaging presentation on Bitcoin and a question-and-answer sessionThursday about the virtual investment, Steve Branham was ready with a gift to thank his guest for speaking at a Longboat Key Kiwanis Club noontime session at Portofino Restaurant and Grill.

Branham, the club president, handed a coffee mug to David Kotok, the chairman and chief investment officer of Sarasota-based Cumberland Advisors.

“Truly, something with more intrinsic value than Bitcoin,’’ Branham said with a smile.

That Bitcoin, and most of the world’s other 1,380 or so cryptocurrencies, aren’t backed by a central bank, government or a commodity of value is one of the factors behind investors’ hesitancy and curiosity. Still, the appeal is there in certain circles.

Kotok himself made the same point when he produced a Ziploc bag and handed out to the 30 people in attendance shiny gold coins with embossed with a capital B. Not immediately apparent: the coins’ sweet, creamy centers.

 “There is more tangible value in this piece of chocolate than there is in Bitcoin,’’ Kotok said, holding one up. “If you don’t believe it, peel off the wrapper.’’

Bitcoin and investment vehicles like it have grabbed headlines of late with a dizzying series of climbs and drops in value. At their peak, cryptocurrencies were worth an aggregate of about three-quarters of a trillion dollars, Kotok said. That figure is down these days about 25-35%. According to Coindesk.com, the value of a Bitcoin rose from about $900 in early 2017 to more than $19,000 in early December. The value was around $8,000 lower by mid-January.

Evolving cryptocurrencies could soon link with such commodities of value as gold or national currencies, which might quell some of the volatility, Kotok said. He described Bitcoin as a speculative vehicle for investors. Kotok told the club members and guests his company does not deal in Bitcoin directly for its clients. The potential for market losses and outright hacking is a serious concern.

If someone wants to get involved, ''have fun doing it, but be careful with what you're doing.''

Because of its hard-to-track connection to investors, Kotok called Bitcoin the perfect currency for someone making nefarious deals or fleeing an unstable part of the world, with their financial assets intact, with little notice or preparation.

He also warned about potential tax worries connected with Bitcoin capital gains.

“We will read about cases like this.’’