Money Talk
Feel like you’ve landed on another planet when someone mentions Bitcoin and cryptocurrencies?
You’re not the only one. With Bitcoin popping up in the news these days, here’s my jargon-free guide to what it’s all about – and a warning on the risks of investing.
Bitcoin is a cryptocurrency (yes, I know, sounding even more confusing right now, but bear with me!). It’s basically a virtual or digital currency. So we’re not talking notes or coins that you can use over the counter in shops.
Bitcoins are “made” during a complex computer process known as mining, and more recently some people have been buying them for investment purposes.
Some of the biggest exchanges to invest include Coinbase and Gemini. Price-wise, Bitcoin has had highs of anything from £300 to £30,000 per unit, with huge price drops along the way.
But the huge thing is that any investing is risky; and cryptocurrencies (there are a few of them including Bitcoin) are unregulated. So, unlike cash savings in banks or building societies – where your money is protected if firms go bust – with Bitcoin, we’re talking zero protection. You could lose it all.
Still think it seems like an easy way to make a fast buck? Watch out! The world of cryptocurrency is complex, and soaring prices have lured scammers out of the woodwork with scams including fake exchanges and scams where you’re duped into investing in fake companies. The Financial Conduct Authority, which regulates the financial industry, classes cryptocurrencies as very high risk investments in which you can easily lose all your money.
◆ Bitcoins don’t come as notes and coins. Those pictures you see are just novelty versions.
◆ Bitcoin is unregulated and unprotected so there is zero protection, which means you can lose every penny.
◆ Over £2 million has been lost to cryptocurrency scams in just six months, according to Action Fraud.