Bitcoin still has me baffled
ILIKE to think that I’m pretty open to innovation when it comes to matters of business. Well, I did until a client gave me the option of being paid in Bitcoin. We were still some way from completing the contract so I took a few soundings on what it would entail.
Although I was vaguely aware of the concept, I was surprised to discover the level of Marmite opinions that abound.
One of the contacts I reached out to for advice told me that the age of tactile exchange is dead and that socalled cryptocurrencies are the future. Another reckoned it to be a hugely risky field liable to high volatility and potential fraud.
There is certainly nothing straightforward about the mechanics involved.
According to the blurb, “Bitcoin is the first decentralised peer-to-peer payment network powered by its users with no central authority or middlemen. It’s built on a database that uses a coding format called blockchain”.
Well that’s okay then, but what the hell is “blockchain”?
It is estimated that 2.3 million people in Britain now own a crypto asset but the Treasury says some users may not fully understand what they are buying
It seems that this is an arrangement to let users store information securely but also allow third-party tracking for verification. Bitcoins get their value, which can vary drastically, based on the mechanics of supply and demand. Last year, the Central American country of El Salvador adopted Bitcoin
as legal tender. This happened months after China drastically restricted its use.
Basically, it comes down to balancing the benefits of speed and freedom from fees and regulation against the risks of high volatility, a complex tax picture and uncertain future.
Here in the UK, cryptocurrency adverts are to come under the same scrutiny as the promotion of stocks and insurance products,
It is estimated that 2.3 million people in Britain now own a crypto asset but the Treasury says some users may not fully understand what they are buying. Under the new controls, only a business regulated by the Financial Conduct Authority (FCA) or Bank of England would be allowed to issue their own promotions for cryptoassets.
A piece of advice I often give to clients is that if you don’t understand the possible consequences of a strategy then don’t do it. Seems appropriate in this case too.