Have you ever daydreamed about becoming a Bitcoin billionaire? Yep, me too. Although, I think I'm still unclear on what crypto even really is.
Okay, so basically this kind of money comes in the form of digital units, so they don't actually exist in any physical form. And also unlike bank notes and coins, crypto isn't issued by a central bank, but there are lots of different currencies out there (scroll down for some of the crypto biggies). Proceed with caution, but if you have some spare cash, you can buy crypto via trading apps such as Coinbase or Kraken. This Urban Dictionary definition is, urm, sort of useful: "An investment like money or stocks, except tied to absolutely nothing. So let me get this straight, the only thing that makes cryptocurrency valuable is people think other people think it's valuable... And that's it?"
Look, the internet is full of info on crypto, but be wary – there’s a lot of misinformation out there. It's super important to cross-reference and double-check everything you read. Still confused? Yep me too, so I turned to Anna-Sophie Hartvigsen, co-founder of Female Invest, a platform committed to empowering women to achieve financial success, to answer some niggling questions. Consider this your cheat sheet to keep up if everyone’s talking crypto at a party... you're welcome.
We know that crypto is ‘volatile’, but what does that really mean?
‘The worry about crypto investment is that you can lose huge sums very quickly. As we entered February this year, a single bitcoin was worth £28,593 and a single Dogecoin was 11p. In the past year, Bitcoin’s value has been as high as £49,800 and as low as £22,600, with Dogecoin starting life at less than a penny and peaking at 49p. Making the right calls at the right time during 2021 could have netted a very tidy profit; however, £1,000 worth of Dogecoin bought when it was valued at 49p would now be worth around £300.’
What can affect its value?
‘It’s an industry powered by impulse, rumour and the word of just a few key figures. Billionaire Elon Musk is a key crypto figure and – with just one action or statement – he can impact your investment overnight. For example, Musk promoted Dogecoin on all his socials, but then apparently caused the price of it to dip by nearly 30% after he made an awkward joke on US TV show Saturday Night Live, which made investors sell their stock. UK investors, stuck in another time zone, woke up to find that a single Musk action had crashed their investment overnight.’
Okay, but is my money protected at all?
‘It’s an entirely unregulated market and not protected like normal financial transactions. If you buy crypto via a platform and that platform folds, or the transaction is somehow mismanaged and the crypto fails to materialise, you have almost no one to complain to and there are few laws on your side to get the investment back.’
Are there any ethical implications?
‘There are several ethical arguments made against crypto. First, due to its lack of regulation and the difficulty in tracking its peer-to-peer transactions, it provides criminal and terror organisations with the means to move vast funds around the world undetected. Many hackers who attack businesses ask to be paid in cryptocurrency as it’s untraceable. The other ethical issue comes from the digital coalface where vast amounts of electricity are used to power huge computer farms involved in mining new crypto. This process – in which a bitcoin is awarded to a computer that solves a complex series of algorithm – is deeply energy-intensive. The output associated with Bitcoin alone is now equal to the carbon footprint of Argentina.’
Some crypto biggies
The most famous kind of crypto has been around for 13 years; its price (at time of publishing, £31,419.72 for one bitcoin) is so high because of its limited supply.
Its blockchain works faster than Bitcoin’s, so you can use it to buy non-fungible tokens, or NFTs, like digital art. One coin = roughly £2,335.42.
At just 71p per coin, Cardano claims to have the most energy-efficient blockchain in the game.
Founded in 2013, this one is based on the infamous meme of a Shiba Inu dog. In stark contrast to Bitcoin, Dogecoin is intentionally abundant – with 10,000 new coins mined every minute and a total supply of one quadrillion. It's currently worth 11p per coin.
Weird facts to impress your mates
El Salvador adopted Bitcoin as legal tender in 2021, so all shops had to accept it. This caused riots, price crashes and technical glitches, too.
Only 21 million Bitcoin can ever be produced, which means that the last coin is estimated to be mined by 2140. Only 118 years to go.
Bitcoins are stored in a digital wallet – either on a hard drive or the web. About 20% of all bitcoins are lost, too. Some are stuck in a wallet as lost passwords can’t be reset.
You need to be careful where you use bitcoins. Some countries – such as Bolivia, Bangladesh and Ecuador – have banned their usage.
One man threw out his Bitcoin hard drive after spilling water on it... and lost £210m. Now he’s begging to be allowed to search for it in the landfill.
Read our report on the "finfluencers" promising to make you rich, but should you trust them?
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