The cryptocurrency bubble. Here to stay or will it burst?
Cryptocurrencies took another battering this week amid fresh fears of regulatory crackdown in South Korea – one of the largest markets for trading virtual currencies.
Weekend Today asked Stockspot CEO Chris Brycki about the future of Bitcoin.
TODAY: Chris what are the dangers of investing in Bitcoin?
CHRIS: Bitcoin and other cryptocurrencies are much riskier than any other investment in history, ever. Some of them are rising and falling by more than 30% per day. So as investment they’re certainly not very safe. However they’re appealing to people because there are people out there like Ian who had the foresight to buy them a while ago and have made a lot of money. People are thinking ‘That could be me’ and feeling a lot of FOMO. What people need to keep in mind is that there have already been 3 times when bitcoin has fallen by more than 80%, anyone looking to invest needs to be comfortable with losing a lot of money before they make potentially any. It’s also likely that many cryptocurrencies will be worthless.
TODAY: What are some better alternative investment options?
CHRIS: Cryptocurrencies are like going to the races. They can give you a thrill because you can make a lot of money quickly, but if investing is ever exciting what you’re probably doing is not investing but gambling.
Rather than gambling on cryptocurrencies we recommend investing in a diversified portfolio of shares and bonds. It’s not as exciting but the returns are much more steady.
TODAY: China and South-Korea are considering a cryptocurrency crackdown. Is this something current investors should be worried about?
CHRIS: Governments and central banks are concerned with cryptocurrencies because they’re not regulated so they don’t have much control over what goes on. Over the long run governments may not have a lot of power to regulate them but in the short term any comments they make can have a huge impact on market sentiment and that’s what drives prices.
TODAY: What sort of impact could the crackdown have on the crypto market?
CHRIS: Bitcoin has already fallen by 80 percent three times before so it’s certainly conceivable that it could happen again if sentiment turns negative and everyone tries to sell at the same time.
TODAY: One home-grown company making a name for themselves in this field is Power Ledger. What is your take on them?
CHRIS: There are thousands of these ‘coins’ now and they’re highly speculative. Some may be worth something one day but plenty will turn out to be scams. The world’s greatest investor has always said if you don’t understand it, don’t invest in it. I’d apply the same principle to investing in cryptocurrency.