I think we are witnessing a once in every 300-year event. I think most agree that it is a technology that is here to stay, but I cannot see wider adoption of it as a currency until you can trust the price. And there's the rub; I don't. The only people I think who are invested in it are either a wild speculator who believe they'll find a greater fool than themselves to sell it to, or someone working in the dark shadows of society with no better way of exchanging illegal goods for something that might be exchanged for cash later. For those shadowy figures, like the drug dealer profiled on the 4th episode of Drugsland (a brilliant BBC documentary), this massive increase in price must have been a very unexpected bonus.
Some mention that it needs a wider adoption by retailers and service providers for this to become more normal. Why or why would you as a retailer want to use a crypto currency when the price could go to zero! Why would you want to risk your business for that?
Do expect that some financial institutions will jump onto the opportunity to find some way in trading in it. And to be clear, when I say ‘opportunity’ I mean gullible members of the public. Just like back in very late part of the last century we saw loads of dotcom investment funds spring up. They all went well didn’t they! You want to invest in it? Trust me, some shark will create a fund for you to do that. Avoid. They are brilliant at building a case for it and it’s the time you should keep your wallet and cheque book in your pocket. The funds that will come along (very soon) won’t make it legitimate in my eyes.
Could Bitcoin and others like it go to zero? Yes. Absolutely yes. It’s only worth what someone else is prepared to pay for it and as far as I can see, it’s like Tulip Mania, but without the Tulip!
Will some people make money out of this? Oh yes. Will joe public make money from it, probably not? I think a lot of people will be having a feeling of a sense of loss over this. I was told about it in 2010. It was only a few cents at the time and yes it would be lovely to have gone back in a time machine and made a punt. But at that time, I concluded as I do today that:
- it’s not regulated
- The value could go to nothing
- It is, in fact a nothing
- It is only worth what someone else is prepared to pay for it
- What’s a nothing worth to someone else?
- So, you’ll need to find a sea of fools to make a market.
- The technology is great though. But what’s that worth, it’s still a nothing!
I for one will be staying on the side-lines as I am an investor and not a speculator.
Bitcoin has been likened to Dante’s Inferno by the chairman of the Royal Bank of Scotland. As the digital currency surged towards $16,000, Sir Howard Davies suggested it should carry a similarly apocalyptic warning for investors.