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Making Sense of Cryptocurrencies: Part #3

Making Sense of Cryptocurrencies
June 30, 2021

In this edition, we continue to explore the real-life practicalities of cryptocurrency ownership – buying, storing and spending. Last time we looked at the rollercoaster changes in cryptocurrency prices, and now we consider safety, security and daily practicality.

Whats’s the latest?

Last time we described how the unpredictable comments and actions of various actors create rollercoaster changes in cryptocurrency prices, which do not bear comparison to a regulated market. Whilst one can find daily comments about price crashes and price surges, at the time of writing Bitcoin remains at around the US$34,000 mark (25 June 2021), about 45% below its April 2021 peak.

There are many predictions that crypto-prices have a long way to rise, and well past all historic peaks. Equally, some commentators argue that virtually all those promoting cryptocurrency have their own financial stakes in them, with a vested interest in talking the price up – “Enjoy being poor” is an established meme seemingly to promote fear of missing out. Are we entering a period where small retail investors are propping up demand and prices, giving a few original movers the chance to exit and get very rich, with others taking the pain if (when?) the bubble bursts?

Meanwhile, on 17 June the U.K.’s Financial Conduct Authority (FCA) said about 2.3 million UK adults now have cryptoassets, which is about 1 in 20 adults and up over 20% from the previous year. Worryingly, almost 1/3rd were not able to correctly describe cryptocurrencies from a list of statements, and around 2/5ths did not regard them as a gamble. The FCA’s own warning that “investing in crypto-assets is high risk and … investors should be prepared to lose all their money” does not seem to hit home with everyone.