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IT & InnovationIs cryptocurrency a safe development?

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Brian Bourne
Posted byBrian Bourne

Brian connects with people all over Switzerland working in the finance and professional services sector. 

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With Bitcoin becoming a buzz word around dinner tables and offices over the past year, there are many cursing hindsight and wondering how they let such a lucrative investment opportunity pass them by. Our Finance Specialist Brian Bourne explains below his thoughts on whether cryptocurrecny is a safe development.

When Bitcoin was first released to the public, it was available for less than $0.01, at time of writing, it is now worth around £13,000 and has been heralded as digital gold by billionaire investment banker, Michael Novogratz. However, while gold is considered a safe asset, cryptocurrency, doesn’t exactly follow in its footsteps.

While there is a risk with any investment, the returns people are seeing from cryptocurrency is enough to make anyone think that it can only get better. But as the digital asset’s value continues to increase, just how safe is it to invest?

Just because the likes of Bitcoin and Litecoin have seen huge growth, doesn’t mean that they are safe investments. There are plenty of factors that could lead to cryptocurrencies crashing and as they continue to enter the mainstream, there’s going to be plenty of moments that could unnerve investors.

Back in September, Bitcoin’s value plunged by a total of 20% when Chinese regulators banned companies from raising money through ICOs. While it has clearly recovered and only moved from strength to strength since, there’s always the risk that more governments could clamp down on the digital assets.

Even as cryptocurrency continues to grow, payment experts are warning people to only invest what they can afford. In an article featured on The Guardian, electronic payments expert Dave Birch commented on the security of an investment:

“One doesn’t invest in bitcoin, one gambles on bitcoin”

Bitcoin is proving itself to be more then capable of delivering huge profits, but the risk of investment has been compared to that of tulip bulbs in the 1600s. Massive demand for the flowers helped skyrocket the value of the bulbs, hitting a solid peak in the 1630s. The trading was so frantic that many were putting their homes down as collateral, seeing the investment opportunity as too good to be missed. Unfortunately, it ended up being too good to be true and by February 1637, the market crashed leaving many investors penniless.

This comparison was made by Jamie Dimon, CEO of JP Morgan as he dismissed the cryptocurrency, describing it as worse than tulip bulbs. With cryptocurrencies creating such a risky market, there’s no guarantee that any money will be made for a long-term investment.

Every investment is subject to drops and even though cryptocurrency has seen a few, the communities built around these digital assets remain confident that it will keep going for a long time. The returns some people have seen have been immense and Bitcoin itself has helped millionaires around the world, for the foreseeable future, things for Bitcoin only seem to be looking up.

An alternative investment

The digital asset may be out of reach for the part-time investor, but there are plenty of other altcoins on the market that present a cheaper way to invest into cryptocurrency.

One of the biggest altcoins that is seeing massive growth alongside Bitcoin is Litecoin, which has currently grown over 4,000% from the beginning of 2017 to 11, November. Another altcoin that has seen tremendous success recently is Ethereum, the second largest digital currency which has just surpassed the $500 mark for the first time.

Alongside these, there are hundreds of other altcoins in the market that have the potential to either develop into the next Bitcoin or crash and burn. However, through research and engaging in the wide spread cryptocurrency community, any budding investors can take advantage of a growing market.

While cryptocurrency does seem like a strong investment right now, the market is known for its volatility. As with every type of investment, you shouldn’t create any financial risk for yourself and only invest what you can. If you want to learn more about the cryptic world of cryptocurrency, we’ve delved into its past, present and future to discover just what this innovative technology means for the job market that surrounds it.  

If you are looking for a new role in finance, get in touch with Brian today:

Disclaimer: While we’re writing about investment into cryptocurrency, we cannot recommend it as an investment opportunity and any money placed into the digital asset is done so of the investors own choice.

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