Monday, January 11, 2021
Bitcoin rides a roller coaster
Financial regulator warns of total crypto loss
Cryptocurrencies have risen sharply in value in recent weeks. Now it's going down again. UK financial regulators believe investments are risky – investors could lose all of their money.
The British financial regulator is skeptical of the current boom in cryptocurrencies such as Bitcoin. Such investments are high-risk, warns the Financial Conduct Authority (FCA). Investors would therefore have to be prepared to lose all of the money they have invested in cryptocurrencies. The supervisors are particularly concerned about the strong price fluctuations, the complexity of crypto currencies and the lack of consumer protection for these products.
In the past year, the Bitcoin price has quadrupled. Over the weekend, he broke the $ 40,000 barrier, just three weeks earlier the $ 20,000 mark. There is currently a strong downward trend. Today alone, Bitcoin has become cheaper by around twelve percent to $ 35,390. Price capers are not uncommon with Bitcoin.
Conceived during the great financial crisis of 2008, Bitcoin has always had a dubious reputation. Critics complain that the digital currency can easily be misused for criminal purposes due to anonymous payment processes. It also fits that Bitcoin has been accompanied by financial and fraud scandals since the beginning.
Asset manager invests in Bitcoin
However, the image of bitcoin has improved over the past year. For example, the payment service PayPal has enabled its US customers to trade in cryptocurrencies. This year, transactions in Bitcoin and other digital currencies, of which there are now thousands, should also be possible.
Large financial investors are also showing a greater interest in digital currencies. For example, the large asset manager Fidelity launched a fund last year that invests in Bitcoin. Bitcoin is also increasingly being used as an alternative investment, because some investors expect higher inflation in the future due to the sharp rise in national debt during the Corona crisis.
Now the question arises whether Bitcoin can benefit from these developments in the long term. Because the main points of criticism remain: Bitcoin is largely unsuitable as a means of payment. Its exchange rate fluctuations are too strong, the energy consumption in production (mining) is too high, and transaction processing is too lengthy and expensive. The core idea of the Bitcoin inventor, who is only known under a pseudonym to this day, was precisely the creation of a new means of payment. Bitcoin also remains controversial as a financial investment.
. (tagsToTranslate) Economy (t) Bitcoin (t) Cryptocurrencies