Bank of England Governor Andrew Bailey has dealt an almighty blow to cryptocurrency investors, warning punters to be ready to lose all their money to the online phenomenon.
Banks have been forced to stand tough against the growing trend, which is a very real threat to traditional economies, as more and more people buy goods and services with decentralized currency.
Bitcoin was introduced in 2008 as an alternative to popular banking services and has generated unprecedented demand for alternative currencies. It has fueled the growth of countless new blockchain-based coins in a market that is now worth trillions.
However, the natural hysteria that is gripping the global cryptocurrency market has made traditional economists reluctant to declare the revolutionary technology a fail-safe investment.
Coins like Dogecoin – now the fourth most popular cryptocurrency with a market capitalization of over $ 84 billion – have appreciated in value due to internet memes.
Tech billionaire Elon Musk also has palpable power in manipulating markets through his Twitter account, as was seen earlier this year when Bitcoin invested $ 1.5 billion in the currency following Tesla’s announcement and accepting it as a means of payment has seen an increase.
For investors deep in the cryptocurrency world, however, the phenomenon is more than a get-rich-quick system.
Pro-Crypto advocates have long been drawn to blockchain transactions for privacy protection, as opposed to a traditional bank where every penny of your spending on an institution can be viewed at will.
According to Bailey, volatility is a serious concern for anyone investing real money in cryptocurrency.
“They have no intrinsic value. That doesn’t mean people don’t value them because they may have extrinsic worth. But they have no intrinsic value, ”he said, according to a CNBC report.
“I’ll be frank about this one more time … only buy them when you’re willing to lose all your money.”
Bitcoin experienced an astronomical boom in late 2017, rising to around $ 25,000 per coin and attracting thousands of new investors before dropping below $ A3,000 a year later.
Those who resisted the urge to cash out when the markets collapsed were rewarded for their beliefs. The value rose back to $ 74,000 in May 2021.
Mr Bailey’s warning to crypto investors came after a similar statement by the UK Financial Conduct Authority.
“Investing in cryptoassets or related investments and loans generally involves very high risk with investors’ money,” the watch dog said in January.
“When consumers invest in these types of products, they should be ready to lose all of their money.”
For some, the unpredictability of cryptocurrency is half the battle. Something as simple as a photo Mr. Musk posted on Twitter can turn markets by absurd amounts almost instantly.
Dogecoin has since soared sky-high after Musk repeatedly endorsed it on social media and nicknamed it “Dogefather” after its support sparked a 26,000 percent increase last year.
But even the emphatic billionaire has warned against diving into the complex trend without a lifeboat.
“Cryptocurrency shows promise, but please invest with caution!” he tweeted on Friday morning.
“First of all, I think people shouldn’t invest their savings in cryptocurrency to be clear. I think that’s unwise. “
He added that “there are good chances” crypto will become the major currency on earth, but no one knows which digital coin will be the most productive.
He added that raising money “should be viewed as speculation at this point”.
