Bitcoin is a type of digital currency known as a cryptocurrency. It operates on a decentralised peer-to-peer networked program on your computer, meaning that transactions can be conducted between a buyer and seller without the need for any third party oversight such as a regulator or bank. The underlying technology that makes all cryptocurrencies possible is the blockchain.
Bitcoin’s ‘wild run’
Bitcoin’s value has oscillated wildly. It peaked at US$20,000 in mid-December 2017, lost 40 per cent of its value within a week, then bounced back and hasn’t stopped bouncing since.
What are the risks?
Bitcoin certainly has all of the hallmarks of a ‘speculative bubble’ and history is littered with plenty of examples of speculative fevers that ultimately collapsed. Another risk is regulation. Some cryptocurrencies are becoming the preferred medium of exchange for criminals due to anonymity, if governments can find a way to crack down they surely will.
Want to know more?
Have a chat to your financial adviser who can help you work out if Bitcoin, or cryptocurrency, merits further investigation.