The (REALLY) risky business of crypto currency


Back in December, one weekend I decided to have a serious look at investing in cyber crypto currency.

The week before I had watched Bitcoin experience an unprecedented surge in value that was as dizzying as it was abruptly short lived. I knew even before considering whether to even start investigating crypto currencies that Bitcoin was clearly well out of my ball park. I therefore did not look at Bitcoin and instead I turned to look at other crypto currencies. One of the ones that I looked is one called Litecoin. Others, such as Ethereum, Ethereum Classic and Ripple were noted but not explored.

To this day I have not purchased anything. Litecoin as I mentioned earlier may have been selling at a rate low enough when I first looked at it to consider buying a few just to see what happened. There were several factors that I needed to consider:

  • What broker would I use – one called BitPrime, which is located in Christchurch seemed like a good option. Its website listed the terms and conditions of the sale, and the government regulations that it was compliant with.
  • How much would I be prepared to pay? Even then, one Litecoin would set me about N.Z.$140 and seven would have set me back about N.Z.$1,000 – yesterday it was worth N.Z.$365
  • Given the extreme volatility of Bitcoin which in the space of a week in late November-early December rose nearly $8,000 in value before plunging several thousand in a very short time, would I be able to sell and the sale be given effect to in time before a plunge possibly wipe out everything I had put into crypto currency – at the present time one Bitcoin will set you back N.Z.$19824
  • Would there be unseen hooks in this unique system of electronic currency that for the most part you do not actually see, and which is prone to hacking, cyber theft and and other criminal activity

As easy as it looked on the computer screen – the registration for Bit Prime almost seeming too easy – there were immediate questions. My brother had noticed Bitcoin’s surge as well and, having watched initially out of curiosity, he could see where Bitcoin was going and that a sharp correction would come, potentially with little or no warning.

Some serious misconceptions also exist. One is that Governments cannot regulate Bitcoin. A Government can regulate whatever it wishes and China has banned Bitcoin transactions. The I.R.S. in the United States has also moved on crypto currencies with a court win forcing the most reputable exchange to hand over records of transactions. In short you cannot hide finances in Bitcoin, and presumably none of the others as well should Governments go after them.

At some point in the future on a crypto currency in its relative infancy I might invest a bit just to see where it goes and pocket a little bit in return. However right now, sitting on the fence and watching the various crypto currencies going up and down as if they were puppets being jerked by a puppeteer seems to be a much more sensible – and less daunting – proposition.

2 thoughts on “The (REALLY) risky business of crypto currency

  1. Investing in cryptocurrency is like bettimg on a racehorse. You may have a win sometimes but most of the time you lose.
    You shoukd be ‘in’ onling currency to use it to buy and accept it if you sell. Using it that way (exempts) sets you aside from Government taxes and regulations.
    If you have an item to sell for bitcoin you will not need a broker. A broker is like a bank, being paid to manage your wealth for you. The whole point of the online currency is to avoid those charges.

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    • At this stage I am yet to actually decide whether to invest. The idea seems fantastic at the outset, but given the alarm bells ringing over Bitcoin, alarm bells must follow for others as well.

      Like

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