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Spend your way onto the property ladder! Wild West of exchanges and wallets – and do you have to declare profits to the taxman? Recently, This is Money received an e-mail from a reader which started: ‘You need to have a section dedicated to crypto technology and currencies. The technology is the biggest technological leap since the founding of the internet. It highlights just how quickly the cryptocurrency phenomenon has exploded in recent months and how much some investors believe in the technology.
You can read our at-a-glance round-up of some of them here. But, recent activity and price swings have shown just how volatile the world of bitcoin, ethereum, ripple and co are. Nevertheless, many readers are asking how they can get their hands on bitcoin and other cryptocurrencies safely and securely, and importantly, how they can sell if they want to take profits. However, it is the Wild West out there.
So let’s start with the warnings. As mentioned above, digital currencies are volatile and not for the faint-hearted. You should read our bitcoin box below. Yes, there are plenty of stories about how people have become rich investing in bitcoin at the start and some self-titled experts are saying this is the best new financial investment you can make. But there have also been plenty of grumbles about it, including from stalwart US investor Warren Buffett – while the Financial Conduct Authority has also warned bout the dangers of investing in bitcoin.
Remember bitcoin yields nothing and its main source of value is scarcity. Most bitcoin activity is trading not investing. Research coin wallets, the digital vaults where cryptocurrency is held, and consider security carefully. Bitcoins have been stolen before, understand how this happened. The price can move by 20 per cent in one day and you could easily lose half of your cash in a far quicker time that investing in the stock market.
Consider how you would cash in any gains. There are reports that this has proved hard for some people. A time of market stress could lead to people being locked in and unable to trade. Read our guide to How to be a successful investor, which looks at the far less high octane world of long-term investing and how to make it a success. The digital currency that most will be familiar with is free from government interference and can be shared instantly online. It doesn’t rely on trusting one central monetary authority.
The underlying technology is blockchain, a financial ledger maintained by a network of computers that can track the movement of any asset without the need for a central regulator. WILD WEST WARNINGAccording to analysis by digital threat firm RiskIQ, the world’s top app stores are hosting more than 600 blacklisted bitcoin apps which leave users open to hackers. It looked at 18,408 apps across 20 app stores, including Apple and Google Play. It found a staggering 661 to be blacklisted by official cyber security vendors – but still available for download by users. Hackers behind the malicious apps, which have been blacklisted by one or more cyber security vendors, can trick users into handing over large sums of money or personal details for financial gain. Fabian Libeau, vice president of RiskIQ, says: ‘We are seeing threat actors around the world exploiting what is already a hostile currency in a lawless digital world.
Before handing over any cash or personal data investors should carry out thorough research into the exchange and wallet apps they intend to use. If you plan to buy cryptocurrency in 2018, you must arm yourself with as much knowledge as possible to avoid the conmen. SET UP A WALLET Search engine data shows that queries for ‘buy bitcoin’ outstripped ‘buy gold’ in the latter part of 2017. This is Money data showed just how many people have been searching some of the most popular digital currencies.
20,000 mark in December, bringing it to the attention of the British public. To get a cryptocurrency, you need a wallet – this is where the digital currency lives. HAVE YOU BOUGHT INTO THE CRAZE? Have you invested in cryptocurrencies in recent months?