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What’s Bitcoin and is it secure?
Listed below are a few of Martin’s solutions from the stay present, [along with additional notes from Martin in square brackets and italics – added in the cold light of day].
Martin stated on The Martin Lewis Cash Present: “Bitcoin is ready up as a forex – a non-governmental forex – so that you’re meant to have the ability to spend it, however I’m presuming you’re considering of this to not spend however extra as an funding, which is what most individuals are .
“Initially is it secure? Properly some individuals have misplaced cash of their wallets. Like gold it may be stolen, and cryptocurrency is a bit like an equal to gold because it’s a retailer of worth of what persons are placing in. It’s important to be very cautious.”
[More accurately, I should’ve said ‘many see Bitcoin as a store of value’. It doesn’t have an intrinsic value in its own right; it is only worth what people are willing to pay for it. Those who see it as a store of value do so as they believe others will always be willing to pay something for it.
For more on the fundamentals of this, see my 2017 blog Bitcoin: four things you need to know before investing (it’s somewhat out of date but it will help beginners to understand).
With Bitcoin and other types of cryptoassets you are unlikely to have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme (FSCS) if something goes wrong.]
Can I earn money investing in Bitcoin?
Whereas Bitcoin’s worth has lately soared to round £30,000, its worth is extraordinarily unstable and it has dropped to as little as round £300 up to now – so that you should not make investments if you cannot afford to lose the money.
Martin stated on The Martin Lewis Cash Present: “As as to whether it’s any good – I don’t discuss investing. The factor about investing – and Bitcoin is an funding – is that costs go up and costs go down. With Bitcoin they go up massively they usually go down massively. And the rationale for stressing that a lot is that you would be able to make a fortune however chances are you’ll lose a fortune.”
[In the show I said the prior height for Bitcoin prices was two years ago, but things go quickly as you get older and it was actually in December 2017.]
He added on TV: “So in case you can’t afford to lose the cash that you simply put in then don’t put money into it. It’s a raffle like all types of shares and shares and all types of funding and placing cash in gold. That’s your selection, however in case you do it the correct means the funding ought to give you the results you want but it surely doesn’t imply you gained’t lose cash although.”
[Technically, it’s arguable whether Bitcoin is investing or just speculation – as investing usually includes the chance to generate income or accumulate, while speculation is a straight bet on the price of something. Yet that’s splitting hairs, either way it is a big risk. There’s no protection with Bitcoin, there’s no guarantee it will be worth money. Of course, if you buy and the price rockets, you could make big money. Whether that will happen or not no one knows.
Many people pushing Bitcoin will tell you things like “the fundamentals have changed”, “big investment firms are getting into it”, “there’s greater transactional demand” and indeed that may all be true. Yet it’s when they use that to say the price will keep rising that it moves into the realms of speculation. No-one has a crystal ball. There are no guarantees.
Once things are already known, in any speculative market, they are immediately factored into the price (or even factored in before that if it’s assumed it will happen). So if you do go in, go in with your eyes open and the understanding that you’re doing it hoping to gain, but in the knowledge you could lose some or all of your money.
It’s worth noting the financial regulator, the Financial Conduct Authority (FCA), has since the programme aired also issued a warning saying that investing in cryptoassets, such as Bitcoin, or investments and lending linked to them, generally involves taking very high risks and that you “should be prepared to lose all your money”.]
BEWARE scam-ads which lie that Martin recommends Bitcoin
Fraudsters have wrongly used Fake Martin Lewis ads together with his identify and face on to advertise cryptocurrencies however these are scams. Martin doesn’t do adverts – When you ever see one together with his face or identify on it, it’s with out permission. In truth, Martin sued social media site Facebook over these adverts and settled for £3 million, which he donated to charity.
Martin stated on TV: “You’ll have seen adverts with me in for Bitcoin or Bitcoin buying and selling. They aren’t Bitcoin, they’re scams – don’t contact them – in case you see my face in an advert it’s not true. Be extremely cautious to do your analysis and go for a reputable supply in order for you your Bitcoin.”
[The point about doing your research is crucial. We don’t have a ‘How to buy Bitcoin’ guide on the site, as we don’t usually cover what to invest in. This story is only here because I get asked so many times about this topic; likely because people have seen the scam adverts. Never buy Bitcoin off an advert, do your reading, research it yourself – and if you want Bitcoin, ensure you’re buying it, and that no-one is selling it to you.]
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