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 us, we can help you work out if Bitcoin, or cryptocurrency, merits further investigation.
This article is the expressed opinion of the author, Mark Rider, Chief Investment Officer, Wealth Australia, ANZ. If this article is of interest please discuss further with your financial adviser. The information/advice (including taxation) on this website is General Advice Only. It has been prepared without taking into account any of your individual objectives, financial situation or needs. Millennium3 Financial Services Pty Ltd ABN 61 094 529 987 AFSL 244252.