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Crypto currency – what on earth?

Cryto CurrencySo one of the latest things seems to be crypto currency, you might have heard terms such as Bitcoin being banded around, the latest investment that seems to have made millionaires practically overnight.

But what is it? Should it be something you look at as an investor? Is it risky? Could you be missing out on making a packet?

Here’s our guide to crypto currency, everything you wanted to know but were afraid to ask because you didn’t know what you were talking about…

Essentially, crypto currency is like cyber cash. Transactions are ridiculously secure, as it uses a form of secret coding that originated during the Second World War, believe it or not.

There are a number of different currencies that use this system, the most well-known being Bitcoin, which began in 2009.

So how do you buy it? Well, it’s called mining it, as essentially, to get a Bitcoin, you need a computer to solve a complex mathematical problem (this secret code) and the solution is a code of 64 digits. Solving the problem means you get to keep the Bitcoin.

Seems too much of a hassle? Well you do get paid for your reward, one Bitcoin is worth (at the time of writing) over £13k. If you were lucky to have got some a few years ago, you’d be quids in – the value has risen hundreds of thousands of times, making you a very rich man or woman.

But what’s the difference to ‘normal’ currency or investments? Well, the thing is that because it’s all in the cyber world, there are no physical coins/notes etc, and so doesn’t go through the normal banking process. Therefore, it’s not regulated. So riskier.

Governments are unsure about the legal status of cyber currency, and there have been reports of scams and other criminal activity, not surprising when you can see the potential rewards. So it’s all a bit of an unknown at the moment, and likely to change.

As does the value. The volatility of the market is pretty crazy, thousands can be lost or gained in a matter of days, and you can’t really be sure who you are dealing with when you’re buying and selling – because it’s not regulated, there are all sorts out there.

Surely you don’t have to do this ‘mining’ yourself? Well if you have the tech, then it is possible, but for most people, that’s not going to happen. So you can buy and sell the currency through online platforms. Or it’s even been known for people to club together in a mining group, so that between you, you can mine the currency yourself, and that way, you are more certain of getting hold of the currency – because it’s so competitive at the moment, then it can be hard to get a good price to be able to make a profit. And because the number of Bitcoins and other currencies are capped, it’s not as though Governments release extra money or give permission for the Mint to make more currency – this adds to its exclusivity.

So there you have it – a bit more of an insight into this crazy world of crypto currency, there’s clearly money to be made – if you are willing to take the risk.

Remember, if you are thinking of investing, then it’s important to seek regulated financial advice, and a balanced portfolio will help you to spread the risk.

But if you’re thinking of making your fortune in 2018 – then could this be a way to do it?

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