The Bitcoin Bubble

Cryptocurrency: “A digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.” For example, Bitcoin.

It was in May 2014 that Oxford Dictionaries Online (distinct from the Oxford English Dictionary) added the relatively unknown word ‘cryptocurrency’ to its database.

Fast forward to 2017 and not a day goes by when either I’m asked for my views on Bitcoin, Ethereum and Initial Coin Offerings (“ICOs”) and whether or not they are investable assets, or an opinion piece lands in my inbox or newsfeed.

Bitcoin has risen over 825% in the past year alone, to its current level of +/-$5,800 (as at time of writing). Dot-com stocks rose 680% from 1996 to 2000, and we all know what happened next!

There’s no doubt that cryptocurrencies have caught the public’s attention, but arguably it’s for all the wrong reasons.

I believe the value lies in the ‘encryption techniques’ known as Blockchain Technology, a view which is shared by Neville Chester, Portfolio Manager at Coronation Fund Managers, in the most coherent and easy to understand article (find it here) I have read on the subject to date.

Cryptocurrencies make for great headlines, but not great investments!

Posted in Blog, Investments, Tips.