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Cryptocurrency
“ Understand that it is an extremely risky asset class to be invested in , especially as it is brand new ”
Peter Komolafe Financial adviser and founder of Conversation of Money
To counter misinformation , he urges people to sense-check what ’ s being said in the content they consume , and to carry out their own research . “ Understand that it is an extremely risky asset class , especially as it is brand new ,” he says , adding that scams are also rife in this area .
Squeezed out Fans of cryptocurrencies often argue that they ’ re an effective inflation hedge , but Komolafe says this has “ proved to be patently wrong ”. He points out inflation is currently high , and if Bitcoin were really a hedge , then it would be heading towards $ 80,000 . The reason it isn ’ t is that this asset is driven by sentiment , “ and the sentiment now is that disposable incomes are being squeezed , and there is not the stomach to leave money in crypto when it ’ s needed on a day-to-day basis ”. There ’ s also an argument that cryptocurrencies are a store of value , especially Bitcoin , which has a finite supply – no more coins will be released once 21 million are in circulation . The problem is that there are so many cryptocurrencies out there , how can you tell which one will go the distance and be a real store of value in the long term ? “ There is potential in the crypto world , but it ’ s very difficult to know
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