Cryptocurrency
They can ’ t all be winners
When a sector receives a flood of money , it can be a sign it is close to its peak ; when it is patently obvious that those rushing to invest have limited knowledge about what they are buying , the alarm bells should be deafening .
A 2021 FCA survey indicated cryptocurrency investors were much more likely to have first heard about the asset class from friends , family or colleagues ( 34 %) than non-users ( 16 %), demonstrating that personal networks have a powerful effect . This flies in the face of a central tenet of financial guidance , which is to be wary of “ public house advisers ”.
Meanwhile , 19 % of respondents said they bought crypto “ instead of buying shares or other financial investments ”, meaning they will miss out on the long-term compounding of returns from stock markets . Most worryingly of all , about half of users surveyed said they “ know they ’ ll make money at some point ”. they ’ re claiming all the benefits to which they ’ re entitled . As for James , he ’ s quietly confident that cryptocurrencies will deliver for him in the end . “ I ’ m happy with everything . I feel absolutely , fundamentally secure that Bitcoin will eventually come right .” A useful question to ask someone who you suspect may be getting carried away with an investment is ,
“ what would make you sell ?” And James is able to offer an answer to this question – to some extent , anyway . “ I guess if there were some black swan event , such as the entire network going down , and maybe with this whole notion of double spend [ the risk that a cryptocurrency can be used twice or more ]. But those are the only things , really .”
Issue 86 - July 2022 / 41 /