Recently I was in a taxi and as one does in such close quarters, began chatting to the driver about life.
Upon asking my profession, where conversation often heads, he proceeded to tell me lightly about his finances and frustration trying to find an income.
‘I have taken all of my money out of Isas, I’m fed-up with the low rates from the banks…’ he said, animated.
Love it or hate it: A bit like Marmite, many have polar opinions of Bitcoin – and a recent chat in a cab shows how the topic has caught on like wildfire
I knew where this chat – and his cash – was heading. The B-word was incoming. The B-word, which has somehow pushed Brexit into second place.
In the last month or two, Bitcoin – and other cryptocurrencies – have become the new buzz topic. It has spread like wildfire.
And yes, there it came.
‘…I have put half of it in Bitcoin,’ he added, glancing in his rear view mirror, perhaps seeing if I was shocked or aghast at his decision.
HOW THIS IS MONEY CAN HELP
I was intrigued more than anything to find out what prompted his decision.
Today, the price of Bitcoin has rocketed to nearly $16,000 a coin – or 70 per cent in a week – so the move, at present, has been a wise one.
You cannot move for noise about Bitcoin. It’s plastered on social media and is being spoken about in pubs (and taxis) across the land. Perhaps the world.
The amount of correspondence I’ve had about cryptocurrencies in the last month has also rocketed. It’s a complete and utter feeding frenzy, which fuels worry about online currencies.
Many suggest they are taking money out of their tax-free Isa wrappers. Unless you have built up a huge pot, many find the low rates pointless, especially with the relatively new personal savings allowance.
My taxi driver and I chatted about how the price of Bitcoin has risen since the start of the year, bubble fears and our understanding of cryptocurrencies.
The price has risen from $900 a coin back In January to almost $16,000 today. There are stories everywhere about John or Jenny Soandso who bought into cryptocurrencies years ago and are now millionaires after investing peanuts.
These types of tale appear to have encouraged more and more people to get involved without perhaps considering the risks.
And as John or Jenny Public do so, the price, of course, has ramped up. The chart for recent Bitcoin movement is astonishing and a little frightening:
Bumper returns: Bitcoin has rocketed in price this year as this chart plotting it since its creation shows (dated 6 December 2017)
The taxi driver was relatively clued up about his investment. He accepted it was a huge risk and has read plenty of negative stories about it potentially being a bigger bubble than tulips all those centuries ago. I hope all who have invested have done this.
He also had a relatively broad idea of how it works, although began to look a little confused when we started to talk about blockchain and mining. I don’t blame him.
Like any investment, adages apply.
Don’t put all your eggs in one basket, understand the risk and arm yourself with as much knowledge as possible.
In terms of cryptocurrencies, I would urge those considering getting involved to find out how to do it safely and securely, and make sure you know how to cash out as and when you want, without being stung with over-the-top fees by fly-by-night firms.
It’s incredibly hard to see how this will all play out. This time next year, it could reach $100,000 a coin. It would only need to go up tenfold again.
This time next year, it could be $100 a coin if it is rumbled as complete and utter tripe, or something happens to make it next to worthless, such as a crackdown by authorities across the globe.
It’s hard to criticise people investing in it when easy-access savings accounts on offer to people are so low. The interest rates available offer little reward for saving.
There are risky investments everywhere, not just in the cryptocurrency sphere – although, this is what has caught the attention of many.
If you can make £100 on £10,000 in a day investing in Bitcoin, instead of waiting a year with a typical savings account, I can see the appeal. But it also puts my ‘too good to be true’ sensors into overload.
Yesterday, the Treasury said anti-money laundering regulations could be updated to include Bitcoin and other virtual currencies.
It comes as the Metropolitan Police say criminals are using cryptocurrency cash machines to launder money in London.
This nasty undertone to cryptocurrencies and it being unmasked could be its undoing. However, there is a lot of ‘could’ when it comes to Bitcoin & Co.
Bitcoin: The price of the cryptocurrency has exploded in recent months as more people pile in
As the taxi pulled up to my destination and I handed over old-fashioned notes, I wondered if one day I would be paying in cryptocurrency.
I also couldn’t help but ask where he put the other half of his hard-earned cash.
‘Premium Bonds,’ he replied. ‘The underlying rate has gone up this month and you’ve got to be in it to win it.’
I stepped out of the taxi and thought about his ‘gamble’ – I wouldn’t be surprised if people all over the land have done something similar.
Huge gamble on one side of the scale with Bitcoin, low risk on the other with a government-backed provider.
I have no idea how much money he was talking about – if it was a few thousand quid that he could afford to lose, it doesn’t seem like the worst strategy.
But if it was money he couldn’t afford to part with, or is a five-figure sum, alarm bells would be ringing.
If you are getting involved in the cryptocurrency boom, please treat it with extreme caution.
Is Bitcoin in a bubble?
Bitcoin has risen more than tenfold this year and doubled in just seven weeks.
But can it keep rising as adoption gets more widespread, does blockchain’s promise justify the price, and does any of this matter as to whether it is in a bubble or not?
In this excerpt from the This is Money podcast, Simon Lambert and Georgie Frost discuss Bitcoin’s astonishing rise.