VICTORIA BISCHOFF: Don’t get bitten by Bitcoin

Don’t get bitten by bitcoin: A risky punt on cryptocurrency is not a long-term investment strategy, says VICTORIA BISCHOFF

Investment guru Warren Buffett once said: ‘Investors should be fearful when others are greedy and greedy when others are fearful’.

So, to a veteran investor, the Bitcoin ads plastered all over the London Underground will have been an immediate red flag.

Yet to the thousands of ordinary savers passing these ads, they may well have looked tempting.

Bit silly: To a veteran investor like Warren Buffet, the Bitcoin ads plastered all over the London Underground will have been an immediate red flag

Savers have amassed an extra £150 billion during the pandemic after being unable to socialise or go on holiday. Many are fed up with rock-bottom interest rates and are desperately seeking a more lucrative home for their cash.

But a plague of reckless commercials for an unregulated and unprotected cryptocurrency is selling a dangerous lie.

‘If you’re seeing Bitcoin on the Underground, it’s time to buy,’ one ad casually states.

This is nonsense. In fact, most seasoned financial experts will tell you that when you see ads for Bitcoin on the Tube it’s time to sell! 

There are absolutely no guarantees when it comes to cryptocurrency. And the Bitcoin price crash this month only further proves just how extraordinarily volatile it can be.

The Bank of England governor Andrew Bailey, and the City watchdog, say that those buying the digital currency should be prepared to lose everything.

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The main driver behind Bitcoin value is the hype around it. The more people that buy into it, the stronger the illusion. Yet ask anyone what Bitcoin actually is, and they will struggle to give you an answer you can understand.

In finance, the ‘greater fool theory’ banks on you finding someone more reckless than yourself to buy your investment for a higher price.

And these adverts are aimed at those greater fools, blurring the lines between sensible investing and outright gambling.

Even with a warning label, these adverts are still irresponsibly pushing savers towards taking on a dangerous amount of risk.

If you’ve got a bit of spare cash you can afford to lose, a flutter here and there — be it on the races or Bitcoin — is no issue. But a punt on cryptocurrency is not a long-term investment strategy.

And it certainly isn’t the right option for anyone who cares about the planet. It’s an oft-quoted fact that the computers generating cryptocurrency are using more power than Argentina alone.

The fact is that you are buying something that exists only in a virtual world — one we know can be hacked by fraudsters.

So ignore the ads, ignore the hype, and stay grounded in reality. Bubbles like this rely on the expectation that the price will keep rising.

But now that Bitcoin has seen its value plunge by as much as half in a few weeks, the hazard lights should be flashing brightly.

Receipt fears

Retailers have launched a campaign to kill off the traditional paper receipt. Customers will instead be asked for their email address so they can be sent a digital copy.

It is claimed the Paperless Pledge is a green measure that will help save the planet… as well as millions of pounds for retailers.

There are fears, though, that the stores will use your information to bombard you with marketing offers, or even sell your details on. 

I don’t begrudge struggling High Street stores vital savings, and there is no doubt digital receipts are convenient — particularly if you often lose the paper ones.

But retailers must not leave behind the millions of shoppers who do not have a smartphone or computer.

The stores claim they will still offer customers a paper receipt if they ask. They must ensure they do. 

I’ve been in shops where staff have used every trick in the book to try to convince me to hand over my email address. Customers should always be given a choice.

Wallet wisdom

To end, another brilliant money motto from our reader Tracy in Leamington Spa, Warwickshire.

She says: ‘My grandmother used to say: ‘Spend a bit, save a bit and squander a bit.’ It’s an adage I’ve lived by and can attest works well.’ 

Good advice for anyone tempted by Bitcoin, too.