Everywhere we go for financial information we keep reading about crypto. The big one seems to be Bitcoin, but there’s another one too that sounds like a fragrance. It’s eth-something or other? We dunno…that’s why we asked out friends at LGBT Money for the lowdown
LGBT Money answers…
Big, big, big disclaimer here. What follows is not a recommendation to buy crypto. But we’re happy to give you an overview. The eth-something? That’s called Ethereum.Both Bitcoin and Ethereum are what are known as ‘crypto currencies’. They are digital currencies as opposed to ’normal’ currencies like the sterling, dollar, euro etc. (which in turn are also referred to by the crypto community as ‘fiat’ money).
Bitcoin is the giant crypto and currently trades in the $50k+ territory for one unit. In terms of value the entire currency is valued at over $1tn. (Yes, trillion). This is known as ‘market capitalisation’ and that figure of £1tn means few companies are worth more, the exceptions being the likes of Google, Microsoft, Amazon, Facebook etc.
Bitcoin is firmly in the top 10 most valuable assets in the world.A crypto currency basically means that to transfer payment there is no need for a bank as an intermediary and transactions are knowns as ‘peer-to-peer’ eg. you can send to your contact and they can send to you. Transactions happen in a decentralised blockchain-based network and your Bitcoin is stored on an electronic wallet. Back story? Bitcoin was set up in 2008 by Satoshi Nakamoto. Think about that. In just over 12 years it has become one of the most valuable assets on the planet.
Only 21 million bitcoins will ever be issued meaning it has finite supply. How big can Bitcoin go? The truth is we don’t know. You have to factor in that governments around the world might get (or might already be) tetchy about this new currency and try to limit or control it; but that’s tricky, precisely because it’s peer-to-peer. Is it impossible for them? No.
There is risk. Having said that, Bitcoin is huge. It stands around 6% of the US dollar. Elon Musk at Tesla is a high-profile believer with a $1.5bn Bitcoin acquisition and you can now buy a Tesla from him (well, not personally, from one of his minions) using Bitcoin. Back in late December last year, US sports icon Russell Okung demanded his team the Seattle Seahawks ‘Pay me in Bitcoin’. He opted to get half his $13m a year payment in Bitcoin.
That’s worked out nicely for him because give or take Bitcoin has gone up 70% in the interim. The likes of Morgan Stanley are now engaging with Bitcoin, about to add or adding Bitcoin to the portfolios they offer clients. Oh. And Paris Hilton is now a big fan and adopter, should that mean anything at all to you. You can tell because if you look at Twitter (who doesn’t?) then Bitcoin fans identify themselves with laser eyes on their pic profile. So now you know.
So: remember the disclaimer? It stands. You asked for an overview, OutNewsGlobal, and that’s what we’ve shared; hopefully helpful but fact-based with no emotion. And because crypto is a new culture it can be volatile – more so than fiat money.