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20th of July 2018

Economy



Bitcoin is BEST BET for crypto investors, but UK savings expert warns 'don’t go near them'

Bitcoin, the world’s leading cryptocurrency by market capitalisation, multiplied more than 13 times in price in 2017, but crashed from over $19,000 in December to $6,360 today at time of press.

With bitcoin expected to continue heading south in value and investors looking for a bargain, Jamie Smith-Thompson, Managing Director of Portafina, told Express.co.uk that now is not the time for taking risks with new kinds of money.

He said: "With the current political backdrop, especially in Russia, the UK government will clamp down on these currencies even more. Hence, as qualified financial experts, we simply wouldn’t advise anyone to go near them.”

As hype over cryptocurrencies like bitcoin, etheruem and ripple has simmered this year, discussion has moved on to how and when the big banks and investment arms in the City of London and Wall Street will enter the space.

A big move of traditional institutional investors has been mooted throughout the year and CEO of Sequant Capital, George Zarya told Express.co.uk that, “crypto as an asset class is becoming too big to ignore”.

Matthew Newton, analyst at eToro, agreed telling the Express in May that, "any forward-looking financial institution needs to understand this technology and accept its enormous potential.”

However, Jamie Smith-Thompson, Managing Director of Portafina now says that financial advisers are still staying well clear of all things crypto, for now.

When asked why, he told Express.co.uk: “It’s simple really. These types of investments have no history and nobody really understands in any great detail what would make them compliant and acceptable to any regulator.

"How do you pick which one to invest in? It’s almost like putting your money on a race horse when you know nothing about odds or how the favourites are worked out.

“And that’s why for us as a regulated adviser, we would never suggest doing something that risky.”

Mr Smith-Thompson concedes that the exciting thing about bitcoin is that it could make you a millionaire overnight - “and let’s face it, who doesn’t like that feeling of making quick and easy money?”

However, he warns: “The likelihood of you being able to do this is extremely low. In fact, that you may be better off risking your money by putting it on the Lottery!

“Financial services have been though several rounds of similar things that deem to be the ‘new way of investing’. And do you know what? They very rarely have any longevity.

“As advisers, it’s usually us that try to explain what the risks and implications of these investments are and the reasons not to invest in them.”

While mainstream investment professionals might not be ready for bitcoin, for the rising cryptocurrency community bitcoin remains, “the currency of the internet” according to a leading Wall Street professional.

Speaking to CNBC Bart Smith of Susquehanna International Group said: "If you want to own the asset that you can actually use today and that people are functionally using, it’s bitcoin.

"The use case for bitcoin is valid today, which is the currency of the internet."

However, the Wall Street banker said that in late 2017, “we got way ahead of ourselves" and bitcoin is the only real success story of the period.

He said: “People got very excited about bitcoin.

“They got really excited about all these other tokens and use cases. And all of the sudden you saw all of these smaller tokens, as people got excited about them, massively outperform.

"If you’re looking at these other use cases, smart contracts, or lightning network or these different technological advancements, I think people are coming to realse, those things are very difficult and aren’t coming anytime soon.”

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