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It has been a wild ride for cryptocurrencies in the last year, but can they become a stable deposit of wealth for investors?
If there's something like a cryptocurrency geek, Campbell Pentney is one. The Auckland lawyer buys and sells "coins" and "tokens" (those digital crypto-wealth markers) and puts them in its online cryptographic "wallet". Pentney knows the prices of obscure cryptocurrencies; follows dozens of encrypted websites. His work with the law firm Bell Gully plans to discuss the tax implications of cryptocurrencies with people in the Department of Revenue.
Pentney is also a wealth of great stories on the strangest side of cryptography. "Coins" of potatoes, Trump coins, the Venezuelan "petromoneda", presumably supported by the government's oil. He even heard of a coin of Jesus.
But in the more traditional part of the city, people are making (and losing) a lot of money on cryptocurrencies. Daily encryption volumes worldwide can easily reach $ 10 billion; they have invested $ 21 billion a day in mid-November. The first and most well-known digital token, Bitcoin, traded 7 billion US dollars over a 24-hour period.
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We also hear the buzz closer to home. When New Zealand had its digital currencies last year, NZDT (New Zealand Digital Token), trade peaked at $ 1 million a day. This was before ANZ Bank got nervous and disconnected, although its founder, Cryptopia, is trying to re-launch next year.
But investing in cryptocurrencies is not for the faint hearted, Pentney says. Prices are not tracked as in a traditional action or currency; bounce like a billiard ball on a trampoline.
Bitcoin had a value of US $ 7770 in mid-November 2017, US $ 19,000 in mid-December, US $ 12,600 for Christmas, US $ 17,000 for New Year, US $ 8500 in February. And so on.
The speculators' paradise
Then, just as people began to wonder if Bitcoin's investment was getting boring – it was stuck in the US $ 6300-US $ 6500 range in mid-November, it went crazy again, dropping 10% in about five minutes .
"Many of the other currencies fell more, some up to 20%," says Pentney, describing the events of November 14. Furthermore, they were very volatile. They collapsed, then fired up and then down, then they came up again. "
The markets were said to be frightened by the internal struggles between two key figures in the Bitcoin world, the investor Roger Ver and the controversial Australian computer scientist Craig Wright.
Pentney says investors who have been involved with cryptocurrencies for a while will not be affected by a return to volatility – they've been there before. And short sellers will have earned a lot of money. "But other people have invested a lot of money, maybe too much, maybe they've borrowed to buy Bitcoin, they'll be worried."
Oddly, Pentney predicts that some of the major cryptocurrencies could become stable investments. Some could be used as a store of value for investors, such as gold and silver now.
"A prudent investor should have a percentage of its assets in a relatively conservative investment: Gold and silver tend to do well in times when the market is uncertain or turbulent. proved, but Bitcoin could at some time have the same properties as being a safe haven. "
This article was published for the first time in the New Zealand Listener's edition of December 8, 2018.
