Bitcoin: Is It Fool’s Gold Or Time To Buy? – Technology


As published in the Sunday Times January 24, 2021.

Article by Graeme Lennox.

As the world’s most famous digital currency rises in value amid economic uncertainty, Graeme Lennox asks if now is a good time to invest in cryptocurrencies. With the head of our group for cryptocurrency and blockchain, Andrew Tzialli.

It has been referred to as “digital gold” and is synonymous with drug trafficking, ransomware, and incompetent criminals, as well as innocent investors losing fortunes on lost hard drives. Whether Bitcoin is the best program for getting rich quick or the next financial bubble waiting to burst is usually just a matter of opinion – but either way, investors have been on a roller coaster ride for the past fortnight.

The values ​​of the world’s most famous digital currency have surged more than 700% during the pandemic as economic uncertainty spreads. Bitcoin prices skyrocketed in late 2020, doubling in less than a month before hitting a high of $ 42,000 on Jan. 8. Since then, values ​​have declined amid fears that newly-inducted US President Joe Biden will seek stricter regulation, but will stay at around $ 26,000 a coin.

However, for every story of life changing fortune, there is also a story of heartbreak. In 2013, Welsh IT staff member James Howells accidentally threw out a hard drive containing the keys for 7,500 bitcoins. At the time, they were worth around $ 5 million. Now they would be worth more than $ 250 million.

In the meantime, San Francisco-based programmer Stefan Thomas received more than 7,000 bitcoins in payment for creating a video about how the cryptocurrency works. They cost anywhere from $ 2 to $ 6 at the time, but could now be worth up to $ 220 million. After Thomas discovered he was on a fortune, he entered the wrong password on his hard drive eight times and only has two chances before it encrypts itself and he loses everything.

Cryptocurrency data company Chainalysis estimates that around 20% of the 18.5 million bitcoins in circulation are either lost or stranded in inaccessible wallets. Requests from Bitcoin owners have tripled in the past month, according to Wallet Recovery Services, a company that specializes in finding lost digital keys.

Lory Kehoe, associate professor at Trinity College Dublin and founder of Blockchain Ireland, was approached last week by several desperate Irish investors who lost digital wallets of Bitcoin fortune. “We’re not talking 240m, but a man lost 500,000 bitcoins moved between wallets,” he says.

“He called me asking for help that his wife was crying in the background. Often the problem is people looking in the wrong place. The UI isn’t as good as Revolut and it’s easy to make things look like that as if they were gone when they actually didn’t have it. “

Kehoe, who previously set up Deloitte’s Europe, Middle East and Africa blockchain lab and ran the blockchain technology company ConsenSys, knows the dangers of cryptocurrency firsthand.

“I bought a couple in 2014 at a very affordable price,” he says. “It didn’t change anything, but I was in New York in 2016 and paid for lunch with my girlfriend with my Bank of Ireland Mastercard. For some reason it didn’t work out, so I paid it back with Bitcoin. The 50- Dollar lunch has now cost me $ 35,000. “

Bitcoin was invented in 2008 by a person or group of people – to this day nobody knows – under the pseudonym Satoshi Nakamoto and was an attempt to create a decentralized digital currency, but was seen by some as a way to move illegal money without tracking .

As the value of Bitcoin slowly rises towards 1 trillion euros, cryptocurrency is now a valid investment vehicle, with hedge funds and banks steadily coming on board in recent weeks.

There are more than 3,000 cryptocurrencies in total, and amateur investors are often the victims of scammers posing as cryptocurrency exchanges. Andrew Tzialli, partner in venture capital and enterprise technology at Dublin-based law firm Philip Lee, receives frequent inquiries from private investors who have been defrauded. “Often times, they have Bitcoin with an investment group they found online that no longer responds to calls,” he says. “We’re dealing with them and what they thought was an Ireland-based crypto company is actually based in Cayman, Panama or Russia.”

He believes cryptocurrency will stay here, but needs proper regulation if it is to be taken seriously. “I’ve been in the industry since 2013 and have great confidence in it, but I would rather put my mortgage on gold,” says Tzialli.

“I know a lot of people who bought bitcoin in 2013 when it was $ 300. It crashed soon after and they sold out, so most of them are crying into their empty wallets now.

Bitcoin was an attempt to create a decentralized digital currency

“Interest rates are currently high because the value has gone through the roof. Regulation is still in its infancy, but people are seeing the value go up and don’t think twice about the risk. The reality is that even the legitimate ones Companies have terms in their terms and conditions that say your money is not safe. “

Joshua Goodbody, regional director at Binance, says the company saw record spikes during the pandemic as investors hedge against turbulence in traditional markets. “You have watched governments print record amounts and are aware that inflationary pressures are mounting,” he says. “We hit a record high of over $ 80 billion a day in the first few days of the year. We also saw record numbers of new users.”

Some analysts are forecasting Bitcoin value will top $ 100,000 by the end of the year, and Kehoe understands how loud it is to jump on the bandwagon. “Fear of missing out is a big factor,” he says. “In October when PayPal was getting into Bitcoin, I told people to look into this area. At that point it was around $ 11,000 and then the billionaires and hedge fund folks put parts of their portfolios into that area .

“We’re seeing global banks offering crypto services to their customers. I think Bitcoin could be worth between $ 50,000 and $ 100,000 by the end of 2021.”

With financial firms leaving London in droves after Brexit, Kehoe says we are ideally positioned to reap the benefits. “It’s a great opportunity for Ireland Inc to become a European cryptocurrency hub,” he says. “We already have reputable exchanges here like Coinbase, Revolut and Gemini.

“When a company like this comes along, others follow.”

The content of this article is intended to provide general guidance on the subject. A professional should be obtained about your particular circumstances.