Rollercoaster ride of dabbling in digital currency

Jim Duffy. Picture: Contributed
Jim Duffy. Picture: Contributed
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Yes it’s HODL time in the world of crypto currencies… HODL ­meaning Hold On For Dear Life!

After the festive season high in crypto land with Bitcoin hitting an all-time mark of just short of $20,000, the fizz has gone out of the alt coin marketplace. As I write this, the price is hovering around $10,800 with many other alt coins floundering. The whole crypto currency landscape is ­experiencing the jitters, hence Hold On For Dear Life.

As many of you will know only too well, investing in any market takes nerve, strategy and a long-term approach. I must say, if those handling any of my own investments told me to HODL at our bi-annual investment meetings, I would be switching ­broker tout de suite.

Using a traditional and well-trusted outfit like Brewin Dolphin or Adam Bank is a well-kent way for many to invest their savings or pension pot. These companies and many like them will have analysts, researchers and professional investment-managers. Sure, the caveat is in place that past performance is no guarantee of future returns. But their investment advice is built on company fundamentals and solid research. Their reputation relies on it for existing customers and new business. But, not so in the crypto world.

As I check my crypto wallet each day, I can see heavy losses, as January has been a dismal month. My wallet is basically a digital storage space where my ­currency or tokens are stored or traded on the growing number of crypto ­currency exchanges.

Having invested only what I could afford to lose, I am treating my wallet a bit like Monopoly. I’m ­having some fun, sticking my bets on some of the smaller coins that have the ­potential to grow in 2018. My own favourites are Tron, FunFair and Telcoin. (These are not recommendations.)

If these coins do well in 2018, I will ­probably make five times my money. No broker in Edinburgh will make that for you. But, and of course it’s a gigantic but, I could lose the lot over the next 12 months. This is where HODL comes in to play for the somewhat naive and speculative younger investors who have put their cash into crypto currency instead of an ISA.

They too have been speculating. They understand the tech world and like the idea of having their investments on the decentralised blockchain. They like the excitement of seeing some coins shoot up sharply by 100 per cent in a day. They like the idea of the hype around many coins hoping that the hype turns into reality.

Some have sold their personal possessions on eBay to fund their crypto ­wallets. Many are borrowing from friends and family to keep them afloat while they wait for that 500 per cent lift. But, as Bitcoin itself, which is still being touted by some to hit $50,000, loses ground, the whole ­market is falling with it. And the youngsters are feeling the pain. A pain that they have not ­experienced before. A pain that was never supposed to happen. So, where to now?

The “pump and dump” brigade are still highlighting specific coins that can go to the moon. The youngsters (me included in a few of them) are trading between coins in the hope that they can cut their losses and make up some ground elsewhere.

The whole ecosystem is awash with new ­initial coin offerings, rumour and predictions. But, like all businesses that want to radically change the world, these things take time. For example, Tron wants to create a blockchain-based worldwide free content entertainment system ­taking on the likes of Netflix. That ain’t going to happen overnight, I’m afraid. And that is exactly what your Edinburgh broker would tell you.

But, this long-term approach is only just beginning to dawn in the world of us “new world” investors. Perhaps, we need a dose of Gordon Gekko on Wall Street to create some common sense. It’s HODL alright in the land of crypto and 2018 will make it or break it.

- Jim Duffy is co-founder of Moonshot ­Academy and author of Create Special.