Bitcoin price drops as Turkey bans cryptocurrency payments
THE price of Bitcoin is down 3% to $60,630 following the news that Turkey has banned crypto payments.
Its central bank said the ban is due to the risk of transactions and the danger of "irrepairable" possible damages.
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Earlier this week Bitcoin climbed to an all-time high of $64,000 (£46,500) for the first time since the currency was invented.
In part, the rise was due to well-known, mainstream companies such as PayPal, Mastercard, Facebook and Tesla.
Today's drop highlights how volatile the cryptocurrency is.
Investors have been warned about how dangerous it is.
The volatility means that your cash can go down as well as up in the blink of an eye.
For instance, the price of Bitcoin plummeted when the coronavirus crisis first hit, falling to lows of £3,300 last March.
City watchdog, the FCA, has even issued a warning against investing in cryptocurrencies.
What is Bitcoin?
BITCOIN got you baffled? Here's what you need to know:
- Bitcoin is a virtual currency
- It's traded between people without the help of a bank
- Every transaction is recorded in a public ledger, or "blockchain"
- Bitcoin is created by mining
- Mining involves solving difficult maths problems using computer processors
- Bitcoin can be traded anonymously, which can make it a popular way of funding illegal activities
- The value of Bitcoin fluctuates wildly
- Bitcoin is one of many different cryptocurrencies, but by far the most popular
It comes after a ban on some crypto-related investment products.
Despite this, investors have flocked to digital currencies - including Bitcoin - throughout the pandemic, sending the price skyrocketing.
Before even thinking about joining the trend, you need to make sure you know the risks and can afford to lose the money.
Meanwhile, Dodgecoin has soared by 91% in the past 24 hours - but analysts have warned that the "bubble has to burst".
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The cryptocurrency, which was invented as a joke, currently has a market value of more than £24.4billion ($33.6billion).
An advert for a bitcoin exchange Coinfloor was banned last month for telling savers cryptocurrencies are a safe investment.
People considering investing in Bitcoin or shares and stocks have also been warned over "risky" tips being shared on TikTok.
5 risks of crypto investments
THE Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.