THE price of Cardano is on the rise – but what exactly is it?
We take you through everything you need to know about the cryptocurrency and the risks you should be aware of before parting with your cash.
🔵 Read our cryptocurrency live blog for the latest Bitcoin updates
A word of warning though: buying cryptocurrencies as well as stocks and shares is a very risky business.
Investing is not a guaranteed way to make money, so make sure you know the risks and can afford to lose the cash.
Cryptocurrencies are highly volatile, so your cash can go down as well as up in the blink of an eye – you can lose all the money you put in.
Plus, some products and cryptocurrency services are very complex. You should only invest in things you understand.
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.
There is also no guarantee that you’ll be able to convert cryptoassests back into cash, as it may depend on the demand and supply in the existing market.
Fees and charges may also be higher than with regulated investment products.
We know that crypto firms may also overstate the returns or understate the risks. Be careful.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown warned: “Every week it seems there are new kids in crypto town, a traders’ playground where there appear to be few rules and little regulation.
“There are now thousands of altcoins in circulation but their valuation has no reliable basis.”
What is Cardano?
Cardano is a cryptocurrency that uses blockchain, making it difficult to be hacked.
It was launched in 2017 and set up by Charles Hoskinson, who was one of the eight co-founders of Bitcoin rival, Ethereum.
Every time someone buys or sells the cryptocurrency, it’s permanently recorded on the platform’s blockchain.
Unlike some other cryptocurrencies, the blockchain is more transparent so anyone can see it. It’s managed by the Cardano Foundation.
The “altcoin” has been designed to make sure that investors can have some say in how the currency is run.
It means those who own Cardano have the right to vote on any proposed changes to the software, reports Coinmarketcap.
Why is it going up?
This morning, Cardano peaked at $1.38 (99p) but has since dropped slightly to $1.33 (96p).
However, it’s not as high as it was on April 14, when the cryptocurrency hit $1.56 (£1.12).
Mark Hipperson, founder of cryptocurrency exchange firm Ziglu, explained that it’s the sixth largest cryptocurrency with a market cap of around $45billion (£32billion).
Over the past 52 weeks, its valuation has increased by 3,360% and since January 1 2021, it has increased 568% in value.
Comparatively, Bitcoin has gone up by 706% and 93% during the same time, while Ethereum has risen by 1,194% and 204%.
“The cryptocurrency has seen incredible growth in recent months, which has raised the attention of a number of crypto enthusiasts,” he said.
Celebrity backing has also drawn attention to Cardano.
For example, in March, Gene Simmons from rock band Kiss threw his support behind it, tweeting that he’d purchased $300,000 (£216,223) worth.
How risky is Cardano?
Like any cryptocurrency, Cardano is a high risk investment because they are unregulated here in the UK.
It means you won’t have a level of protection if something goes wrong, plus fees and charges may be higher than regulated investment products.
Cryptoassets are also complex to understand, making them dangerous for those who aren’t in the know.
They’re also extremely high risk due to their volatility, meaning they can go up as well as down, so you should only invest if you can afford to lose the cash.
Ms Streeter said: “Much of the demand for these coins and tokens have come from traders hoping to benefit from future price rises rather than using them as a means of exchange.
“Gains are often being fuelled by frenzied chat across social media with influencers jostling for position to push their favoured coins.
“But like a slot machine, many of the coins being pushed into circulation are very much a speculative bet and investors should only get involved if they have money they can afford to lose.”
Peer-to-peer cryptocurrencies are considered an even higher risk, as they are similar to a pyramid selling scheme.
These rely on an investor further down the line being willing to pay more than you did in order to turn a profit, putting them at a greater risk of collapsing.
Ms Streeter added these kind of investments should “sound fresh alarm bells”.
“Such models appears to be geared towards helping early holders of the currency become wealthy, as others pile in after them, pushing the price up further,” she said.
Another risk is there is no guarantee that you’ll be able to convert cryptocurrency into cash.
Some crypto firms also overstate the returns on investments – profits are not guaranteed.
Brits should also be wary they risk losing all of their money if they invest in bitcoin and other cryptocurrencies.
It comes after a ban on some crypto-related investment products.
Scammers are also known to take advantage of amateur investors in a bid to steal their cash.
SETTING THE BAR
Aldi is selling a rattan garden tiki bar £100 cheaper than Asda’s
Who accepts Dogecoin?
8 changes in May hitting your pocket – and how to avoid them
Millions in problem debt to get two-month ‘breathing space’ from today
Argos is having a Bank Holiday sale with up to 70% off laptops, vacuums and toys
Asda, Sainsbury’s and Tesco recall Wall’s ice lollies over ‘health risk’
It’s not the only cryptocurrency to see its price rise. Dogecoin has surged in 2021 too, despite being launched as a “joke”.
Plus, a Caribbean island could become the first place in the world to use Bitcoin instead of money.
From Safemoon and Litecoin to Bitcoin – here are the different cryptocurrencies explained.