THE price of Ethereum Classic has soared by more than 700% in just a month – and it’s currently at a value of £101.
But what is the cryptocurrency and why is the price going up? We explain all you need to know.
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First, a word of warning: buying cryptocurrencies, like any investment, is a risky business and making money is never guaranteed so you’ll need to be prepared to lose what you put in.
Cryptocurrencies are highly volatile, so the value of your investments can go down as well as up in the blink of an eye.
As always, you should never invest money in something you don’t understand.
What is Ethereum Classic?
Ethereum Classic (ETC) is a cryptocurrency that came into existence in the summer of 2016, when the Ethereum community essentially split into two.
Cryptocurrency Ethereum (ETH) was released in 2015, and it’s the second largest after Bitcoin.
Some experts believe it has the potential to one day overtake Bitcoin as the dominant coin in the market.
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.
Following a hacking incident, where hackers got their hands on $70million worth of ETH, Ethereum Classic was created in the original blockchain.
Simon Peters, cryptoasset analyst at investment platform eToro, told The Sun: “The Ethereum community essentially split into two, those that said to keep the blockchain as it is, and those that wanted to restore the stolen ETH.”
It means Ethereum Classic is the continuation of the original Ethereum blockchain with none of the new updates on its network.
Meanwhile, Ethereum received a lot more security features following the hacking incident, Nigel Green, founder of deVere Group, added.
Why is the price of Ethereum Classic going up?
Since it split into two, Ethereum has superseded Ethereum Classic with the former now having a market cap of roughly $400billion.
In comparison, Ethereum Classic has one of around $16billion, according to CoinMarketCap.
The Ethereum price is currently sitting at £2,491 ($3,468), compared to £101 ($141) for Ethereum Classic.
The value of Ethereum Classic has rocketed by more than 700% in just a month though, and was worth £13.74 ($19.14) on April 7.
The cryptocurrency is going up in value as it “plays catch-up with the wider markets”, Mr Green told The Sun.
He added: “The recent price hikes rise are a ‘correction’ as ETC hadn’t experienced the pull of bull market – until now.”
The cryptocurrency is also benefiting from “momuntal instituational investment” thanks to providing in-demand business solutions, Mr Green said.
Ethereum rose earlier this week following a report that the European Investment Bank (EIB) could launch a digital bond sale on the Ethereum blockchain network.
Investors are betting that ether will be of ever greater use in a decentralised future financial system.
Cryptocurrencies such Ethereum have also enjoyed a price surge after exchange platform Coinbase listed on the stock market in the US.
How risky is Ethereum Classic?
Investing is always a risk but investing in cryptocurrency is an even higher risk as they are VERY volatile, so you should be prepared to lose cash.
There is also no guarantee that you can convert cryptoassests back into cash, as it may depend on the demand and supply in the existing market.
How to spot crypto scams
CRYPTO scams are popping up all over the internet. We explain how to spot them.
- Promises of a high or guaranteed return – Does the offer look realistic? Scammers often attract money by making fake promises.
- Heavy marketing and promotional offers – If they are using marketing tricks to con customers you should beware.
- Unamed or non-existent team members – Just like any business you should be easily able to find out who is running it.
- Check the whitepaper – Every crypto firm should have a white paper. This should explain how it plans to grow and make money. If this doesn’t make sense, then it could be because the founders are trying to confuse you.
- Do your research – Check reviews online and Reddit threads to see what other people think.
Plus, fees and charges may be higher than with regulated investment products.
Cryptocurrency firms aren’t regulated in the way that other financial firms are. This means that you won’t have any protection if things go wrong.
In January, the Financial Conduct Authority warned that Brits risk losing ALL of their money if they invest in cryptocurrencies.
The financial regulator said people need to be aware of the risks, ranging from prices going up and down suddenly, to the lack of protection if something goes wrong.
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It comes after a ban on some crypto-related investment products.
Meanwhile, 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.