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Both veteran and inexperienced investors are being drawn into dangerous bets on cryptocurrencies, as the price of Bitcoin has hit a record high.
The cost for one Bitcoin topped $19,700 (14,550) on Monday as more investors and companies threw support behind it amid claims digital currencies are going mainstream.
However, the rally has been far from stable and the record was hit only after the Bitcoin price plunged 11pc the week before. Experts are now warning of another market correction that will be far more severe.
As Telegraph Money’s Harry Brennan reported, the price jump has caused first-time investors, including housewives and pensioners, to pile their savings into the e-currency in the hope of making millions.
One reader, a 50-year-old housewife from Dorset, said she had sold 30,000 in Premium Bonds to buy Bitcoin as a birthday present to herself. The value of her investment has jumped by nearly 75pc and she has decided to stick with it, believing it could go higher.
But just how safe are cryptocurrencies? Sceptics would argue that they have no intrinsic value, as they cannot be used to buy goods or services. This means it is also very difficult to predict when prices will rise or fall.
What’s more, digital currencies have sparked a lot of controversy and could be banned by governments at any point, leaving investors out of pocket. Even if they time it right and have regulators on their side, investors could still lose their shirt as the cryptocurrency marketplace is something of a Wild West, overrun by scammers.
On the other hand, Bitcoin’s backers liken it to a modern day gold, claiming it offers a hedge when stock markets are falling. So should you buy it? Here we analyse the arguments for and against and take a look at how to invest.
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