In recent weeks we’ve read loads of stories about how the value of Bitcoin and other cryptocurrencies has skyrocketed to outlandish proportions. In fact, one Bitcoin is currently worth £12,400. I know - it’s hard to wrap your head around, isn’t it?
If, like me, you’re a bit baffled by the whole Bitcoin mania, here’s a brief explainer. According to coindesk.com: “Bitcoin is a form of digital currency, created and held electronically. No one controls it. Bitcoins aren’t printed, like dollars or euros – they’re produced by people, and increasingly businesses, running computers all around the world, using software that solves mathematical problems.”
Now former stockbroker Jordan Belfort – the real-life inspiration for the 2013 film The Wolf of Wall Street – has warned that the whole thing is essentially a scam. And Belfort should know a thing or two about scams considering he spent 22 months in prison after admitting to operating a huge fraud scheme earlier in his career.
Speaking to CNN, he said: “There’s all these copycat cryptocurrencies that are going out there and there’s no regulation on the level of Bitcoin itself… it’s a dark market. And there’s people right now who are using the success of Bitcoin to create these massive pump and dumps with other cryptocurrencies so I think it’s a huge danger right now… it’s a bubble for sure.
“Eventually it’s going to come caving in – it’s almost a guarantee. It’s going to crater and the average investor is going to be the one who loses money, not the professionals.”
And this isn’t the first time he’s spoken out about the danger of unregulated cryptocurrencies.
He earlier said to the Financial Times: “Promoters are perpetuating a massive scam of the highest order on everyone. Probably 85% of people out there don’t have bad intentions, but the problem is, if 5-10% are trying to scam you, it’s a fucking disaster.
“It is the biggest scam ever, such a huge gigantic scam that’s going to blow up in so many people’s faces. It’s far worse than anything I was ever doing.”
So it seems that while those who control Bitcoin (including Satoshi Nakamoto, the mysterious creator of the currency) could become filthy rich, it’s those who try to get in on the action later that are most at risk of losing their cash. Pretty damning stuff. Be careful.
(Images: CNN / Paramount Pictures)