The Salary Calculator

The current state of crypto

by Madaline Dunn

Crypto is in a constant state of flux. In 2022 we witnessed the infamous crypto-crash, it’s now in the midst of regulatory changes, and two of the biggest crypto companies are currently facing lawsuits. With so much confusion and incoming crackdowns, it makes sense that you might be having questions about what’s happening and how the crypto landscape is changing.

This week, at The Salary Calculator, we’ll walk you through:

• How the current crypto market is faring,
• Legislative changes and regulated crypto activity
• What’s happening with Britcoin
• How to stay as safe as possible when trading

How is crypto faring?

There are currently 23,171 cryptocurrency projects in the crypto market amounting to £954 billion, with the leading three being Bitcoin (BTC), Ethereum (ETH), and Tether (USDT). The former is the original cryptocurrency and the world’s largest, with a 1 Bitcoin worth £24,019.77, up from £18,929 in August last year. However, as highlighted, despite this, the crash saw it fall from its all-time high of £69,000 the year prior to this much lower figure.

Ethereum, similarly, has fallen meteorically; last year in May, the cryptocurrency fell over 20 per cent in 24 hours – at the end of June, it was worth £1,481, with a market cap of £178.1 billion.

Tether, meanwhile, lost USD 20 billion in 2022, but according to the latest reports, it has now recovered this, surpassing USD 83.2 billion in market capitalisation.

However, for the most part, trust has not been restored in crypto, and experts say that the road to recovery will be long. Indeed, considering the continued volatility of the currency, experts say that if you choose to invest in crypto, keep investment minimal and only weigh in money that you can afford to lose. It’s likely last year you will have seen stories of investors losing their entire life savings after betting on crypto – and it’s important to remember that even the most tech-savvy individuals are at risk of losing money, because the market is extremely speculative.

Legislative changes regulating activity and risk

There have been lots of regulatory shifts related to crypto in recent years, and just recently, the UK parliament moved one step further to recognising crypto as a regulated activity in the UK, voting the Financial Services and Markets Bill (FSMB) through to the House of Lords (HoL).

The legislation contains provisions to:

• Include stablecoins under the country’s payments rules,
• Include crypto as a regulated activity, and
• Supervise crypto promotions.

According to reports, new regulations could be introduced within 12 months.

Further to this, the FCA has also introduced new rules for marketing cryptoassets, whereby financial promotions on cryptoassets will only be permitted if they are “made or approved” by a firm with certain status with the FCA2. Further, if a firm promotes crypto, it must have clear risk warnings so that adverts are “clear, fair and not misleading.

There were a huge amount of hacks on crypto in 2022, whereby hackers stole a record $3.8 billion worth of cryptocurrency globally last year; 2022 was subsequently identified as the biggest ever year for hacking. And, indeed, this should be a warning to consumers who should be aware that crypto is still an environmental that comes with serious risk.

Speaking about the potential risk that consumers expose themselves to when dealing with crypto, Sheldon Mills, Executive Director, Consumers and Competition, said: “It is up to people to decide whether they buy crypto. But research shows many regret making a hasty decision. Our rules give people the time and the right risk warnings to make an informed choice.”

Further, Mills said that consumers should “still be aware” that crypto remains largely unregulated and high risk, and that those who invest should be prepared to “lose all their money.”

Interestingly, despite this ongoing warning, last year, the FCA found that almost one in 10 people surveyed owned cryptocurrencies in 2022.

Further, the International Monetary Fund (IMF) has even recently gone back on its advice that countries should ban crypto, and is now saying that outright bans “may not be effective in the long run.”

Is Britcoin advancing?

There’s been a lot of hype around Britcoin; some have said it will bring legitimacy to crypto, while others have criticised the proposal to introduce the digital currency, claiming that it will be detrimental to the UK economy and people’s privacy.

The House of Lords Economic Affairs Committee, for example, found that the introduction would see “a lot of risk” with “very little” reward. Further, it outlined that if Britcoin allowed anonymous transactions, it would be open to the same kind of criminal risks as the current cryptocurrencies, but if it introduced potential ‘safeguards ‘against this, privacy would be at risk. Indeed, a centralised digital pound would mean that all spending would be recorded.

Regardless of the criticisms, it appears that Britcoin is pushing ahead and projections are that it could arrive by the end of the decade. Indeed, Project Rosalind, a joint trial run by The Bank for International Settlements and the Bank of England, was trialling the best way an Application Programming Interface (API) could be implemented in central bank digital currency (CBDC) for retail transactions. This trial recently concluded, with it reportedly showing the potential CBDCs have for introducing “programmability” to money and it looks like things will be progressing further.

Things to bear in mind when trading

While it’s important to enter trading with the knowledge that it is inherently risky, some of the following tips can help you trade a little more safely and is advise that should always apply to cryptotrading.

1.) Research is always your friend. Whether you’re looking for a cryptocurrency exchange to trade on or deciding which cryptocurrency you’ll proceed with – you need to research in depth. Make sure to choose an exchange with high-security features. Likewise, with cryptocurrency itself, review reputation, risk and track record.

2.) As outlined above, crypto is prone to being hacked, so you need to keep your money secure. One of the best ways to do this is to use a crypto wallet. Here, either get a digital wallet on your computer’s hard drive or a physical hardware wallet. This is also key for ensuring you don’t misplace your crypto – as many as 1 in 5 Bitcoins have been misplaced.

3.) Get serious about security. Say goodbye to easy-to-guess passwords and use a password manager to help you store your highly-secure passwords.

Tags: Britcoin, cryptoassets, cryptocurrency, investment

Cryptocurrency: Facts, figures and potential dangers

by Madaline Dunn

These days, it feels like talk of cryptocurrency is everywhere. It can be easy to think that cryptocurrency is a straightforward investment, with adverts saying “It’s time to buy” and “Be your own bank.” However, cryptocurrency is a lot more complicated than one might first think, and as with any investment, it’s important to be aware of the risks and dangers.

At The Salary Calculator, we’ll guide you through:

• What cryptocurrency is
• What Britcoin is, and what the Bank of England’s consultation means
• Why you should be wary of cryptocurrency
• How to keep your wits about you

What is cryptocurrency?

Cryptocurrency is a form of digital currency which is typically decentralised and with which people can use to make transactions and invest. However, what makes it unique is that it is secured by cryptography, meaning that transactions are entirely untraceable, and you don’t need a third party, like a bank or credit card company, to oversee purchases.

The most well-known form of cryptocurrency is Bitcoin which was created back in 2009 and uses peer-to-peer technology, allowing users to buy or sell directly with another user. It uses blockchain technology, which is also known as Distributed Ledger Technology (DLT).

As of 2021, there are reportedly 300 million crypto users across the globe.

What is Britcoin?

The Bank of England has reportedly launched a consultation into Britcoin, Britain’s own digital currency. That said, it would not technically be a cryptocurrency because, unlike Bitcoin, it would be issued by the bank.

As a result, Britcoin would be a Central Bank Digital Currency (CBDC), and, as outlined by the Bank of England, £10 of Britcoin would hold the same value as a £10 note.

Speaking about the consultation, the bank’s deputy governor for financial stability, Jon Cunliffe, said: “The plan to publish a consultation next year on CBDC is a crucial step in our policy development, especially as we further our thinking on the pressing issues at hand.”

“What it will do is provide a platform for interested parties and relevant groups to engage with the key questions on the merits of CBDC, and whether the public sector should advance to a development phase.”

England isn’t the first place to be exploring the possibilities of this kind of digital currency; the Bahamas has the Sand Dollar, while China launched pilots of CBDC in 2020.

According to the Bank of England, there will be no launch before 2025.

Why you should be wary of cryptocurrency

There are a number of reasons why you should be wary of cryptocurrency. One key aspect of cryptocurrency is that it is incredibly volatile. While, on the 10th November, Bitcoin reached an all-time high reaching above $68,000, on 16th November, there was a market-wide crash, whereby the overall crypto market dropped by over $200 billion to approximately $2.6 trillion.

It’s also important to note that cryptocurrencies are unregulated, which means that there’s no watchdog or regulator to oversee the security of transactions and guarantee safety and security – which is another issue.

Although cryptocurrency is decentralised, meaning you own your own money, crypto exchanges and hot wallets (cryptocurrency wallets) can be hacked, and hacks happen all the time. This is why, when trading, it’s important to have a ‘cold wallet,’ too, which can’t be accessed through the internet.

Cryptocurrency ads and keeping your wits about you

You may have found yourself noticing more and more advertisements for cryptocurrency. With these advertisements becoming more mainstream, appearing on TfL buses and trains, one may believe these are regulated, conventional and safe forms of investment.

It’s for this exact reason that the Advertising Standards Authority (ASA) banned advertisement from crypto exchange service, Luno, which told people it was “time to buy.” Explaining the reasoning behind its decision, the ASA said: “We understood that bitcoin investment was complex, volatile, and could expose investors to losses and considered that stood in contrast to the impression given by the ad, that investment was simple and conventional.”

Adding: “We concluded that the ad irresponsibly suggested that engaging in bitcoin investment through Luno was straightforward and easy, particularly given that the audience it addressed.”

Now, further appeals for bans of crypto ads have been made, especially in relation to TfL posters advertising Floki Inu, another crypto product. Advertisements for this product ran for three weeks, and TfL has admitted that they do not know who is behind the funding of the posters.

If you decide you want to take things further with cryptocurrency, here are some tips on how to keep safe:

• Research, research, and research some more. Keep up-to-date with cryptocurrency exchanges, and even reach out to experienced investors for guidance and advice.
• Diversify. Putting all your money into cryptocurrency, especially considering how volatile it is, is potentially very dangerous. Make sure you don’t get caught out.
• Look into different cryptocurrency wallets to ensure your investments and purchases are safe or as safe as they can be.

Tags: Britcoin, cryptocurrency, Currency, Economy, investment