CRYPTOCURRENCY Internet Computer rocketed in value after its launch last week – but it has since fallen slightly.
We explain what you need to know about the cryptocurrency and how much it’s worth.
If you’re thinking of investing, keep in mind it’s a risky business and you’re not guaranteed to make money.
You need to make sure you know the risks and can afford to lose the cash, and never invest in something you don’t understand.
Cryptocurrencies are typically also highly volatile, so your cash can go down as well as up in the blink of an eye.
What is Internet Computer?
Internet Computer is a crypto token and blockchain innovation that launched on May 10.
It uses smart contracts, similar to the Ethereum blockchain, to power applications and platforms.
The aim is for developers to build websites and other internet services, like social media or messenger applications, using the technology.
It means they won’t need to use big companies like Amazon, Google or Facebook.
5 risks of crypto investments
BELOW we round up five 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.
Blockchain technology, which can seem very complicated, is a kind of database used to record transactions.
It’s the technology at the heart of cryptocurrencies such as Bitcoin.
Internet Computer’s founder, the Dfinity Foundation, is aiming for the crypto to be the decentralized version of the internet.
The Dfinity Foundation is a not-for-profit scientific research organization based in Zurich, Switzerland.
What’s the value of Internet Computer?
Internet Computer is currently worth $181 (£128), down from $289.18 £204.76 on May 13, according to CoinMarketCap.
The price also fluctuated wildly on release though, and first hit a value of $731 last Monday.
In comparison, Bitcoin is currently worth $41,779 ($29,580).
Charlie Barton, investment specialist at comparison site Finder, told The Sun that Internet Computer “aims to democratise the internet”.
He added that its market cap of $30billion last week gave it “a similar value to massive corporations such as eBay or Twitter”.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said “its rapid ascent and descent within just hours of launching shows that like many other coins it’s the focus of short term speculation”.
“Many buyers are hoping to profit from surges in price rather than having a fundamental belief in the long term use case of the blockchain technology.
“In this speculative world it’s almost impossible to predict when demand will subside and prices will fall.”
How risky is Internet Computer?
Investing in cryptocurrencies is essentially gambling and there are no guarantees that you will see what you pay in go up in value.
Cryptocurrencies are VERY high risk and a speculative investment, with limited track records and no underlying value.
There is also no guarantee that you can convert crypto assests back into cash, as it may depend on the demand and supply in the existing market.
If you’re planning to invest in newer cryptos, keep in mind these are riskier than others, such as Bitcoin, and would make you more open to scams.
Ms Streeter added: “Traders should proceed with caution and only dabble with money they can afford to lose.’’
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In January, the UK’s Financial Conduct Authority warned that households risk losing ALL of their money if they invest in cryptocurrencies.
Meanwhile, a Russian 27-year-old recently became the world’s youngest crypto billionaire after his cryptocurrency Ethereum surged in value.
We also explain how much Bitcoin is worth.