Page 37 - DIY Investor Magazine February 2018

US government stats has lost c.95% of its purchasing power since the creation of the Federal Reserve in 1913 (see chart below). However, with Bitcoin continuing to see highly volatile price movements on a daily, and even hourly, basis its future role as a stable form of value storage is uncertain.
Finally, Bitcoin is a unit of account as goods and services are able to be priced according to its value. On PizzaForCoins.com for example five cheese sticks from Pizza Hut currently cost 0.001BTC. But again due to its volatility, prices are often quoted alongside US dollars to give an idea of what its value is against more stable and widely accepted forms of money.
We can use the cheese sticks example of how Bitcoin’s current volatility limits its usefulness as a form of money.
At a price of 0.001 BTC, the cheese sticks currently cost the equivalent of $16.71 (or £12.47) – a price no- one would be willing to pay unless they were very, very hungry.
The issue is that Bitcoin prices are moving so fast that the PizzaForCoins website hasn’t been able to change its prices to adjust. If Bitcoin remains as volatile as
it is, retailers would have to constantly re-price their products in order to achieve sales to consumers, thus increasing their operational costs and (the rising value aside) making Bitcoin a less attractive form of payment for them. Customers are not going to pay the equivalent of £12.47 for a few pieces of cheddar covered dough via Bitcoin simply because the Bitcoin price has gone up. Instead, unless the retailers constantly change their pricing to reflect what the consumer would be willing
to pay in terms of a more established currency, the consumer would simply cash in their coins and go to Pizza Hut directly where the cheese sticks cost just $5.29 (£3.95).
While Bitcoin still has some way to go before it can be considered to be a widely accepted form of money,
it does look like it, and other cryptocurrencies, are
here to stay. Those interested in getting involved in cryptocurrencies but who are put off by the investment risks, which include the price volatility, potential loss of capital, no regulatory protection and issuing companies having a limited operating history, might want to look at the latest offering from Crowd for Angels.
Crowd for Angels is currently looking to raise up to £50 million by way of a 5 year ‘Liquid Crypto Bond’ paying 3% interest per annum. As part of the fundraise, for every £100 worth of Bonds purchased investors will receive up to 9900 ‘tokens’ (or cryptocoins) at no extra cost to themselves. These tokens will subsequently be listed on external exchanges and their value supported by buy-backs by the company.
As the tokens are being given away as a reward to investors there will be no risk of loss of capital on them, so could be an ideal entry point for those wanting to dip their toes into cryptocurrency for the first time.
For more information on the Crowd for Angels token issue visit https://crowdforangels.com/company/plc/ Crowd-for-Angels-UK-Limited-1031
RISK WARNING
Investing in small public listed or private companies involves risks, including illiquidity, lack of dividends, loss of investment and dilution, and it should be done only as part of a diversified portfolio. Investing in debt pitches through Crowd for Angels (UK) Limited involves lending to companies and therefore your capital is at risk and interest payments are not guaranteed if the borrower defaults. Past performance is not necessarily a guide to future performance and forecasts are not a reliable indicator of future results. Crowd for Angels is targeted exclusively at investors who are sufficiently sophisticated to understand these risks and make their own Investment Decisions. You will only be able to invest via Crowd for Angels once you are authorised.
Please visit crowdforangels.com/risk-warning to read the full Risk Warning. This email has
been approved as a Financial Promotion by Crowd for Angels (UK) Limited (Company number: 03064807), which is authorised and regulated by the Financial Conduct Authority (Reference number: 176508). Investments made in companies listed on the Crowd for Angels platform are
not covered by the Financial Services Compensation Scheme (FSCS). The availability of any tax relief depends on the individual circumstances of each investor and of the company concerned, and may be subject to change in the future. If you are in any doubt about the availability of any tax reliefs, or the tax treatment of your investment, you should obtain independent financial advice before proceeding with your investment. The prices of virtual goods and products, like real goods and products, constantly fluctuate over time. Any currency, virtual or otherwise, could be subject to large swings in value and at any time might become worthless. As such, the value of your holding may increase or decrease over time or even go to zero. Cryptocurrencies, tokens and other digital currencies are not regulated by the Financial Conduct Authority and therefore do not offer recourse to the Financial Ombudsman Service or the Financial
Services Compensation Scheme.
37 DIY Investor Magazine | Jan 2018