Why You Should Care About Bitcoin

Bitcoin is not for nerds anymore; it’s mainstream. It took the front page of the Financial Times – the UK’s largest investment newspaper – and has made thousands of appearances on media outlets online. But bitcoin is still a very mysterious subject. If you’re not familiar with the digital currency, there is a great guide to bitcoin on the poker comparison site, bitcoinpoker.org, but for those that are, here’s why you should care (and possibly worry) about the virtual currency.

  • Bitcoin creator, Satoshi Nakamoto has never been fully identified. It is expected that Satoshi is planning on remaining anonymous indefinitely, however there are reports that on creating the currency, he ‘mined’ millions of bitcoin (which would now be worth millions of dollars).
  • Bitcoin is associated with some incredibly immoral goings on. A heavily encrypted online market place, The Silk Road, allowed users to buy and sell drugs and guns using this anonymous currency. A scary thought, and one that many governments are trying to keep a close eye on.
  • Bitcoin is incredibly unstable; we have seen prices rise from $10/BTC to over $250/BTC in a matter of weeks. Speculators are thriving on this high risk, high reward investment and creating what appear to be small (or potentially huge) bubbles. Bitcoin is now a billion dollar industry, volatility like this is unheard of and incredibly dangerous for the personal wealth of thousands.

If you’re considering investing in bitcoin, small doses are recommended. There are legitimate reasons as to why someone would want to deal in the currency (low transaction costs for example), however storing significant volumes of real fiat money in this virtual world is highly unadvisable.

The Cost of Selling Shares

Many individuals look to invest in shares as a way of supplementing their income or simply as a hobby. What some people don’t know is that selling shares can be incredibly tricky and there are some key areas that you should watch out for. This is a short guide to the mathematics of selling shares.

The Mathematics of Selling Shares

If you were to buy £1,000.00 of shares in a single company and the share price increased by 10%, your shares would now be worth £1,100.00. Now if you imagine that the share price then went up again by 10% the next day but crashed by 20% the following day, you may think that you have broken even. Let’s take a look at the maths:

Initial Investment: £1,000.00
Day 1: £1,100.00
Day 2: £1,210.00
Day 3: £968.00

From this series of events you have incurred a net loss. The principle behind this is a very strong one. For every decrease in share price, there is a greater increase required to break even. Let’s take a look at a simpler example starting with your initial investment of £1,000.00:

Initial Investment: £1,000.00
Day 1: £900.00
Day 2: £1000.00

On day 1 your share price fell by 10%. On day 2 your share price broke even. However the required % increase to break even was 11.11%. Whenever you’re looking to invest in shares you must be aware that selling shares at a profit becomes more difficult with every lost percentile.

What is a Bridging Loan and when is it appropriate?

Before you take a serious look at taking out a bridging loan you should fully understand all of the risks that come with short term finance. Bridging loans are a great solution for some but not others, so when does it make sense to take out a bridging loan?

What is a Bridging Loan

The clue is in the name, bridging loans literally bridge the gap in your finances. These types of loans are almost always repaid within a 12 month period as the high interest rates make further borrowing too expensive. However the more savvy individual will use a bridging loan to make a profitable investment that requires fast extra cash. For example a bridging loan may be used to purchase an under-valued asset when their current finances couldn’t afford such an investment – this may result in a rapid return on investment which heavily outweighs the high interest rate.

Bridging loans should rarely be used to cover debt as a strong and secure financial plan is required to avoid heavy repayment costs.

How much can you borrow with a bridging loan?

Bridging loans typically range from £30,000 to anything as high as £10,000,000. Of course large bridging loans require financial security to ensure repayments are made.