- Bank of England has warned Nigerians and other bitcoin traders to cash out and leave before it is too late
- According to the central bank there is no value attached to bitcoin and it will be worthless in coming years
- The warning is coming amid reports of app glitch, and bitcoin rapid devaluation in the last few weeks
A few days after the cryptocurrency market experienced a significant drop in value, wiping out over N3 trillion in hours, the Bank of England has issued a stern warning to bitcoin traders that the currency will soon become worthless and exchange for zero.
According to the deputy governor of Bank of England, Sir Jon Cunliffe, the price of bitcoin is inconsistent, creating a possibility of the crypto asset falling to zero in value.
He added that there is no inherent worth in the most prominent digital currency the Guardian reports quoting British Broadcast Service(BBC).
Jon Cunliffe, in a discussion with BBC said:
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"Their valuation can fluctuate significantly, and [bitcoins] could theoretically or practically fall to zero."
"Improved regulatory and legal frameworks, both domestically and globally, are needed to manage these risks, encourage long-term innovation, and maintain broader trust and integrity in the financial system."
The warning comes as BTC value drop by 30.07% since hitting $68,990.90 in November [when pegged to current price of $48,240.07].
The market capitalisation of crypto assets has grown tenfold since early 2020 to about $2.6tn, representing about 1% of global financial assets.
"The issue is that, unlike traditional forms of currency, Bitcoin isn't used to price anything other than itself." 'One Bitcoin = one Bitcoin,' as Bitcoiners are fond of saying. "However, a tautology does not make a currency."
How investors we lose everything
Thomas Belsham, a Bank of England employee, also explained why investors' money is at risk.
He noted that the crypto asset's scarcity – which is limited to 21 million bitcoin – is one of the key reasons for its appeal to investors, but this feature built into its design "may even, eventually, render Bitcoin worthless."
Approximately 19 million bitcoins are currently in circulation. While the total number of bitcoins in circulation is not expected to reach its peak until February 2140, this system will become increasingly difficult to sustain over time.
"A process of backward induction, according to simple game theory, should eventually induce the smart money to leave. Investors should expect to lose everything if this occurs. Eventually.”
I was halfway to becoming a billionaire, then I lost everything in 5 minutes
Meanwhile, a cryptocurrency trader has shared his experience on how he lost almost half a billion Naira assets in less than five minutes.
He said he lost everything when the coin crashed and his account was left with $0 before he could do anything.
He also stated that he cannot reveal himself for fear of being mocked because he was cautioned against investing in squid currency.