Picture: REUTERS
Picture: REUTERS

* Lance Boyle is a pseudonym. Get over it.

The first day of the portfolio:

Okay, so the first day was grim. Starting off with capital of R2.5m, I'm down R228,000 ... a one-day loss of just less than 10%. This is obviously not good. Almost as bad as holding Sibanye ...

But, wait, there's something important you need to know. This is (thank the gods) a demo account. I'm not stupid enough to throw money at something I know absolutely nothing about. I only throw money at things I know very little about and I'm a long way from that at the moment ... 

The first thing that strikes one about this market is its volatility. By way of illustration, while writing the above sentences, I lost another 20 or 30k ... er, just checked again, 40k.

That comes from throwing money at CFDs in a market you don't know the first thing about. Back to volatility ... 

Why is this? Because ... wait, there's a live chat function. Let me ask Valentin to help out ... 

Valentin tells me that the market is affected "from different factors".

I ask him what these factors are and he replies: "It can be politicla (sic) economic or others."

Clearly Valentin cannot help. I'll obviously have to do what serious professional traders do when they need decent information. I ask Google ...

Google directs me to an article on Investopedia which has the title 'Why is Bitcoin's value so volatile?' This from the article: 

Volatility in Bitcoin does not yet have a generally accepted index since cryptocurrency as an asset class is still in its nascent stages, but we do know that Bitcoin is capable of volatility in the form of 10x changes in price versus the US dollar, in a relatively short period of time.

The first of the reasons given is: "News events that scare Bitcoin users include geopolitical events and statements by governments that Bitcoin is likely to be regulated". I put that in bold, because I sense deep in my free market boots that this is really serious. The threat of government regulation would give any asset class the cold shivers ...

Basically, Bitcoin is like gold. There is a finite supply and an unpredictable demand. And nobody really knows how to price it. Or what it is ... Or who invented it ...  It is after all, a phenomenon of the ether. HQ somewhere in cyberspace. No annual report. Like a Gupta front company, only not.

I'm going to do some proper research and come back to you with an answer to the following question:

What exactly is a cryptocurrency?

Until next time. By the way, I went to lunch and have just checked on my portfolio. I'm now down R483,000 ... 

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