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Bitcoin, advice and our predictions for 2022

7 mins read
by Kate Morgan
Last updated Wednesday, March 30, 2022

What is the future of bitcoin? Discover more about bitcoin in 2022 and beyond.

the future of bitcoin

Bitcoin, and cryptocurrencies more generally, have dramatically increased in value over the last few years. With these digital currencies becoming ever more popular, financial advisers need to be keeping a close eye on the fast-changing rules around cryptocurrency regulation, how much bitcoin is worth and how safe is it.

In this article, we’re going to cover all these bases. 


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What is bitcoin? 

Cryptocurrencies are a peer-to-peer payment method, of which bitcoin is the most popular.

Unlike currencies such as the US Dollar, Euro or Great British Pound which have some form of physical exchange, cryptocurrencies are entirely digital and have no physical presence at all.

This means that while physical currencies are a permanent tracker of where payments have gone, individuals using cryptocurrencies to make payments have to find digital ways of tracking payment.  

While this can be achieved through blockchain technology, many other people simply see cryptocurrencies as assets worth investing in. Now, bitcoin has become both a digital payment method and a potentially valuable investment.

Some countries, such as El Salvador have made bitcoin legal tender, while some central banks, such as the Bank of England, are considering issuing their own digital currencies. 

If you’re using bitcoin as a payment method, there are a number of ways to ensure you’re buying and selling it safely. But how safe are cryptocurrencies in general?  


How safe is bitcoin?  

To buy bitcoin, your clients will need to exchange a fixed sum of their money for a set amount of bitcoin.

The price of this cryptocurrency is famously volatile: in 2010, bitcoins could be bought for a matter of pennies whereas today one coin can be worth tens of thousands of pounds.

Investing is risky, as you both stand to make a lot of money and lose everything due to the somewhat unpredictable fluctuations. 

When it comes to paying for things, bitcoin is generally safe. Cryptocurrencies are powered by a blockchain, which is a publicly accessible ledger of transactions. A blockchain is a decentralised network that is publicly accessible and keeps a permanent and unhackable record of transactions.  

But as bitcoin isn’t a physical currency, buyers of bitcoin need to keep their digital currencies in something called a digital wallet. These wallets are password-protected, meaning they are not immune to hackers.   

While bitcoin is largely safe, it is not the safest investment if you’re highly risk averse. As it’s entirely digital, there is always some risk of passwords getting forgotten or stolen, meaning your clients could lose access to their coins and subsequently a lot of money.  


Bitcoin has become a major source of investment, interest and speculation in just a few short years.

There are a number of high-profile companies adopting cryptocurrencies, such as Wikipedia and Microsoft, while many retail and central banks are integrating bitcoin features into their services. In 2021, El Salvador adopted bitcoin as legal tender.

There’s no doubt that bitcoin and cryptocurrencies are increasingly being adopted by some parts of the private and public sectors.  

Within the UK, cryptocurrencies such as Bitcoin have been growing very quickly in popularity. Since first hitting coin exchanges in 2018, the number of Brits investing into bitcoin has surged by 558%, with younger investors – notably between the ages of 18-34 – particularly taken with these investments 

But as bitcoin becomes more widespread, the regulations about its usage are changing all the time. China, for example, has banned all cryptocurrency transactions, which sent the price of bitcoin tumbling significantly.  


How is bitcoin regulated in the UK? 

As countries are yet to reach a consensus on how to regulate bitcoin, there is little agreement on how it should be nationally and internationally regulated. Within countries, such as the US, there are discrepancies in how different regulators classify cryptocurrencies.  

In the UK, cryptocurrencies are categorised as property, but aren’t legal tender. Exchanges where bitcoin is available are regulated by the Financial Conduct Authority (FCA), while both the FCA and the Bank of England have issued both warnings and guidance about the volatile nature of cryptocurrencies.  

From the perspective of taxation, any profits your clients make on bitcoins or cryptocurrencies will be eligible for Capital Gains Tax. Different countries and states have their own regulations and taxation rules, so the best way to prepare to invest in bitcoin is to consult each state’s own regulations.  


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Is bitcoin a safe investment? 

While well-known cryptocurrencies such as bitcoin are legitimate, the price volatility and potential for ‘losing’ access to your money mean that, overall, bitcoin is one of the riskier investments people can make.

Some experts believe that 20 percent of all cryptocurrencies have been lost or forgotten about – sometimes through forgotten or stolen passwords – accounting to a combined worth of around $140 billion.

When it comes to buying bitcoin, it is always best to carry out due diligence and always consider the potential losses. There are certainly less risky ways to save for your future, for example.   

As investments into bitcoin have increased, so too have warnings about the risks.

In a recent report, 18% of investors feared not wanting to miss out on the bitcoin opportunity. As bitcoin becomes more normalised, so too are some investors starting to take more risks. 

The fear of missing out is never a good reason to make an invest, and with some evidence suggesting that people are borrowing to make these investments, it’s more important than ever for financial advisers to have the right crypto knowledge. 


Questions your clients will ask 

Clients are asking financial advisers about cryptocurrencies, so advisers should be prepared to answer the following questions: 

  • Are cryptocurrencies a gamble or an investment? One of the most common reasons people want to invest in cryptocurrencies is the amount of money that can be made. But is this just a gamble that can pay off? 

  • Are cryptocurrencies safe? While the technology underpinning cryptos are safe, there is the extra risk of lost passwords and hacking to contend with. 

  • Will I lose money? Losing money on a cryptocurrency investment is a very distinct possibility. 

  • What are the leading cryptocurrencies? Bitcoin is by far and away the most valuable cryptocurrency and is worth more than all over cryptos put together. The next most valuable coins are Ethereum and Maker. 


Questions you should ask your clients 

Given some of the additional risks that investing in digital currencies brings, advisers should take extra care when assessing whether or not their clients are making the right decisions. Consider asking the following questions: 

  • Why do you want to buy crypto? Clients looking for a safe investment to build their pensions should be strongly warned against crypto. 

  • What is your risk appetite? Digital currencies are very risky and should only be bought by individuals with a high-risk appetite. 

  • Where and how do you intend to buy crypto? Ensure that if your clients do intend to buy crypto, it is from a safe coin exchange and they have the right security measures in place.  

  • Which currencies would you buy? While smaller currencies may seem like better long-term investments on the basis that they may appreciate quickly, they can also lose value just as fast. 


How much will bitcoin be worth in 2022? 

This year has been a bumper year for bitcoin, but there’s no way to know for certain if this positive trend in pricing will continue.

In July 2021, one bitcoin was worth £21,000. By November 2021, its value had more than doubled to £49,000. Price volatility has been a continuous feature of bitcoin, and this is unlikely to change in the future.  

A lot of the instability surrounding bitcoin’s valuation comes down to changing regulation and this will be a continued source of uncertainty.

As more institutional investors adopt cryptocurrencies, we will likely see more people looking to invest into them, potentially pushing the price higher still. But, as governments and regulators continue to assess their own sentiments towards cryptocurrencies, regulations about how to tax and regulate cryptos could bring the prices down. 

Unbiased can help you find the right clients for your financial guidance.

With cryptocurrencies becoming more popular, there are increasing numbers of potential clients than ever looking for the right, expert-driven advice when it comes to making investments and saving for their futures.

Grow your business by joining Unbiased. 

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Kate Morgan
Kate has written for leading publications and blue chip companies over the last 20 years.