Investors should steer clear of speculating in bitcoin, said top economist John Greenwood.
Investors looking for a way to make money from the global bitcoin bonanza should steer clear of the pseudo currency itself and instead follow Li Ka-shing's lead: buy in to the firms providing the services that bitcoin holders use.
That's according to John Greenwood, the London-based chief economist of Invesco who designed Hong Kong's pegged currency regime.
"Just like investors in days gone by made more money out of selling shovels and picks to gold-diggers than anyone ever made out of the gold mine, he
is investing in the peripheral activity that bitcoin has generated," Greenwood
said bitcoin was simply not credible as a global currency as it failed to fulfil three fundamental requirements: be an effective medium of exchange for a wide range of goods and services; be a long-term store of value or be used for the settlement of long-term contracts; or be a universal unit of account.
The virtual currency became popular, especially on the mainland, because it enabled individuals to get around Beijing's controls on the movement of capital across its national borders - currently limited to a maximum of US$50,000 equivalent without permission from regulators.
"This, I believe, is the fundamental reason why bitcoins rose in price so steeply, and why the Chinese authorities have now acted to outlaw conversions from renminbi to bitcoins and vice-versa," Greenwood