THE Hex cryptocurrency has increased in value in recent months after attracting the interest of new buyers.
We explain what you need to know about the cryptocurrency.
As with any investment, whether it's stocks or cryptocurrencies, keep in mind that making money is never guaranteed.
You may actually lose all the cash you put in, so don't invest more than you can afford to lose or into something you don't understand.
There's also scant regulation for cryptocurrency firms, so you won't have any protection if and when things go wrong.
Plus, there's no guarantee that you can convert cryptoassests back into cash, as it may depend on the demand and supply in the existing market.
5 risks of crypto investments
BELOW we round up five risks of investing in cryptocurrencies.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.
What is Hex?
Hex is a cryptocurrency token, which was launched on the Ethereum network in 2019 by entrepreneur Richard Heart.
The system claims to be the first blockchain certificate of deposit, which rewards investors who lock up or stake their holdings for a period of time.
Proceeds come from the token's price rises and there are penalties if people withdraw early.
More interest is paid if more coins are staked and as more Hex are locked away, they become more scarce driving up the price, said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
Mr Heart told The Sun he launched Hex because "I wanted to fix what was wrong with Bitcoin and finance in general".
He added: "Building the best performing asset in the history of mankind was also a specific target."
How much is Hex worth?
Hex is currently worth $0.08071, according to data by CoinMarketCap.
In comparison, it was worth a lower $0.01575 on April 26 but at the time of writing, it's down by 8% over the past 24 hours.
Holding the fastest appreciating assets – meaning they increase in value as you own them – comes with "extreme volatility", Mr Heart said.
He added: "85% price dips are common. Bitcoin's done a few of them over the years, and Hex has as well, yet no one that ever held Bitcoin for more than 3.5 years lost money.
"Hex hasn't gone six months without making a new all time high price."
The price has risen sharply as more buyers have piled in over a short amount of time, Ms Streeter told The Sun.
She added: "But the reward system is reliant on price inflation and penalties on withdrawing from stakes early, and as we’ve seen in the volatile world of crypto, when demand subsides prices can fall dramatically.
"The long term use case as a certificate of deposit is also unproven and many buyers are simply looking for shorter term gains.
"Given the potential volatility traders would be wise to treat Hex with caution and only dabble with crypto at the fringes of their investment portfolio."
We explain what you need to know about the AMP and Tiger King cryptos as well as Dogecoin spin-off Baby Doge.
Dogecoin surged in value last week after Elon Musk supported an "important" change to slash crypto transaction fees by 100 times.
Meanwhile, investors were recently warned about cryptocurrency trading platforms Bitcoin Rush and Bitcoin Storm.
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