HUMMINGBIRD Finance is one of the newest cryptocurrencies on the market.
We explain what you need to know about Hummingbird – and what investors should be aware of.
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If you're thinking of investing, keep in mind it's a risky business and you're not guaranteed to make money.
You need to make sure you know the risks and can afford to lose the cash.
Cryptocurrencies are typically also highly volatile, so your cash can go down as well as up in the blink of an eye.
If you're tempted by newer cryptos, be aware that these are riskier than others, such as Bitcoin, and make you more open to scams.
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 Hummingbird Finance?
Hummingbird Finance is a new cryptocurrency token, which launched in April 2021.
It's a smart contract, or program, built on the Binance Smart Chain blockchain network.
Blockchain technology is at the heart of most cryptocurrencies, including Bitcoin.
It can seem complicated, but it's a kind of database used to record transactions.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, told The Sun: "Hummingbird's founders promise to use proceeds from the token to help finance charities to protect the species in the wild and spread awareness.
"But this promise can’t easily be verified, and the way the token works rewards holders for not selling their tokens, and taxing those who do.
"That raises suspicions of an aim to simply drive up the price on a wave of speculation and so traders would be wise to treat the token with extreme caution."
How much is Hummingbird worth?
Hummingbird Finance is currently worth less than $0.0000000025, according to CoinMarketCap.
The token's value is so low that the major tracking website doesn't say the specific price.
In comparison, it was worth a higher $0.000000011 earlier this week on May 17.
At the time of writing, the cryptocurrency is down by 15.47% over 24 hours and has a market cap of $55million.
The cryptocurrency has only been listed on CoinMarketCap since May 13.
What are the risks of Hummingbird?
Investing in cryptocurrencies is essentially gambling and there are no guarantees that you will see what you pay in go up in value.
Cryptocurrencies are VERY high risk and a speculative investment, with limited track records and no underlying value.
There is also no guarantee that you can convert crypto assests back into cash, as it may depend on the demand and supply in the existing market.
Cryptocurrency firms aren't regulated in the way that other financial firms are. This means that you won't have any protection if things go wrong.
As always, make sure you never invest in something you don't understand.
Charlie Barton, investment specialist at comparison site Finder, told The Sun: "Hummingbird is an extremely early stage cryptocurrency project and, given that, it’s very hard to evaluate the true strengths and weaknesses of it.
"Hummingbird is one of literally thousands of tokens to be launched in recent months.
"All projects of this type are to be treated as extremely high risk, with the very real possibility that these tokens are simply scams to enrich those who created the token.
"Tread carefully! Never invest more than you’re willing to lose, and always do your own research."
In January, the UK's Financial Conduct Authority warned that households risk losing ALL of their money if they invest in cryptocurrencies.
It was followed by a similar warning by Andrew Bailey – the boss of the Bank of England.
Meanwhile, a Russian 27-year-old recently became the world's youngest crypto billionaire after his cryptocurrency Ethereum surged in value.
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