CRYPTOCURRENCY seems to be one of the hot topics these days, especially since Bitcoin reached an all-time high of US$69,000 on Nov 9.
With all the talk of its price continuing to grow, many would think that it might be too late to start investing in Bitcoin. Is it? According to Luno Malaysia country manager Aaron Tang, it's not.
"In fact, Bitcoin adopters are actually early. Bitcoin, and cryptocurrency in general, have received mainstream adoption and look to be around for years to come," he said.
Cryptocurrency is a technology that inspires people to change their way of using money.
In Bitcoin's case, said Tang, its technology is open and transparent, and has the potential to improve the global financial system.
"Bitcoin's real value can be seen in global adoption over time and in emerging use cases whether as a payment method, a store of value, or a hedge against inflation.
" In fact, Bitcoin is still a young technology, having been around for just over 12 years, with much potential for the future," he explained.
STILL IN EARLY DAYS
Tang said Bitcoin is considered an alternative store of value due to its similarity to gold.
It has a limited supply of 21 million and it can be made into smaller units without losing unit value.
"Much like a ringgit can be broken up into sen, Bitcoin is made up of satoshis.
"Each Bitcoin is made up of 100 million satoshis. This means that there are two quadrillion and one hundred trillion satoshis, which convert to nearly 275,000 satoshis for every person in the world," he explained.
The value of these satoshis will vary in line with the Bitcoin price. So if one Bitcoin is worth US$50,000, that means investors can buy one satoshi at just US$0.0005.
"People will probably not limit themselves to 275,000 satoshis. So it is recommended to buy while Bitcoin's price is low as it has the potential to rise much higher in the future," he added.
POSSIBLE BUBBLE BURST?
Although researchers said that the cryptocurrency bubble is about to burst now with the all-time high value of Bitcoin and Ethereum, Tang begged to differ.
"Bitcoin's price is determined by supply and demand, especially in the short term. This demand is driven by people who understand how Bitcoin can benefit the world and believe it will be more widely adopted in the future," he said.
However, the scale of belief is subject to change in the short term due to certain events having temporary impacts on the price.
"On the one hand, news of a major company investing in Bitcoin or adopting it as a form of payment could help it go on a rally.
"On the other hand, news of a government — the most recent example being China, a few months ago — being negative on crypto can depress prices," he added.
Bitcoin's actual value can be seen in its global adoption as a store of value, a hedge against inflation and as a payment method.
"As widespread adoption continues, it will ultimately create a less volatile market for Bitcoin, which is a positive sign for investors looking to invest in the asset for the long term," explained Tang.
DEMAND FOR CRYPTO IN MALAYSIA
Tang said the demand for cryptocurrency in Malaysia is steadily growing due to its rising popularity as an alternative asset class.
"Most Luno users in Malaysia buy cryptocurrencies for portfolio diversification, as a store of value and a hedge against inflation," he said.
Here, Luno stores more than RM1 billion worth of digital assets, consisting of Bitcoin, Ethereum, Ripple, Litecoin and Bitcoin Cash, on behalf of more than 300,000 customers, and thus far has processed more than RM4.2 billion worth of transactions this year alone.
In addition, there are more than 450,000 Digital Asset Exchange (DAX) accounts in Malaysia, according to a report by the Securities Commission Malaysia.
"This is an encouraging number, given that it was achieved in only 14 months from October 2019, when the first DAX in Malaysia began its regulated operations," said Tang.
"Over the past year, there was increased demand for cryptocurrency among Malaysian retail investors, looking to diversify their portfolios," he said.
The commission recently reported that over RM16 billion worth of digital assets were traded in the country between August 2020 and September 2021, highlighting the growing popularity of cryptocurrencies among Malaysians.
"That would mean we are now on the slope of enlightenment, with Bitcoin on its way to becoming widely used, but not quite there just yet. This can be seen not just in Malaysia, but globally as well," he said.
At the end of the day, it is not about being too early or too late. What is important is the problem that Bitcoin is solving.
"Bitcoin is a new way of looking at our financial system, one that is more open and transparent.
"It makes money more useful and helps it keep its value, providing a hedge against rising inflation and currency devaluation. It is also considered by many to be the payment system of the future. Such factors have helped support Bitcoin as a viable alternative investment vehicle that the everyday retail investors can easily gain access to," concluded Tang.