Can bitcoin and ethereum challenge the traditional world of fiat currencies?
An employee demonstrating the usage of a bitcoin automated teller machine (AT M) at BITPoint Japan Co headquarters in Tokyo. In Malaysia, the trading of bitcoins and other cryptocurrencies remains largely an unregulated activity
THEIR price may be volatile, they may be used by a few rogue elements and lack traceability, yet cryptocurrencies such as bitcoin are all the rage now.
Going by some reports, there are more than 900 cryptocurrencies based on blockchain technology today, but the market is led by the main ones such as bitcoin and ethereum.
Bitcoin has risen by some 771% over the last three years to hit an all-time high of US$2,871 recently. Notably, it started seven years ago at a value of almost nothing. Newcomer ethereum has seen its price spike by more than 5,000% year-to-date.
The interest of many Malaysians has been piqued, wondering if they should jump on the bandwagon. The talk is that there are a few Malaysians who have become bitcoin millionaires, as they had invested in them early. Some are bitcoin miners, a process of verifying transactions in the system, which pays in bitcoins.
But cryptocurrencies lie largely in a grey area of the law. Their actual usage is limited. So, why are people rushing to buy them?
“It is mostly (buying on) speculation and to some extent a hedging mechanism,” says an investor.
A much-written phrase on the Internet today is this: “If you bought US$5 of bitcoin seven years ago, you’d be US$4.4mil richer”. A single bitcoin was then worth a quarter-of-a-US cent.
Investors can buy these currencies through exchanges spread across the globe, including some in Malaysia.