The cryptocurrency phenomenal rise has driven some Malaysians to bet their savings on this unregulated investment class

By AFIQ AZIZ / Pic By BLOOMBERG

With one unit now worth US$5,000 (RM21,000), bitcoin is the latest investment craze among Malaysians who are convinced that the digital cryptocurrency is definitely going up in the future.

Many of the bitcoin investors are those who have traditionally put money in equity, property, currency, gold and unit trusts to expand their wealth. The cryptocurrency phenomenal rise has driven some Malaysians to bet their savings on this unregulated investment class.

According to a bitcoin exchange website, Coin Dance, Malaysia bitcoin daily trade value had risen 500% to RM2.3 million as at September 2017 from just RM393,000 a year ago, showing more Malaysians are trading in the currency.

An industry expert told The Malaysian Reserve (TMR) that the daily transaction value will be RM11.9 million higher if transactions from other exchange platforms like Luno, Coinhako and other available platforms are taken into account.

Bitcoin’s fast rise to over US$5,000 had further fuelled the interest in the cryptocurrency and the market thinks bitcoin will continue its meteoric rise.

LGMS Services Sdn Bhd CEO Fong Choong Fook said the digital currency is expected to hit US$10,000 by December this year and that will further boost the interest in bitcoin, despite the absence of formal regulation by the authorities.

Fong said investors who purchased 1BTC (bitcoin) worth RM1,000 in 2015 had already increased their investments by 230%.

“The cryptocurrency is an addition tool for investor, while maintaining the conservative platform such as Forex,” he told TMR.

Rising popularity, high demand and trust in the digital token technology have propelled the crypto- currency to unprecedented levels.

Bitcoin price jumped 29% to RM24,248 in a week from Oct 8 to Oct 15, 2017.

It is presently traded around US$5,684.91 with a market capitalisation of about US$95 billion.

The rise of bitcoin was invented by an unknown programmer and released as an open software in 2009 as a secure, non-regulated and a decentralised alternative currency. It was regarded as a decentralised peer-to-peer payment network powered by the users with no central authority or middlemen, allowing for a cheaper, faster and more convenient method of transaction. Fong said that cryptocurrency has proven to be a very secure technology and the investment scheme is safely guarded.

“Unlike credit card, where someone can abuse another’s credit card number to buy an online item, cryptocurrency is more secure.

“However, we need to have enough knowledge to prevent any scams,” he said, adding that the central bank’s concern is more towards the unrecorded and uncontrolled money trail matter.

CRA Global CEO Mohd Roshaimi Mat Rasid said the increasing cryptocurrency market value will encourage more people to invest in digital currency as an investment asset class.

Mohd Roshaimi who joined Bitclub Network, a bitcoin-mining community group in 2014, said the digital token price will increase further.

“It will increase like gold. But, bitcoin is like a virtual gold. It exists, but can’t be physically touched,” he said, adding that the bitcoin fad is unstoppable as the cryptocurrency will become a future alternative currency and be used globally.

Bitcoin is already accepted in many industries, including the food and beverage. It was reported that certain restaurants have started to accept cryptocurrency — including food trucks and street food businesses — such as “Tapak” in Kuala Lumpur.

“The wide acceptance of bitcoin transaction and mining will contribute to the higher price of the digital currency,” he said.

Bitcoin mining is the process of adding transaction records to bitcoin’s public ledger of past transactions, or “blockchain”. The blockchain serves to confirm and verify transactions to the rest of the network as having taken place.

The miners who verified the transaction will be awarded with the automatic newly generated bitcoin and earn the transaction fee.

“Currently, 17 million total BTCs have already been in circulation out of the 21 million BTCs, with 12.5 BTCs generated in every 10 minutes,” Mohd Roshaimi said, expecting the remaining four million BTCs will gradually reach the market by 2100. He said the technology can’t be “killed” as long as the cryptocurrency community, especially the miners, keep the platform alive.

“It is just like the Internet. Once it was invented, no one can shut it down unless every single user in the world stops using it,” he said.

Mohd Roshaimi, however, cautioned on the existence of scam bitcoin products that promise fixed returns.

“Scammers are riding on bit- coins popularity to cheat investors like what had happened in the foreign-exchange and gold investments.

“It is important for newbies to really know how bitcoins work and how their money will generate the promised income,” he said.

Bitclub Network has more than 8,000 Malaysian members and up to 70,000 players globally.

The cryptocurrency legitimacy and regulatory scheme was raised by certain quarters including consumer associations. Earlier, TMR reported that Federation of Malaysian Consumer Association, and Consumers’ Association of Subang and Shah Alam had raised their concerned on the unregulated digital token.

The associations warned consumers to be aware of the schemes as Bank Negara Malaysia’s regulations over the digital token have yet to be announced.

The authorities recently reported that 500,000 people had fallen victims to a bitcoin investment scheme known as “Bit Kingdom”.