PayPal now allows US customers to buy, sell and hold Bitcoin, and plans to provide the same service to other countries in 2021
by AFIQ AZIZ / pic by BLOOMBERG
BITCOIN led other cryptocurrencies in a surge that almost matched its all-time price of US$19,926 (RM80,700) earlier this month, but doubts over the currency’s long-term sustainability as an investment linger.
However, this attitude may change as cryptocurrency gains mainstream following, said Bitcoin dealers.
In October, PayPal Holdings Inc announced that it now allows US customers to buy, sell and hold Bitcoin, and plans to provide the same service to other countries in 2021.
Grayscale Investments LLC — which is the world’s largest crypto asset manager whose assets under management (AUM) is often viewed as the barometer of institutional interest — reported an AUM increase by more than US$1 billion in the third quarter of this year alone.
Last month, Grayscale announced that its total AUM reached almost US$10 billion.
Tokenize Technology (M) Sdn Bhd, one of Malaysia’s digital asset exchanges, is of the view that the trend would remain upwards, as Bitcoin also offers “intrinsic value” through its limited circulation.
According to Tokenize Technology CEO and CTO Hong Qi Yu, Bitcoin will always be regarded as “liquid gold” as its value will increase over time, and at the same time, it is easy to use.
“The fundamental of Bitcoin is always on halving, where supply gets scarce and the demand either stays constant or gets stronger.
“The supply which must be mined everyday also comes with a cost. That cost keeps increasing since inception.
“All these contribute to the intrinsic aspect and confluence with macroeconomy. Those understand join the force and will strengthen the demand,” Hong told The Malaysian Reserve recently.
Bitcoin, which was invented by the then-unknown Satoshi Nakamoto in 2007, has a maximum number of coins that can be mined. Its total supply is limited by its software and can never exceed the 21 million coins limit.
New coins are created during a process known as “mining”: As transactions are relayed across the network, they get picked up by miners and packaged into blocks, which are in turn protected by complex cryptographic calculations.
As compensation for spending their computational resources, the miners receive rewards for every block that they successfully add to the blockchain.
At the moment of Bitcoin’s launch, the reward was 50 bitcoins per block: This number gets halved with every 210,000 new blocks mined, which took the network roughly four years. As of 2020, the block reward has been halved three times and comprises 6.25 bitcoins.
Bitcoin has not been pre-mined, meaning that no coins have been mined and/or distributed between the founders before it becomes available to the public.
However, during the first few years of Bitcoin’s existence, the competition between miners was relatively low, allowing the earliest network participants to accumulate significant amounts of coins via regular mining.
“Bitcoin is another aspect compared to gold. While gold can only be jewellery, Bitcoin has the potential of value transfer in digital format. It can also be a mode of payment when it scales up to a certain extent,” Hong said.
He added that all these are the complex aspects of fundamental and intrinsic value that investors find difficult to comprehend.
“If there is an analogy I can compare. It is like Tesla technology. Intrinsic wise, it does not make sense with the market pricing. However, for those who under-stand, it has the potential and price ahead,” Hong said.
Bitcoin was valued at US$19,120 a coin yesterday.