A bit of a coin
There’s a growing number of people fascinated by the cryptocurrency. I admit, I am one of them. I am intrigued by the increasing appetite in the region on bitcoins as an alternative form of investment.
Who would not be enthused? Googling several websites tracking its price showed that the value of a bitcoin at the onset of 2017 stood at $1,000, then soared and flirted close to $20,000, an astronomical gain. Its worth by end of the year just past, though, slightly dropped. However, its price, based on latest reports, recovered. In local currency, it’s equivalent, as of this writing, to a whopping R713,280.34!
Intellectual discussions among seasoned bank presidents, treasurers, and ordinary individuals on the viability of bitcoins as an alternative form of investments indicate two common observations: One, the growing demand for bitcoin is because everyone is going electronic. And, second, which is a bit concerning is: there’s no underlying asset.
So, what is a bitcoin? The Sun, a UK-based news company, explains it is a “virtual currency that was created in 2009 by an unknown computer whizz using the alias Satoshi Nakamoto. Individual bitcoins are created by computer code. Transactions are made without middle men, so there are no transaction fees and no need to give your real name. More businesses are beginning to accept them and in some parts of the world you can even buy pizza with bitcoins.” It’s a “virtual wallet” and “aren’t printed, like pounds, dollars, or euros – they’re produced by people, and increasingly businesses, running computers all around the world. Bitcoin is attractive to some users because of its anonymity, as well as its lack of government control.”
Kinda’ risky. The lack of underlying asset to back it and government control make me more circumspect. The Securities and Exchange Commission on Wednesday joined India and Singapore that recently “cautioned” the public about the risk of investing in bitcoin. The Indian finance ministry was quoted as saying that it is like “ponzi scheme,” a form of investment mechanism anchored on the reported success of a nonexistent enterprise. Simply put, new investors earn from the investments of previous investors. Even, American business magnate, investor, and chair of Berkshire Hathaway Warren Buffet, in an interview this week with CNBC, said he wouldn’t trade bitcoin futures. “In terms of cryptocurrencies, generally, I can say, almost with certainty, that they will come to a bad ending,” he said.
I’ve asked some friends on whether they would consider taking bitcoin in their investment portfolio and these are the two of the best answers I’ve received:
— “If I have money available, I will not invest in bitcoin or any other cryptocurrency. As a conservative, I want to physically hold and see my money and to invest in instruments which, in the course of hundreds of years, have evolved to be trusted forms of investments globally.”
— “In an unregulated environment, it can wreck havoc on people’s lives. The rich becoming richer and the poor becoming poorer. The right ingredient for a global debacle.”
As my neighbor columnist, Monetary Board Member (MBM) Atty. Jun de Zuniga of Across the Boardroom, reminded us, BSP has the sole authority to issue currency be it in the form of “notes, coins, or any other object or document… currency issued in the Philippines by any entity other than the Bangko Sentral should be considered unauthorized and counterfeit, and should be subject to criminal sanctions.”
I am a bit unconventional and unorthodox in some ways. In this case, I am gingerly conservative. Risk averse. Taking stock of MBM de Zuniga’s opinion, if I have money to spare for investments, I still would prefer the long established, old-fashioned – stock market and the foreign exchange.
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