The Myth of Crypto-Currency

Bitcoin was created sometime in 2008 by an unknown person named as Satoshi Nakamoto and this digital money is a reward of cyber-mining process. The software was released as open-source in 2009 and attracted many “tech-guys” into the business for mining the perceived wealth of the future money.
Strictly speaking, Bitcoin is a decentralized digital money and not a legal tender recognized by any central banks in the world. There is no benchmark to the value though the circulation of it will be maximized at 21 million units from the cyber-mining field. Effectively, this digital currency is a commodity that can be used to exchange for services, products and ambiguously, for cash money too. In February 2015, over 100,000 merchants accepted bitcoin as payment.
Some market sources comment that bitcoin and all other digit currencies are just bubbles and they are all traps to scam investors’ monies eventually. However, the “block-chain” technology which is a new word in today’s economy has proven that to be more effective in tracing the transactions that cannot be altered.
By definition, block-chain is a public ledger that records all bitcoin transaction on a network of communication nodes. They cannot be erased or altered once recorded into the system with trace of private key as your identity. Unfortunately, the loss of the private key will render disability to retrieve your stored digital assets.
The recent soaring prices of Bitcoin has ushered many investors into new frenzy and hysteria. Other digital currencies like Ethereum, Lite-coin and Ripple coin have followed the path and epitomized by investors. Following the inception of Futures trading in CBoE and CME markets, Bitcoin has offered a brand-new horizon for global investors to participate in a centralized market for cash settlement.
Nevertheless, all other commodities like energy products, precious metals and agriculture etc have lost their popularity since the market liquidity has all rushed into Bitcoin and digital currencies lately. Mathematically, the value of Bitcoin has risen from somewhat USD300 early this year to the high of USD19,000 in early December and settle in the region of USD16,000 for Christmas. Technically, we reckon there may be a rapid roller coaster coming in January when most ignorant investors will be badly hit by a downward correction due to the versatile price swing in Futures market.
Many people have pondered if Cryptocurrency like Bitcoin or other digital money can be invested, I would remain neutral and not oppose to a new global rising trend. At the end of the day, you could make a crisp decision in staying outside the game or join the game with a mindset of proper risk control. While Bitcoin is an instrument of no benchmark value, it will not be a surprise to see a new soaring height after Q1 seasons when Dow Jones market might correct after tax bill news have been digested.

~ DAR Wong is a registered Fund Manager with 28 years of experiences in Singapore. The expressions are solely at his own. He can be reached at dar@pwforex.com