What is Cryptocurrency?
I am not a huge fan of cryptocurrency (put it simply as “CC”) , but even so you cannot miss their recent news. For newbie to CC, it is simply a form of digital currency. It is not controlled by any central central, and you don’t print it like any hard cash. It is similiar (not same) to commodity where the price level is controlled by supply and demand, BUT unlike gold or coal, it is non-tangible (digital currency, remember). There are many types of CC in the market now, notably Bitcoin.
Bitcoin is among the first cryptocurrency to emerge in 2009. It was said to be launched under the pseudonym Satoshi Nakamoto. Nobody knows who this person / group is. He started, and when it was gaining traction, he disappeared. Seriously, you need some risk-appetite to invest in something that you don’t even know its origin. hmzzz……. Anyway, Bitcoin is traded like a share in the market; the higher the demand the higher the price. It hits a record high of $5,000 early Sept 2017 before receding! Seems like a buying frenzy.
Why invest in Bitcoin – Cryptocurrency
- Low cost of transaction directly between 2 parties, bypassing the banks.
- Not controlled by Central Banks, hence not affected by fluctuating interest rates
- It is managed by a highly secured Block Chain technology.
- Not easily transparent (which lead to easier money laundering activities)
China stamping its authority – Cryptocurrency
China had been trying to prevent outflow of capital outside the country. Hence not surprisingly, due to Bitcoin’s low transparency in transaction, it is starting to incur the wrath of China. The economic giant had just stopped the exchange of Bitcoin in China! Some argued that the Bitcoin wave is too huge even for China to stop. I think in the short run, it definitely going to put some ice on its trading price. Currently trading at $4,200 region, potential downside move to the $3,500 to $3,700 region. Calling a short on Bitcoin.