For decades now, currency trading has been at the forefront of investment portfolios; in fact, in the recent years, foreign exchange trading has become more accessible with the advent of online trading tools with minimal capital for trading. One particular and peculiar category that has been getting much attention and growth is cryptocurrency, specifically Bitcoins.
Bitcoin is the first decentralized digital currency. They are currency that can be transferred from person to person without passing through any bank, unlike other digital transfer systems. These are not created by any country or any specific financial institution, but they are digitally created by miners who generate and monitor the transfer of this digital currency. Traditional currency is printed based on the availability of gold; however, Bitcoins are based on a mathematical formula, which limits its production to about 21 million coins.
To understand more about investing in Bitcoins, Philippine Tatler approached Mr. John Bailon, Chief Executive Officer and Co-founder of Satoshi Citadel Industries:
PHILIPPINE TATLER: How would you describe the Bitcoin market in the Philippines?
JOHN BAILON: Bitcoin in the Philippines is pretty much in its infancy. It's growing at a rapid rate, but most of its users are enthusiasts and speculators.
PT: How does one make money with Bitcoins?
JB: Bitcoin is traded the same way as with any other foreign currencies. Bitcoin prices are very volatile, so for an experienced trader, profits are created by timing purchases when the price is low and then selling when the price is high.
PT: What are the common mistakes in investing in Bitcoins?
JB: Risking too much. Bitcoin is a very new of technology and its currency-like aspects are very new and unstable. Risking more than one can afford to lose is not advisable. For example, at the end of 2013, Bitcoin prices soared to over $1,200/BTC but within 3 months dropped to a low of around $150/BTC.
PT: How much is the average return or profit on investing in Bitcoins?
JB: It really varies. You would see a sideways market for a couple of months only to be hit with $10 swings. When there is a bull run, you may make up to 20% returns, but again, this is all very new territory so there are huge risks.
PT: What are the regulatory and tax issues in Bitcoin investments in the Philippines?
JB: Right now, Bitcoin is unregulated. Our central bank, however, has been reported to be close to releasing a framework that will effectively protect consumers and enable Bitcoin technology to grow in a regulated manner.
PT: How do you see Bitcoin or cryptocurrencies evolving in the next decade?
JB: Bitcoin or blockchain technology enables us to have digital ledgers that are cryptographically secure. This means the technology allows for historical records to be immutably recorded in digital form that, in turn, allows for multiple participants to access with confidence knowing that data integrity is intact. I see institutions, especially financial ones such as banks, adopting the technology to improve their existing platforms. But there are also a lot more other possible applications for the blockchain technology, such as digital representations of physical asset registries (think land titles, identities, or contracts). Its almost impossible to fully anticipate what will come about from this new technology, it's almost like trying to predict the emergence of Facebook, Google, and Snapchat in the 1990's.
Mr. John Bailon is the Chief Executive Officer and Co-Founder of Satoshi Citadel Industries. SCI is a financial technology company building the Blockchain ecosystem in the Philippines. For more information about the company and if you are looking to invest in Bitcoins, you may visit www.sci.ph.