The rise and rise of Bitcoin creating space for cryptocurrency in Pakistan

From close to $800 at the start of the year, a single Bitcoin is now being traded for over $4,500.

BE2C2 Report — Bitcoin is at a one month high against the dollar. On Sunday, it marked the first time the cryptocurrency crossed $4,500 since early September and continues a rally that began on Thursday.

From close to $800 at the start of the year, a single Bitcoin can now be bought for over $4,500. According to one analyst, anyone who invested £300 in Bitcoin six years ago will now be sitting on a cool £13.8 million.

Its meteoric rise in 2017 has gained its attention worldwide and helped it appear in the headlines more times than ever before– it’s accepted as a mode of payment by over 100,000 vendors including Microsoft and Dell.

Brazil’s biggest financial firm [XP Investimentos] has announced that they plan to add bitcoin trading for their clients. In Japan, where Bitcoin has been fully legalized as of April, a large energy supplier called Remixpoint has now added the option for their clients to pay in Bitcoin.

This week’s rally also corresponds with renewed interest in bitcoin from investment banks. The Wall Street Journal last week reported that Goldman Sachs is looking at setting up a bitcoin trading operation and Morgan Stanley CEO James Gorman said recently that the cryptocurrency is “certainly more than just a fad.”

However, unlike stocks, gold and currency trading, the market dynamics of Bitcoins were not well-defined from its inception in 2007. Massive booms were coupled with frequent crashes, the most recent being a 27% fall after China’s decision to close down Bitcoin exchanges in the country.

Back in 2014, a financial researcher and author found the volatility of the crypto/digital currency to be seven times greater than that of gold, eight times greater than that of the S&P 500, and 18 times greater than the US dollar.

Its presence in the digital space, an inability to be physically touched or put in a safe, also makes it more susceptible to technological threats.

But negative comments interspersed with reports of the world moving towards adopting digital currency has made Bitcoin stand out.

Adoption in Pakistan

Urdubit.com, the first and only Bitcoin exchange in the country, has seen increased visits on its website, said CEO Danyal Manzar to The Express Tribune.

“The amount is very hard to predict because people can trade individually, but the number of users is definitely on the rise.”

Asked when would be the best time to buy, considering the massive ups and downs in their prices, Manzar said it is a commodity and a technology, making it harder to predict prices in a manner similar to, say, stocks.

“If I knew the answer to this question, I would be on a private island right now and hosting my friends,” he quipped.

The technology angle is something most people ignore, he deplored. However, some market analysts said cryptocurrency has room for growth in Pakistan. China accounts for 23% of the global trade in Bitcoin and there are reports  the Chinese regulatory authorities  may reverse their earlier decision of shutting down Bitcoin exchanges.

What is Bitcoin?

Bitcoin is a digital currency whose every coin and transaction is tracked on a huge database called the blockchain. Rather than existing in one place, this database is held by all Bitcoin users. Like any currency, it has a value in terms of others – dollars or pounds – and, as people have become interested in its potential, Bitcoin’s value has soared. It has been the best-performing currency globally every year since 2010 (apart from 2014 when it was, err, the worst).

How to buy Bitcoin

Good news: you don’t have to buy a whole Bitcoin – at the time of publishing this, that would cost you £3,360. Instead, you can snap up as tiny a fraction of one as you please. The most user-friendly method is to download a free mobile app called Coinbase. You can transfer local currency to your Coinbase “wallet” via a credit or debit card and buy or sell Bitcoin at the click of a button for a small fee. Coinbase also lets you invest in two rising-star “alt coins”: Ethereum and Litecoin.

Alt coins?

These are cryptocurrencies other than Bitcoin and there are hundreds of them. Some have been set up as a joke, such as Dogecoin (because: geeky internet memes), but others – including Monero, Ripple and Dash – have the potential to go far. Ethereum, which recently won backing from Microsoft and JP Morgan Chase, is up 900 per cent this year.

What are the risks of buying cryptocurrency?

Buying cryptocurrency is a crapshoot. It’s highly volatile: the last time the US stock market fell by more than ten per cent in a day was back in 1957; Bitcoin has seen more than ten per cent wiped off its value 38 times since January 2012. A cryptocurrency could also be obliterated overnight. Should major governments regulate hard against it or hackers manage to break its security, that’s your money up in smoke. What’s more, criminals have been stealing from online wallets (though that is avoidable: keep your cryptocurrency offline if you own a significant amount).

How much could I make?

Depends on who you listen to. The doom mongers say that we’re in a cryptocurrency bubble that’s about to burst (indeed, the market took a steep downturn recently), while others believe a single Bitcoin could be worth $500,000 by 2030.

A brief history of Bitcoin

Since the creation of the first Bitcoin in 2009, the cryptocurrency has had a roller-coaster ride. Herewith, a timeline…

June 2011: WikiLeaks begins to accept Bitcoin for donations

February 2012: Bitcoin Magazine launches

June 2012: Bitcoin exchange Coinbase opens

September 2012: Bitcoin Foundation starts ups

December 2014: Microsoft begins accepting Bitcoin for games and apps

January 2015: Coinbase raises $75M in venture capital funding

November 2016: Swiss rail operator SBB upgrades ticket machines to sell Bitcoin

August 2016: 120,000 Bitcoins stolen by hackers from the Bitfinex exchange

April 2017: Japan makes Bitcoin a legal currency

Leave a Reply

Your email address will not be published. Required fields are marked *