(SPOT.ph) Filipinos are no strangers to digital money. We hail rides with our Grab wallets, shop online and in-person with GCash, donate to causes we support with PayPal, and pay bills through our bank apps. As the onset of the pandemic ushered us into a new age of cashlessness, we’ve proven to be highly adaptable to the world of financial technology (or “fintech,” as the cool kids say). And yet, cryptocurrency remains elusive to many.
Perhaps you’ve been trying to wrap your head around the frantic talk about Rocket Bunny and Bitcoin, cryptocurrencies that have turned people into trillionaires overnight—and turned wealthy investors into paupers just as quickly. Perhaps the DogeCoin memes, and their repercussions on the cryptocurrency market, have caught your eye. Or maybe, you’re on the lookout for ways to make your money work for you, but aren’t sure where or how to begin investing in cryptocurrency. Regardless, you’re not alone.
Starting out in the cryptocurrency world can be intimidating. So, with help from Nichel Gaba, the CEO and Founder of PDAX, a Philippine-based cryptocurrency trading platform, we break down the basics for you.
Also read:
The Concise, Non-Boring Glossary for Cryptocurrency Newbies
Cryptocurrency in Simpler Terms
“The simplest explanation,” says Gaba, “is that it’s money in digital form.” But, he goes on to explain, unlike your Lazada wallet or GCash account—which show you amounts that represent paper money—cryptocurrency lives entirely in the electronic realm.
What makes this detail appealing to the tech-savvy is that you can realistically start with no money, and then do enough work to earn digital tokens such as Bitcoin (as of writing, 1 Bitcoin = P1.6 million). This isn’t beginner territory, but in short: much like how a miner can find gold in the crook of a bedrock as long as they have enough stamina, knowledge, and luck to get the task done before anyone else, those with the right tech equipment and resources can similarly “mine” for cryptocurrencies like Bitcoin. This kind of mining takes entire factories’ worth of electricity to do, though. So it’s probably not the way the average person would get into the cryptocurrency trade.
Cryptocurrency's Worth in the Real World
Let’s go back to the analogy with gold. Gaba says that the value of the precious metal is two-fold: its utility (the fact it can become a beautiful wedding ring, for instance), and its scarcity (gold doesn’t just fall from the sky or wash up on shore). Gaba says that the reason investors flock to gold during times of financial crisis isn’t because they want more wedding rings, but because its scarcity will ensure that the amount they have invested in gold will retain its value.
When it comes to cryptocurrency, there is no real utility (you can’t wear Bitcoin, for one). But, keeping in mind how difficult it is to mine, cryptocurrency is valuable for its scarcity.
In this sense, cryptocurrency isn’t imaginary play money the way Monopoly bills are. While it exists in the digital realm, it has real-world value. You can buy goods and services with cryptocurrency, you can receive it as payment, you can trade it for other cryptocurrencies, and of course, you can cash it in for conventional money.
How to Use Cryptocurrency
According to Gaba, you can get your foot in the cryptocurrency door by: 1) mining it, 2) receiving it as payment, or 3) using your conventional money to buy it. The most accessible way is to buy it.
Because cryptocurrency is not yet the main mode of making financial transactions, Gaba recommends looking at your purchase as an investment. In other words, approach it the way you would approach the stock market. This means you should not turn all your paper money into cryptocurrency. Instead, if you happen to have a healthy amount of savings, you don’t need the savings to be liquid (read: quickly turned into cash), and you have the ability to hold your investment (meaning, not sell) for the long term—then buying cryptocurrency might be a good fit for you.
In the early days of cryptocurrency, you would have to rely on shady peer-to-peer transactions. Now, there are legitimate platforms where anyone can set up an account to easily send, receive, and trade cryptocurrency knowing your wallet is protected by insurance.
Simply put: the easiest first step is to create an account on a cryptocurrency trading platform. From there, Gaba says, “You can start trading in three minutes.” For him, the quickest way to learn is to jump right in. You will learn a lot more by using such platforms, than by just reading about them. But the basic principle of market success remains: try to buy at a low price and sell at a high price.
The Cryptocurrency Trading Platform to Use
What’s best for one person might not be best for you—so look around and see which of the many options fit your needs. Consider what currency you have available to you, what kind of security assurances you need, how much you are willing to invest, and what kind of cryptocurrency you want to buy.
That said, there are a few benefits to working with Philippines-based platforms. For one, a lot of the more well-known international platforms do not accept Philippine pesos. Meanwhile, on local platforms like PDAX, you can top up your account by stopping through your neighborhood 7-Eleven, the same way you’d buy load for a prepaid phone.
Secondly, on homegrown platforms, you can rest assured that transactions are occurring under the watchful eye of the Bangko Sentral ng Pilipinas. Long gone are the days where you had to navigate the Internet’s financial underbelly on your own.
Thirdly, and perhaps most exciting: you can start your cryptocurrency investment journey without breaking the bank. On PDAX, Gaba says, you can buy a fraction of a Bitcoin for a minimum of P300. This means that anyone with P300 to spare can get started.
Finally, local platforms are competitive in giving you access to a wide range of cryptocurrencies. While there are 10,000 cryptocurrencies in existence, only about 10 (including Bitcoin and Ethereum) have really seeped into the public consciousness. Still, Philippine-based platforms like PDAX have over 60 cryptocurrencies to choose from. Plus, in PDAX’s case, the company does its due diligence to research the cryptocurrencies they add to their platform, ensuring they provide value to the users.
The Drawbacks of Investing in Cryptocurrency
As with any investment, buying cryptocurrency comes with some risks. The most prominent one is that its value is incredibly volatile—meaning its worth rises and falls very quickly (think of the overnight millionaires, and the overnight paupers). Gaba himself admitted having to limit the amount of times he checks the cryptocurrency market throughout the week, since the quick highs and lows cause too much emotional whiplash. “If you look at the PDAX app, the price [of cryptocurrency] updates very frequently. I used to play daily, but then because of how fast the market moves, it just affected me emotionally. At least in my case, I just bought a lot of crypto and I held. And I’ve been holding ever since.” Again, this is why the PDAX CEO recommends you buy cryptocurrency if you can handle holding your investment for the long term. This way you can weather the lows until they cycle back to a price you’re happy with.
Gaba also adds that not all cryptocurrencies are equally volatile. Bitcoin is notorious for taking its investors on a rollercoaster ride. But USD Coin, a cryptocurrency pegged to the US Dollar is known as a “stablecoin”—making it better suited for people who want to use cryptocurrency to pay for everyday things.
Another drawback is cryptocurrency’s effect environmentally. As we watch the planet break natural disaster records year after year, people—especially in the Philippines, where the effects of climate change are right outside our windows—are increasingly interested in practicing environmental sustainability. The energy-draining way a lot of cryptocurrency is mined may not align with a lot of people’s values.
However, Gaba reassures us that there isn’t one monolithic cryptocurrency mining industry. “I liken it to cars,” he says, “While there are some gas guzzlers, there are other options that are less energy intensive.” He adds the hopeful note that the technology behind cryptocurrency is innovating with sustainability in mind.
Is Cryptocurrency Here to Stay?
While he can’t say for sure that average people are going to be buying groceries in DogeCoin someday soon, Gaba is a firm believer that in the next five years, the world, including the Philippines, will be using the technology behind cryptocurrency—blockchain—to make systems run more efficiently.
To define it quickly: Gaba describes blockchain as a publicly shared Google Doc recording a host of transactions—everyone can have access to it, but it’s not saved in one location. “[Blockchain] is similar to a very large Google sheet where everybody can refer to the same thing, but the Google sheet itself is not saved on any particular person’s computer. So Blockchain is decentralized in its storage [and] in its administration. There’s no one party that can just delete the Google Doc or make changes to it without anybody seeing. So that’s the decentralized part. But, it’s publicly accessible in that everyone can use the information that’s on the Google sheet. So that’s why, when describing the Blockchain [it’s called] a public decentralized ledger.” This is different from banks and government agencies, where the information is stored on their central databases.
Whether or not we give up conventional money in lieu of cryptocurrency is yet to be seen. However, the technology behind cryptocurrency, at least according to Gaba, is the future.
[ArticleReco:{"articles":["86597","86592","86588","86595"], "widget":"Hot Stories You Might Have Missed"}]
Hey, Spotters! Check us out on Viber to join our Community and subscribe to our Chatbot.
Source: Spot PH
No comments:
Post a Comment