Rarely has the world been more divided than on the game of thrones final and investment in cryptocurrencies. Some swear by it and still others on people who swear by it. Given that Elon Musk’s sneeze may decide Bitcoin’s rate tomorrow, why invest in an asset class prone to extraordinarily high levels of volatility?
“Encrypting is easy”
“I can start investing sitting in the toilet in the next 10 minutes,” says DR, who invested about $200 just over a year ago. “All I have to do is go online, watch a few YouTube videos and decide what to buy,” he explains, adding that crypto works well with tech-savvy people who don’t like not the forms or who do not go to places to open an account.
“Crypto is very easy to invest. Just install a little app and you’re good to go,” says ANC, which invested around $2,500 over a year. “I haven’t invested more than 10 coins at any time. Right now I’m holding four to five. Invest the money you’re happy to lose,” he says, adding that he thinks crypto attracts mainly millennials.
A roller coaster ride
“I invested $500 in a coin called Solana when it was at $26 at the start of 2021,” an investor explains. “It went to $54, went down to $26 and finally hit $260,” he says, explaining the volatility inherent in investing in cryptocurrencies.
Some compare it to a bubble and a Ponzi scheme while others see it as an inflation hedge that can yield big profits
After the May crash, he lost about 70% of his $6,000 investment. Eventually the value of the coins increased and he was able to recoup his investment and then make a profit.
“I have two accounts: one that I plan to keep for the next three to four years, and the other for daily trading,” says FA, who invested $1,200 across 10 coins. “We are all stuck. When I bought Bitcoin, it was at an all-time high,” he says, admitting he has yet to make a profit.
“I have never been interested in investing in the stock market. A friend was trading crypto, he told me about it, I had funds on hand and it was easy so I invested. Second, I can use my own research to invest. I watch YouTube videos, follow accounts on Twitter, and read articles on websites,” he recounts his crypto journey. “I invested $100 in Waqar Zaqar’s TenUp, but right now it’s worth around $80,” he laughs.
“Although Bitcoin is king, it is too expensive to buy. Better to invest in coins that we can afford and have the potential to yield many times over,” says another investor, while giving the example of Bloktopia – a cryptocurrency that sells for around 2 cents “The team behind a cryptocurrency is what matters. While Blok has almost no value right now, it can pay off multiple times.
Lots of variables
“You can’t invest in PKR,” says DR. “First, you need to transfer to someone in rupees and buy a cryptocurrency – USDP (USD partners) is the most commonly used. The rate you get depends on the exchange rate at that time. Usually , USDP is Rs 10-12 higher than the current dollar value.
“The amount of USDP purchased also makes a difference. For example, if I want 1,000 USDP, I can get a rate of Rs 184 but if I want to buy 10 USDP, I can get a rate of Rs 193. The higher the amount of the purchase is small, the more expensive it is.
Some investors keep spreadsheets where they record what was bought, at what rate in terms of USDP, the exchange rate at that time and the current value in rupees to gauge where they stand in terms of profitability. A portfolio has a different value every day given all the variables with returns fluctuating daily.
“I started investing in stocks in 2011, but I couldn’t earn a single penny,” CB says while cursing Pakistan Stock Exchange (PSX). “I bought blue chip stocks that lost 50-60% of their value which they never recovered. Eventually, after successive losses, I pulled out of PSX. Over the past decade, I haven’t seen anyone really benefit from investing in stocks in Pakistan because it’s controlled by a few bigwigs and a small investor can never win against them,” he says in response to why not invest in the PSX instead.
Disillusionment with the stock market and the ease of opening an account are the main reasons given by investors for opting for crypto. Some compare it to a bubble and a Ponzi scheme while others see it as an inflation hedge that can yield big profits.
The Pakistan Fintech Association supports State Bank Governor Reza Baqir’s position that there are more risks than benefits. In a statement, he said: “No association or industry should think that it is above and beyond the economic sovereignty and prosperity of Pakistan. Transnational ambitions for short-term gains in speculation and fluff valuations will eventually tarnish the image of the fintech industry.
“Our ambition is to grow up in Pakistan, we live here and Pakistan will be written on our tombstones. The massive capital gains that are outside of Pakistan but obtained through working in Pakistan are treacherous and these crypto fads are an easy source for pump and dump cowboys.
According to the October 2021 report by Chainalysis, Pakistan is among the top three countries in the 2021 Global Crypto Adoption Index. cryptocurrency received. The general perception is to jump on that groovy bandwagon where fortunes can be made almost overnight.
When talking to small individual investors, however, a different picture emerges. In an age of rampant inflation and eroding currency values, people are looking for ways to easily invest and protect small amounts. Any instrument that can promise to do so, tax-free, seems like a panacea for financial problems. And hence, crypto investments continue.
Posted in Dawn, The Business and Finance Weekly, January 21, 2022