Cryptocurrencies are still among the riskiest investment vehicles. They are non-tangible assets worth exponentially more than their collective weight in bandwidth. Slowly but surely, there are many in Malaysia that are including them in their investment portfolios. Here is, by no means an exhaustive list, that gives an overview of how the local crypto scene is shaping up for the future:

1. THERE ARE CRYPTOCURRENCY EXCHANGES. BUT NOT MANY OF THEM

Most will find buying Bitcoin and other altcoins quite a hassle in Malaysia because the infrastructure isn’t quite as established as compared to Singapore’s for instance. There’s only one Bitcoin ATM in the country and it’s in Ipoh – let’s hope that it’s plugged in.

Cryptocurrency ATM in Ipoh

There’s a lot of friction when it comes to injection and withdrawal of Ringgit denominated funds from local banks. As such, easily, the most accessible exchange is Lunowhere  Bitcoin is available for purchase now.Recently, the Bitcoin startup raised USD9 million in new funding courtesy of a London-based VC firm. Coinhako is also a safe(r) bet and is operated by a Singaporean startup that also allows users to purchase Ethereum (ETH) before hopping over to Bittrex or some other more robust digital currency exchange. Of course, there are others like Remitano) and LocalBitcoinbut they are essentially trading pits and as such due diligence must be done by both buyers and sellers.  

“I got started as a lurker on internet forums such as Bitcointalk.org and gradually moved on to trading on exchanges and with other enthusiasts,” explains Alex Wong of his evolution as a trader that is typical of how many locals acquaint themselves with Bitcoin and eventually more adventurous altcoins.

“Almost 70% to 80% of my internet transactions are now donethrough Bitcoin, Ethereum and Litecoin,” Wong adds. “I’ve since joined Telegram groups and attended many crypto seminars and conferences in Vietnam and Philippines and they seem to be ahead of the curve compared to us. In my opinion, we were a little obsessed with mining and tagging along for a quick buck. Adoption came later when many took notice of the soaring prices.”

2. THERE ARE CRYPTOCURRENCY SCAMS (AND CRYPTO-SCAMMERS). MANY OF THEM

Scan through Bank Negara Malaysia’s Financial Consumer Alert list of unauthorised companies and websites. You’ll find that there are fraudulent companies masquerading as investment firms that include cryptocurrencies as part of the strategic repertoire to earn members a fast Ringgit – be it through an index-linked fund, the purchase of pooled mining contracts or even outright purchase of coins and tokens issued by the company.

One such member, when interviewed, proudly trumpets it a means of “increasing your wealth to last your entire future by spending just an hour with me.”  It is worth noting the company he is a part of has a structure that resembles a Ponzi scheme and now sits proudly in the top 10 of BNM’s equivalent of the Billboard Hot 100. Ironically, he too was quick to point out that there are “a lot of scams out there and a lot of people desperate to make some quick cash because times are hard. So please be careful.” Go figure.

As a result, rampant multi-level marketing operators have given cryptocurrencies a bad name in Malaysia. “Given cryptocurrency’s non-legal (it’s not illegal, but exists in a grey area) status, many people are unable to access recourse mechanisms,” says ACCESS Blockchain Association Malaysia’s vice president, Suraya Zainudin. She is also the Malaysian country manager of Wirex, a Bitcoin debit card company. “Some of these Ponzi recruiters are also not based in Malaysia or operated by anonymous entities, making it harder to get justice. Nevertheless, I think the scene has matured to a degree with more knowledgeable individuals who have most passed being easily misled by confidence tricksters.”

3. THEY CAN’T KEEP A GOOD INITIAL COIN OFFERING (ICO) DOWN

If something is too good to be true, it usually is. And that’s where it gets more complicated than monthly forking. There are quick cash grabs and pump-and-dump gigs where literally anyone can raise funds with an Initial Coin Offering (ICO). Still, there exist pools of prospective buyers waiting on the sidelines. Their relatively lower prices present great value with potentially exponential high capital value upside. Demand levels have never been higher even as BNM has until the end of the year to decide if alternative cryptocurrencies (including ICOs) should be regulated or banned.

Unfortunately, a legitimate and operationally viable ICO initiated by a local team is a rare find. This is compounded by the fact that oversupply is suppressing funds raised even as the trend has yet to bottom out.“There are a few ICOs done by Malaysian teams that have well-written white papers and a working product before launch,” elaborates Suraya. “On the other hand, there are also Malaysian-based blockchain projects that are internationally respected such as Etherscanand CoinGecko.”

4. CRYPTOCURRENCY WALLET SECURITY IS (STILL) AN ISSUE

Navigating the barrage of options when it comes paper, hardware, desktop, exchange, smartphone wallets is proving to be taxing to casual dabblers. “I just keep it all in the exchange and hope for the best,” admits one cryptocurrency owner who does not wish to be named for obvious reasons. “It’s just too hard to keep track of where I’ve stashed everything and, more importantly, how to transfer them back to the exchanges securely.” A small sample size of six in ten Bitcoin and altcoin owners did not take any precaution towards safeguarding their new-fangled assets in a digital cowboy town where the sheriff is often in cahoots with the outlaws.

“I’ll take the necessary measures when I start to accumulate more cryptos,” mentions another individual who Ringgit averages as a Bitcoin buying strategy but lets it sit in a pile on the bar counter of his exchange. And judging from similar sentiments echoed by many interviewed, the lack of contraceptive measures is attributed to not just a steep learning curve but the universal fact that a life lesson in investing requires being scalded occasionally in the name of diversification. And we have yet to have a Mt. Gox of our own to scale on a national level. Our suggestion: keep it somewhere safe. Now.  

5. NO LIMIT IN SIGHT FOR CRYPTOCURRENCY GROWTH

Like the trajectory of Bitcoin, the community is growing. And like watching a football match at your local watering hole or mamak, there’s an exhilaration in stalking World Coin Indexwith like-minded individuals who have also placed their bets. There is also a notable shift in interest from traditional core markets due to stagnation and affordability factors – anyone with Ringgit to spare can join in the fun. Overall, there’s a healthy demand due to strong underlying factors and sentiments, which will continue to support the market here even as the Ringgit plummets to new lows in an arduous drawn-out economic recovery that seems to be decelerating.

“I think the growth is positive as the community grows stronger and the number of service providers targeting Malaysians increase,” says Suraya.  “I’m pleasantly surprised by the strong community spirit. We have actively helped newbies to get started and avoid scams.” If one possesses the funds or even a favourable leverage position, the outlook is that the ability to HODL (Hold on for dear life) is a realistic approach to take even as Bitcoin alone mutates in size to surpass Malaysia’s foreign reserve in market capitalisation. “Cryptocurrencies are still considered high-risk,” she adds. “I would advise individuals to not invest more than what they can afford to lose.”