5 Thing to Know About Cryptocurrency in Malaysia

Kali terakhir diperbaharui December 27, 2022 oleh Hariz Hafiz
5 Thing to Know About Cryptocurrency in Malaysia

The popularity of cryptocurrency in Malaysia is really as many investors are starting to get involved in this investment. This article will explain what crypto is and four more things that will help you understand what crypto is before you consider whether to make this investment or any other low-risk investment.

Cryptocurrency in Malaysia: Is Crypto Investment Worth the Risks?

In general, the adoption of this crypto is divided into two perspectives by financial and investment experts. Some argue that this is the ‘money of the future’ that will continue to grow. Another perspective thinks that this crypto is worthless because its value is unstable and is purely speculative like NFTs.

In November 2021, Bitcoin which is the most valuable cryptocurrency reached its highest value of $69,000 (RM303,462) per unit. Nevertheless, on June 14, 2022, bitcoin experienced a sharp decline of more than 67 percent, making its value only around $21,000 (RM92,358). This shows that the value is not yet stable because it can go up and down at any time. Here are five important things you need to know about crypto:

1. What Is Cryptocurrency?

Basically, cryptocurrency is a new investment and its concept is not the same as the investment concept that has existed for a long time such as ASB dividend return, real estate investment and so on. For you to understand what crypto is, there are three important elements you need to know which is the meaning of crypto itself, the meaning of blockchain and the meaning of cryptography.

Cryptocurrency is a form of digital currency that is used as a transaction medium and it relies on blockchain technology. You can compare this concept of crypto more or less the same as the concept of real currency. The main difference is that crypto does not exist in physical form like paper money and coins.

In addition, crypto does not have a central authority such as the National Bank that controls and monitors all matters regarding money, credit cards, CCRIS scores, CTOS scores and so on. Crypto operates on its own because it is a decentralized digital currency and exists outside of traditional banking. It relies on blockchain and cryptography.

What Is Blockchain?

You may be wondering what blockchain means. To make it easy for you to understand, all crypto transactions depend on the blockchain which is a public ledger or open ledger that records all transactions between investors. In other words, blockchain is a form of digital record keeping that displays a transaction ledger that is permanent and cannot be changed or manipulated.

On the blockchain, you will find there will be a lot of code. For your information, cryptocurrency uses cryptographic techniques or cryptography to work. This technique is said to be safer and more transparent.

What Is Cryptography?

In short, the meaning of the word cryptography itself means “secret writing”. Cryptography is a method that protects information and communication through the use of codes. With this method, only the giver and the recipient can read and understand the code that is delivered. Cryptographic techniques ensure that transaction activities between crypto investors remain secure and hidden.

how to buy crypto in malaysia

2. How Does Cryptocurrency Work? What’s the Difference Between Crypto and Banks?

Now you know what cryptocurrency is, but what about how crypto works? Cryptocurrency units are created through a process called mining. Before, you may have heard about Bitcoin mining or crypto mining but maybe you don’t know what mining means in the context of cryptocurrency.

What Is Crypto Mining?

In a nutshell, mining involves the use of computer power that generates crypto coins such as Bitcoin. Crypto mining has two goals which is to generate new cryptocurrencies and verify the authenticity of cryptocurrency transactions on the blockchain chain. Anyone who has a stable internet network and a mining machine such as a mining rig, and a graphics card can become a crypto miner.

As mentioned earlier, the idea behind the concept of crypto is decentralized and it does not have a single financial institution that controls it. This allows you to make transactions without going through a third party such as a bank. How do you make a transaction without a bank?

The idea of crypto is that you don’t trust one party, the bank. Instead, you trust many parties in the blockchain. That’s why crypto is often called a transparent transaction. This way, there will be multiple copies of the transaction record and this makes it difficult for someone to cheat in the transaction because everyone has a copy of the transaction record.

For example, if you try to change the ledger such as changing the value of a transaction and it will not match the other records in the blockchain. As a result, this transaction will be rejected. Briefly, the following explains the difference between crypto and traditional banking:

For example, let’s say you are in a sports shoe store and you want to buy a pair of shoes worth RM400.

Bank TransactionsCryptocurrency Transactions
You use a bank card to pay the sum of RM400. The way this transaction works is:
1. You swipe the card or enter the pin number, then wait for a signal whether your payment is approved or not by the bank.
2. When the payment is approved, the bank will update the records showing the money transferred from your account to the account of the sports shoe store.
You use cryptocurrency to buy the same shoes. The way this transaction takes place is as follows:
1. You transfer certain crypto values to the store. Blockchain will determine if you have enough funds.
2. When the transaction is approved, the record of this transaction can be seen through the blockchain in the form of cryptography by all investors because the blockchain is a public ledger or open ledger.
cryptocurrency malaysia

3. What Are the Benefits of Cryptocurrencies?

Why is crypto popular? No matter the value of crypto goes up or down, it is always a hot topic in finance. Some of the world’s biggest brands now accept Bitcoin digital currency in the United States, including Microsoft, Paypal, AT&T and Starbucks. This crypto is also used as the main transaction medium in the Metaverse world. In addition, many names of cryptocurrency companies are starting to get involved as sponsors in the international sports industry. Millions of dollars of investment have been made into the Formula One industry, soccer, UFC and more.

The main advantage of cryptocurrency is that it is based on blockchain technology and does not depend on a single financial institution. Here are the advantages of cryptocurrency that make many people interested in investing:

Identity Concealed

Cryptocurrency transactions can be conducted anonymously. This is good news for users who want privacy.

Transparent

Although your identity is kept confidential during the transaction, the data will be recorded on a public ledger that uses blockchain technology. This means that the data is transparent and can be seen by the public at any time.

Decentralization or Decentralized

Cryptocurrencies are not issued by a central bank or backed by any government so far. This means no intervention from the government or influence from monetary policy.

Potentially Profitable

Investing in crypto is inherently high risk but it is capable of generating high returns. For example, in 2021, the value of Bitcoin will more than double.

4. What About the Cons of Cryptocurrencies?

Although crypto has its own advantages, you need to be careful because there are some disadvantages or major drawbacks that will make you think twice before starting to invest. You must have been with the value of crypto falling and many suffered terrible losses due to crypto before. Here are some of the disadvantages of crypto that you should know before investing:

Uncertain Investments

While cryptocurrency prices can soar high, they can also fall to rock bottom values quickly. For example, the value of cryptocurrencies like Bitcoin can change quickly, so some people don’t feel it’s safe to exchange real money for Bitcoin.

Not Suitable for Long-Term Investment as of Now

Oleh kerana pasaran kripto ini masih baharu, tidak siapa yang boleh menjangkakan perkara yang akan berlaku. Jadi jika anda ingin membuat pulangan yang stabil, ini mungkin bukan pertaruhan terbaik. 

Other investments such as gold investments and ASB investments have proven to be a good long-term investment but what about crypto? No one really knows what will happen to cryptocurrencies in the near future. Therefore, investors need to be brave because the decisions made may be based on trial and error.

Vulnerable to Crypto Scams

Cryptocurrency also does not escape from scam syndicates. Scammers often use platforms like Facebook, Instagram and Twitter to get people to invest and cheat using certain tricks. Usually, their targets are new investors who don’t have deep knowledge of cryptocurrency.

No Control Center

The cryptocurrency market is unregulated and there are no rules or policies in place to protect you. If, most companies or many users switch to a new cryptocurrency from you or stop using the digital currency entirely, your cryptocurrency will become worthless.

5. What Types of Cryptocurrency Are There in Malaysia?

There are many options of crypto types that you can invest in. Here are some of the types of crypto you can invest in Malaysia:

  • Bitcoin
  • Ethereum
  • XRP
  • Litecoin
  • Bitcoin Cash
bitcoin malaysia

Should You Start Entering the Crypto World?

Remember, crypto investment is a high-risk investment because its value can fluctuate up and down very quickly. Therefore, knowledge about what cryptocurrency is really important and you are advised to get financial advice from a financial planner so that you can evaluate yourself and be able to make a better decision before getting involved in the crypto world.

Also, if you are looking for cheap and best car insurance, visit the Qoala website for more info. Qoala also offers the best motorcycle insurance and home insurance prices from several insurance companies in Malaysia. You can choose insurance according to your needs and budget.

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