There’s a mad rush going on right now throughout Asia over the popular online “cryptocurrency” known as Bitcoin. Armchair investors in places like Japan and South Korea are stocking up on Bitcoin with the belief that doing so will bring them mad returns. But many of them don’t realize that investing in Bitcoin may not lead to the payout boon they expect.
Though it’s experienced a 150 percent surge in price since the beginning of the year, Bitcoin’s value is volatile. Some days it jumps up 25 percent, for instance, while on other days it drops by the same amount. Knowing what it’s going to do next, in other words, isn’t for the faint of heart.
But for some reason, millions of so-called “Mrs. Watanabes” – this being a metaphorical term for Asian housewife investors who feel as though they’ve struck gold for the future of their families with a new investment – are jumping on the Bitcoin bandwagon. Even though they don’t know very much about Bitcoin, they’re convinced that the peer-to-peer digital currency is the greatest thing since sliced bread.
According to reports, thousands of Mrs. Watanabes are investing in Bitcoin, which has driven up prices immensely. They aren’t using Bitcoin as currency as it was intended, either. They’re looking to it as a currency savior in the event that fiat currencies go south, leaving millions of families without the nest egg that they anticipated upon retirement.
It’s difficult to anticipate any potential risks, though, when Bitcoin has already nearly doubled in value over the past year. When compared to the 17 percent increases seen in Asian stocks over the same time period, Bitcoin is the siren’s call of a better future for folks hoping to achieve financial independence and a secure retirement.
“After I first heard about the bitcoin scheme, I was so excited I couldn’t sleep,” stated Mutsuko Higo, a 55-year-old Japanese social insurance and labor consultant to Reuters. Higo recently purchased the U.S. equivalent of about $1,800 worth of Bitcoin to supplement her retirement savings.
“It’s like buying a dream. Everyone says we can’t rely on Japanese pensions anymore. This worries me, so I started buying bitcoins.”
There’s a volatility to Bitcoin that people like Higo don’t seem to fully understand, however. Prices are all over the place as speculation from various parts of the world drives them up or down. While Bitcoin is expected to continue rising in value in the long run, the short-term nuances combined with the intricacies of how the currency works means that being properly educated is step one.
But many of the people investing in Bitcoin don’t have a clue about what it even is, let alone how it functions. Beyond this, the rules governing the Bitcoin trade, especially in places throughout Asia, are patchy at best, which means investors typically carry more risk than they realize.
In South Korea, for instance, a cryptocurrency pyramid scheme bilked thousands of homemakers, workers, and self-employed businessmen out of about $55 million. Similar scams are popping up in Japan and Hong Kong as well, which is why savvy investors and people in the know are warning the public: Be careful.
“Trading carries huge risk,” says Leonhard Weese, president of the Bitcoin Association of Hong Kong and a Bitcoin investor. “There is no investor protection and plenty of market manipulation and insider trading. Some of the exchanges cannot be trusted in my opinion.”
Read more news about the rise and fall of Bitcoin at BitRAPED.com.
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