“Invest in bitcoins only if you have something extra to spare, something you can afford to lose,” he said.
Fong, who is the founder of security services firm LGMS, said he personally would not invest in the cryptocurrency because it’s not based on anything tangible.
“Essentially, the bitcoin has become a religion because people believe the values are assets and that is why the value appreciates,” he said. “But in essence, it is based on nothing. If you believe it is worth 20,000, it will be worth 20,000. If you believe it is worth zero, it will be zero.
“If one day the belief system collapses, the whole game will collapse.”
However, he said he believed the price of bitcoin would continue to shoot up for the moment and he advised those thinking of joining the bandwagon of investors to first study the currency’s mechanism.
“A lot of people don’t know how bitcoin works and blindly invest in it because their friends told them to.
“The funny thing is that a lot of people are saying they are making money from the bitcoin. They have been holding bitcoins and are still holding on to them. If you don’t sell anything, you are not really making any money.
“People have this misconception that they are making passive income or direct income from bitcoins. They are not making any money. They are just holding on to a hope.”
Despite warnings from central banks, the bitcoin wave has been sweeping the world and has reached Malaysian shores. Increasing numbers of Malaysian companies have begun accepting bitcoin payments and investing in the currency.
Fong said the volatility of bitcoins was another factor that potential investors should consider.
He pointed to what transpired following the CME Group’s launch in the United States of the Cboe Options Exchange, the largest futures exchange in the world.
“Just within 24 hours, the futures market was suspended two times due to the volatility of the bitcoin,” he said.
He also said it would be a mistake to assume that one could make a lot of money through bitcoin mining.
“Mining bitcoins has become so expensive that it is virtually impossible to make money out of it unless you have a server operating in Mongolia or Szechuan and are able to get cheap electricity,” he said.
http://www.freemalaysiatoday.com/category/business/2017/12/13/bitcoin-hits-another-record-high-in-march-toward-us20000/.
Bitcoin loses over a fifth of its value in less than 24 hours