|Staff Reporter |||Apr 16, 2018 02:43 PM EDT|
Bitcoin and a host of other cryptocurrencies are taking the global markets by storm at the moment. And while the volatility of their values has provoked warnings from governments and regulators alike, they remain a hot property for investors.
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Many Asian countries have embraced cryptocurrencies, with important services appearing in a number of influential places. Here is a look at the frontrunners, and an assessment of how long this trend could continue to gain traction.
As a powerhouse of business and finance, it is no surprise that cryptocurrencies have been a big hit in some parts of Singaporean society. And when it comes to trading in popular currencies like Bitcoin and Ethereum, one of the most widely used exchanges in this city-state is Coinhako.
It has the main advantage of not charging for deposits, as well as keeping the vast majority of coins in 'cold storage'. This means that they are retained safely offline on hardware not directly connected to the internet, boosting security significantly. Add to that its fixed one percent transaction fee, and it is easy to see why it has risen to prominence.
Cryptocurrencies are not just for investment and trading; they are actually accepted as payment by organizations in Singapore and other parts of the world. It could also become common with online gaming providers like Casumo, allowing customers to top up their accounts with coins from the blockchain.
Always a supporter of new technologies, South Korea has taken advantage of the crypto boom in its own way, with the government tentatively putting its support behind plans to legitimize trading and exchanges.
There were some initial reservations on the part of politicians and regulators, with critics arguing that the cryptocurrency market is based on speculation rather than anything solid and would sap funds from more productive areas of the economy. But the lure of the blockchain which underpins Bitcoin proved too much to ignore.
The most prominent crypto exchange in the country is Bithumb, a service that has undergone massive revenue growth, and is even owned by a publically listed parent firm. It takes a minimal operating fee of just 0.15 percent, but has stiff competition from other exchanges including Korbit.
While trading in cryptocurrencies may be officially outlawed in China, the country is still hugely influential in terms of supporting the perpetuation of this marketplace. In particular, it allegedly provides the infrastructure to house vast Bitcoin mines where armies of servers work together to complete the cryptographic tasks necessary to create new coins.
One of the main reasons for choosing China as a place to mine for cryptocurrencies is that energy prices are relatively cheap there. So even if it costs tens of thousands of dollars a day to power the hardware, operators can still make a profit when they sell the mined coins for millions.
The exodus of crypto companies from China in recent months has helped further establish Japan as a major player in this market. Prominent exchange service Binance relocated to the country last year, following on from its own successful initial coin offering (ICO) earlier in 2017.
The Japanese government has actively sought to fuel the fledgling crypto marketplace, with policies that are favorable to traders and exchanges, rather than restrictive. This is not an approach shared in other parts of Asia.
The Chinese authorities have been clamping down on crypto trading for some time, with an outright ban introduced last year. The government continues to make efforts to prevent citizens accessing exchanges that deal in popular currencies, as well as the sites which promote ICOs.
Some argue that the $340 billion which has been wiped off the value of cryptos in the first few months of 2018 is largely as a result of the restrictions being placed on trading in China and other parts of Asia.
In spite of these efforts, many investors have simply shifted their activities to countries where regulatory rules are much looser. Japan and Hong Kong are reaping the benefits of bans being imposed in other parts of the continent.
Meanwhile, the efforts to put a stop to cryptos in China itself have a real benefit for the country in terms of energy use and environmental impact, while also dealing with the fraudulent schemes that are supported by them in many instances.
The government is concerned about the lack of transparency that is involved with blockchain-based technology as a whole, echoing complaints in other parts of the world that Bitcoin and its contemporaries are being used to carry out money laundering on a massive scale.
There are still a lot of uncertainties surrounding the future of cryptocurrencies in Asia. But it remains a hotspot for activity, irrespective of attempts to quash the growth of the market.
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