On 22 November 2017, Co-Labs and CoinGecko hosted a full-house seminar entitled Blockchain in KL – Bitcoins and Smart Contracts at Utropolis Marketplace in Glenmarie, Shah Alam. Roughly half of the 200-odd crowd have already owned cryptocurrencies, while the other half were curious and wanted to find out more.
Here are summaries of the presentations by Luno, Wirex and CoinGecko, as well as summaries from the Q&A session that followed.
The first presentation was an introduction to Bitcoin by Mriganka Pattnaik, Countries Associate of Luno. He explained that conventional government-backed fiat money such as the Malaysian Ringgit is known as a type of centralised currency. On the other hand, bitcoin does not have a governing body and is a type of decentralised currency.
Bitcoin is the first successful cryptocurrency and remains the most popular among now thousands of cryptocurrencies in existence worldwide. Generated through mathematical computations and maintained by a network of computer users called ‘miners’, the value depends on supply and demand. Bitcoin was introduced via a white paper by an anonymous individual (or group) with the pseudonym ‘Satoshi Nakamoto’ as an alternative to the current form of money.
Anybody can send bitcoins to anybody else in any part of the world easily without restrictions. Unlike government-backed money which can be issued without limits, the supply of bitcoin is mathematically limited to twenty-one million bitcoins. That number cannot be changed (easily).
“Bitcoin is special because it is intended to disrupt banking systems. Not having a centralised system gives it a lot of power,” said Mriganka. “It is a little bit like gold, and a little bit like a credit card”.
Should One Invest in Cryptocurrencies?
The next presentation was entitled ‘Cryptocurrencies as an Investment: Should You Do It?’ by Suraya Zainudin, VP of ACCESS Blockchain Association (Malaysia), and Country Manager (Malaysia) of Wirex. Suraya started off her talk by discussing the various long-term and short-term ways to invest in cryptocurrencies and using bitcoin as an example. Long-term strategies include buying/holding and mining, while the primary short-term strategy is trading (similar to forex trading). Other ways consist of earning or being paid in cryptocurrencies, receiving as gifts and donations, as well as earning small quantities from faucets.
“Please remember to keep abreast of the latest news and tactics employed in scams. Even if a company looks legit, you still have to do a thorough check,” advised Suraya. “People who cannot stomach volatility are not advised to invest in cryptocurrencies, as fluctuations are common. If you invested all your life savings in cryptocurrencies, please cash out accordingly to your risk level and place your money elsewhere.”
Cryptocurrency investments are more suitable for people who want to diversify their existing portfolio of investments. It is also good for people with high digital security knowledge, and people who are tech-savvy and know how to use online tools.
“For security reasons, get a hardware wallet. If you use exchanges, spread your money around. Don’t put all of it at one exchange. Always keep up to date with digital security and current events,” she added. “And for Initial Coin Offerings (ICOs), as a general rule, if there’s no product, don’t invest.”
It is important to know that bitcoin and Ether are the ‘gateway cryptocurrencies’ to other cryptocurrencies. This means you have to get them first before able to exchange for other cryptocurrencies.
Demystifying Smart Contracts
The third presentation was an introduction to ‘Smart Contracts’ by TM Lee, Co-founder of CoinGecko. He explained that traditional paper contracts are usually created by legal professionals, based on rules that have been agreed upon. They are written in legal language, and dependent on third-party enforcement.
In smart contracts, the rules that have been agreed upon are automated in the form of lines of codes. The code defines the rules and consequences, as legal documents do. In the blockchain context, the code self-executes in the distributed ledger system. The data is stored in the blockchain.
Upon completion of agreed conditions, the codes will self-execute the contract thus promoting efficiency. For example, one may write self-executing contracts where a renter may receive house passcodes after transferring their rent money.
As a comparison, if blockchains provide distributed trustworthy storage, then smart contracts provide distributed trustworthy calculations. Designed as a smart contract platform, Ethereum stands out from other blockchain platforms for this value proposition.
“Smart contracts are good for notarisation, where we can verify whether a document has been tampered with. We can upload it to the blockchain for checking,” said Lee. “However, we must be aware of the smart contract bug. There was a real case involving ICO wallets using multisignature wallet for additional security, holding about $100 million to $300 million worth of Ethereum through fundraising. The owner killed it. It’s like locking a treasure chest, then throwing away the key. The funds cannot be accessed till a solution is found. We must be careful not to make the same mistake.”
Connecting the Dots
Bobby Ong from CoinGecko moderated a panel session after the three presentations and invited questions from audience members. One participant wanted to know if other platforms (other than Luno) were secure or reliable. Mriganka suggested that one should always do a good background check, such as looking for articles in the media, checking the founders of the exchange, and reading up on reviews of the exchanges.
Another member of the audience mentioned that Bank Negara (the Central Bank of Malaysia) has set some rules for cryptocurrencies and wanted the speakers to share their views on this matter. The speakers replied that Bank Negara had announced that it would release guidelines on cryptocurrencies by the end of the year, and the guidelines are expected to emphasise anti-money laundering and anti-terrorism financing. The audience was reminded by Suraya that different countries view cryptocurrencies differently depending on the context it is used (or misused) in the country. For example, China took the stance of banning ICOs as it was misused as a fundraising tool.
Another member of the audience wanted to know if there was any way to find out whether a cryptocurrency was legit or a scam. Lee replied that CoinGecko tries to list all publicly traded cryptocurrencies with all the relevant data, rather than just market capitalisation prices. However, he said that CoinGecko cannot assure traders whether a cryptocurrency is a scam or not.
The last enquiry was about the introduction of Bitcoin options and futures and if it will affect the future of Bitcoin. Lee clarified that the introduction of financial products is a way for institutional money to pour in. This will in turn provide more liquidity and stability. Mriganka added that most countries do not regulate cryptocurrencies, but Japan recently started the process, because there is a high volume of Bitcoin trading in Japan. When big money starts to come in, a country will want to regulate to protect its investors.
The moderator thanked the audience for their participation and closed the session with promise to host more learning opportunities in the future.