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Bitcoin

Bitcoin, released to the world in 2009 by a person or people called Satoshi Nakamoto, is not backed by a central bank or a government and is seen as an alternative payment system. In February 2013, Bitcoin went into the mainstream as a monetary crisis threatened to bankrupt Cyprus, seen as a safer bet. Early adopters of Bitcoin have been richly rewarded as the price has soared – in one case, a young Norwegian bought a house from an $850,000 windfall on a US$22 investment.

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FINANCE

‘Better to gamble in Macau’: Hong Kong business students deem bitcoin too risky

PUBLISHED : Friday, 20 December, 2013, 10:32am
UPDATED : Saturday, 21 December, 2013, 7:53am

Students at a private business college say they will not invest in bitcoin because the future of the digital currency is still unclear.

"The currency is not regulated," said Jimmy Hui Yuk-ming, a final-year business administration student at Hang Seng Management College.

"Some say bitcoin's value is decided by the market, but who's going to back it up? Speculators earned when its value soared, but they've since cashed out. For those still keeping bitcoin, I'm not optimistic."

Another student, Victor Tsang Kei-yin, described speculating on bitcoin as "dangerous".

"If you want to speculate, it would be better to gamble in Macau," he said. "Buying bitcoin is like investing in a game of digits using real money. But behind the digits, the value is nothing."

Since bitcoin was established in 2009, the value of the virtual currency has seen large fluctuations across trading platforms.

Speculators have been profiting from the currency's roller-coaster volatility, but some lost out when the People's Bank of China banned third-party payment providers from dealing in it earlier this month.

The bank ruled that no financial institutions, payment agencies or insurers should trade or transact in the digital currency.

Hong Kong's secretary for financial services and the treasury, Professor Chan Ka-keung, reminded Hongkongers that bitcoin was "not qualified to become an electronic currency".

Student Rex Lai Tat-shing said: "What we should do is value investment. For example, when investing in stocks, we should analyse the company's performance based on our knowledge."

Hui, Tsang and Lai are the leaders of three groups in an exchange-traded-fund (ETF) investment competition, organised by the Hang Seng Management College and the Deutsche Asset and Wealth Management.

Each group, comprising five students, is given a virtual capital of HK$500,000 to invest in ETFs for three celebrity clients, each from a different background and with a different investment goal.

The competition, which started in September, will wrap up at the end of the month.

The criteria for victory is based on the rate of investment return as well as the team's investment analyses and use of investment strategies.

The winning team will be awarded scholarships and be invited on a study tour to Europe.

Dean of the college's school of business Professor Raymond So Wai-man said the students did plenty of in-depth research before they made their investments during the competition.

"This is consistent with what we call fundamental analysis, and they learn the practice in addition to textbook knowledge," he said.

The students said that many young investors tended to get involved in several investments, hoping to make fast money, without engaging in the proper level of research.

Marco Montanari, Deutsche's head of passive asset management for Asia-Pacific, said he was pleased to see students allocating significant time to reviewing their portfolios through studying international affairs and market trends.

Video: What's Bitcoin and how does it work?

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This article is now closed to comments

mercedes2233
Couldn't SCMP find more credible people to comment on Bitcoins? Why are the views of these students illuminating?
jmscscmp
the guys in the picture all look like massive tools
blue
I think business student and tool goes hand in hand.
sonkit
Few cents from me on the topic of value. Clear things up, consider Bitcoin as two systems, a payment network, and bitcoin the commodity (or currency). Why Bitcoin the commodity has it value is highly depended on the payment system. Bitcoin the payment system offer some advantage over traditional payment methods like having near zero fee on all transactions, a public ledger of transaction that could be verified, transaction dealt with publicly or privately as you like, no capital control and no ridiculous money printing, all secured by maths. This is the utility value that the payment system has. And in order to make use of these advantages, you have to use Bitcoin the commodity. Thus the utility value of the system is reflected on the commodity. Thereby it was given an intrinsic value by people who trust it.
Mentioning of intrinsic value, it is a relative concept that comments on value that people give an object. Nothing on this world is "born" with intrinsic value. Gold, in long time ago, is just a piece of stone that look nicer than other, but until people recognise the characteristics of it, it was given an intrinsic value. I am sure that Gold has nothing do on hoarding and a tiny amount of them for jewellery, we got a tiny utility value here. But it is where people gave it an intrinsic value, it worth what they think.
Good luck holding your USD/other fiat, nothing more than you trust and you get value on it, kinda like how santa works.
likingming
"all secured by maths"
1.) Is it really secured enough this way?
2.) It is in competition with other virtual coins which could be unlimited !
3.) The rapid fluctuations of its values make it an inappropiate medium of exchange !
sonkit
1: Code is open source, you can review the code, you can tweak it and make your own coins. Here it brings to the next point
2: SInce it is open source, you can see the code and make your own coin like MingCoin, and in fact there are like 200 kinds of these copied coins with different alglorithm, different variables on production rate, coins limit. Bitcoin has value because people belief that it has intrinsic value. Of course the core software of Bitcoin worth something, but you have to look at other perhiperals like community that accepts Bitcoin, service that are dedicated for Bitcoin. With comparason to commodity like precious metals (or non-precious one). Gold has a limited supply, but with all the other materials with other properties and different uses and how people values it, it doesn't make Bitcoin unlimited. Like MingCoin can have a supply of 1000 per second and thats MingCoin's business. Bitcoin might not be the winner in the future, might be other coins with more innovations that replaces Bitcoin.
3: True, though there are service like BitPay, where payments are immediately converted to fiat currency if the merchant wishes.
Also consider places with capital controls, they can buy Bitcoin locally and no one knows and the banks can't charge ridiculous fees (extreme case like Argentina, for forgien transaction cut 35% tax). Also it is irreversible, it solves the chargeback problems for merchants.
Anything I might be wrong please correct me on that. Thanks.
genekim
This is news? Who cares what a bunch of business students think?
sonkit
This should rather be in the "comment>Insight option" section. Students are people who have read things off the book, they haven't experienced much in the reality. Moreover Bitcoin is rather hard to find similar technologies to compare with nowadays, what they can compare is the price and they would say it is bad coz it grows too fast.
Every portfolio should have a diversified investments. Low risk and high risk, with corresponding return, clearly. If you put all eggs in the same basket and you failed, thats your fault, not the basket. Bitcoin as an emerging technology for payment system, it would either be worth a lot or nothing. And this is should also learn, understanding the basic and balancing the risk.
jd.salinger.3154
I can understand your sentiment but I'm afraid you might have missed the point of this typical SCMP-style disingenuous/hollow article. The true purpose is probably this: "OMG! We have these smart business students in Hong Kong working with Deutsche Bank and they know all about ETF and Bitcoin! Next, we will be sending them to further 'study' in the FANTASTIC (but down and out) EU so that we can pick their brains!"
.
Sometimes, being surrounded by phonies may be the only way to find out whether you are on the right path, or not.
genekim
You hit the nail on the head with your first sentence. It's weak journalism. Everyone wants to read about Bitcoin and this is the best the SCMP can do. Their other article about Bitcoin today is a series of interviews with small time speculators- just one step above printing anonymous Weibo tweets on the subject. There are a lot of other angles to cover concerning Bitcoin, many of which are actually news.

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