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