The Malaysian crypto investor
How I dipped my toes into crypto
Introduction
I started my crypto journey in the same way as many people did. I’m sure we all hear news about Bitcoin; how it started just over a year ago from about USD 10k, and hitting an all-time high (ATH) of 64K just recently.
Admittedly I felt a sense of envy and a FOMO (fear of missing out) as I read about some people who started with a small investment and have gained substantially ever since. Some basement geek who became a Bitcoin millionaire because he didn’t purchase pizzas with his coins.
One day I decided I have ignored it enough and felt I’m ready to jump on the bandwagon. So I FOMOed. For better or for worse. YOLO, or you only live once.
The years of investing in the stock market has imbibed in me a few policies. First, I must be willing to lose a substantial part of my investment. Maybe all. So, I reckoned I must only put in funds which I can afford to lose. Luckily for me, my stock market holdings in the past year has seen some good gains since the lowest dips of March 2020. So I figured I put some of my profits in. Anything I lose I mark as “school fees” in Crypto College. Done.
Fees
Second, I am very wary of fees. Many years ago, during a sleepless night while jet-lagged on a trip to the US, I found all the statements in my Life Insurance investment and savings plan, and entered it into an Excel sheet. I found that the trust fund which the plan was invested in took in fees in excess of 10%! You know the big agreement when you sign when you first commit yourself to the Live Insurance and Savings plan. Inside the document, there will be a section of fees charged. And if you tried to read it, you’ll probably need reading glasses and a mind of an attorney + financial wizard to understand it.
At the back of the Coinbase Direct Listing in NY recently, I went to their website to see if I can purchase some Bitcoin from their platform. I tried to find their “fees” page from their main page. I couldn’t. I still couldn’t today. Google helps us if we searched “coinbase fees”, and I got to their fees page. Try to go there yourself and see if you are able to understand their fees structure.
Also, Coinbase is not available in Malaysia at the time of writing. So that platform’s out.
The next one I checked out was Binance. I know, Binance has got a lot of negative rap. It was founded in China, but since their founding, crypto was banned in China. They then packed their bags and is now living a life of exile in few countries after that (Japan, Malta, etc lost count). Now I guess it’s domiciled where its founder CZ is currently at. Maybe he’s having tea with Jho Low in an unknown location now. I’m not sure. At the time, Binance is number #2 behind Coinbase. So I had to check it out and do my due diligence there (as of now, Binance is now the number one Crypto exchange in the world; Coinbase is number #3 behind Huobi). Please hear me out why I’ve chose Binance as my up-ramp into crypto.
Binance P2P
I like the P2P (peer-to-peer) exchange in Binance. P2P means that I’m able to buy and sell cryptocurrencies from other members of the public (i.e. people like me). They list what they have to sell and buy, and if you like the price, you click Buy/Sell, and you deal directly with them. Binance doesn’t take a cut from the deal.
The P2P exchange has sellers from Malaysia, which is good news, and transactions can be done in Ringgit.
This is a snapshot of the P2P page for Ringgit to USDT (Tether Coin). USDT is currently the most popular stablecoin, and is pegged to the USD. An alternative is the Binance USD (or BUSD), also available.
As with any currency exchange, there is a bid/ask spread. Just like if you were to exchange ringgit with USD, the bank (or currency exchange), will sell you less USD than buying from you. The difference between the buy and sell prices is the spread, or their profit.
Move over to the “Sell” part you you see that there is only MYR 0.01 spread between the buy and sell. That’s a spread of only 0.235%!
At the same time, the USDMYR spot price in Oanda is RM 4.14 per USD. Therefore, the P2P folks are selling USDT for RM 0.14 more than the spot rate, or 3.3% higher. But they are also buying back USDT at this higher rate. So as long as the spread remains small, the higher rate given by the P2P people is not too big a concern.
I found that the P2P exchange price between MYR and USD varies from time to time. So, I make it a habit to check on the P2P prices from time to time and buy in some USDT when the rate is favorable. During the recent dip in Bitcoin, I guess many people are moving away from Bitcoin into USDT, driving USDT slightly higher than MYR during that time. The reverse may happen during Bitcoin rallies.
Problems with Binance and USDT
As I have mentioned above, Binance doesn’t have a good reputation in the Crypto world. They are currently under investigation by the US government. USDT (Tether) is currently also under fire for allegedly not keeping a big enough reserve of USD to support their minting (meaning they are creating Tether USDT out of thin air, and can be in danger when there is a “bank-run”).
Why do I still continue to use the platform and the coin?
Firstly, I use Binance the same way I use the exchange shops we see in MidValley. I don’t really care which shop i use, as long is they give me real money, and they give me the best possible rate. After I get the money, they no longer matter to me. I can of course go to Maybank (Coinbase) to exchange my money, but they charge 5% more for the same thing. I won’t fight with money.
On Binance, once I get my crypto, I withdraw it immediately into my Trezor cold wallet. Not your keys not your money. So the crypto spends about 5 minutes tops on that platform. If I find another platform that offers a better rate, I’ll do my exchanging there instead. All my funds are safe in my Trezor and it doesn’t matter which exchange I use.
I also don’t keep my funds in USDT long. I normally trade it to BTC or another Altcoin, or transfer it over to BSC (Binance Smart Chain) to do other things there. The bad news about USDT don’t bother me. Also, on P2P, there is also option to get Binance USD (BUSD), another stablecoin with a little better reputation. However, I find that USDT gives a better rate than BUSD most of the time. I always check both USDT and BUSD rates before doing an exchange.
Summary
That’s it for my first crypto post. I’ll continue to write more about my crypto (mis)adventures as we go. Perhaps about DeFi next. Let’s see!