North Luzon Monitor

North Luzon

Of Cryptos and Scams

JP Villanueva
Latest posts by JP Villanueva (see all)

Yesterday, I had a lengthy discussion with a friend who is currently in Europe working in one of the countries there. The trigger of that conversation was, “kabsat, do you know anything about crypto?”

What she meant was cryptocurrencies. Cryptocurrencies are digital or virtual currencies that use cryptography for security and operate independently of a central authority, such as a government or financial institution. They are based on blockchain technology, which is a decentralized distributed ledger that records all transactions across a network of computers.

Cryptocurrencies enable peer-to-peer transactions without the need for intermediaries like banks. They offer features like transparency, immutability, and decentralization. Bitcoin, created in 2009 by an anonymous person or group known as Satoshi Nakamoto, was the first cryptocurrency and remains the most well-known and widely used.

Since the advent of Bitcoin, thousands of other cryptocurrencies, often referred to as altcoins, have been created. Each cryptocurrency operates on its own underlying technology and may serve different purposes. Some cryptocurrencies aim to be digital alternatives to traditional currencies, while others have specific use cases, such as smart contracts (e.g., Ethereum) or privacy-focused transactions (e.g., Monero).

Investors often buy and sell cryptocurrencies on online platforms called exchanges, and their values can be highly volatile, making them attractive for speculative trading. 

Additionally, cryptocurrencies have gained attention for their potential to revolutionize finance, offering faster, cheaper, and more inclusive financial services globally. However, they also face challenges related to regulatory scrutiny, security concerns, and scalability issues.

Economists’ views on cryptocurrencies vary widely, reflecting the diverse opinions within the field. Here are some common perspectives:

Skepticism: Some economists are skeptical about the long-term viability and value proposition of cryptocurrencies. They argue that cryptocurrencies lack intrinsic value and are primarily driven by speculative trading. They also express concerns about their potential to facilitate illegal activities, their environmental impact due to energy-intensive mining processes, and their susceptibility to regulatory crackdowns.

Volatility and Speculation: Many economists acknowledge the significant volatility of cryptocurrencies and warn about the risks associated with investing in them. They caution that the speculative nature of cryptocurrency markets could lead to price bubbles and eventual crashes, potentially causing financial instability. Some economists argue that the volatility of cryptocurrencies undermines their usefulness as mediums of exchange and stores of value, hindering their mainstream adoption.

Regulatory Concerns: Economists also emphasize the importance of regulation in shaping the future of cryptocurrencies. While some advocate for clear and consistent regulations to mitigate risks and protect investors, others argue that excessive regulation could stifle innovation and hinder the development of the cryptocurrency ecosystem. Finding the right balance between regulation and innovation remains a key challenge for policymakers and economists alike.

Overall, economists’ opinions on cryptocurrencies reflect ongoing debates about their economic implications, regulatory challenges, and potential to reshape financial systems. As the cryptocurrency landscape continues to evolve, economists will likely continue to analyze and debate their impact on economies and societies worldwide.

Going back to the conversation with my friend. Apparently, her friend invested in cryptocurrencies through someone who is supposedly in the UK whom she just communicates through the messaging app, Telegram. Mind you, Telegram is not the safest app to have conversations in because messages can be easily deleted without trace.

My friend suspects that her friend invested thousands of euros, equivalent to millions of pesos, which is highly likely, given that she has the capacity of doing that. As of today, one bitcoin is worth about P3.5 million or about 57,000 euros. She may have invested something around this ballpark.

A hundredth (0.01) of a bitcoin is roughly around P35,000, if this is the case. I tried investing in bitcoin back in 2016. I bought 0.01 of a bitcoin which was worth, back then, only around P17,000. I was not very comfortable, knowing the risks and implications of investing in bitcoin, so I sold it after a month for P21,000. That’s an easy P4,000 profit. Imagine if I kept that 0.01 of a bitcoin until now, that value would have more than doubled. That’s a decent return for 8 years. One cannot get that much interest if the money was saved in a bank. And maybe, that’s the reason why many are enticed to these types of high-return, high-risk investments.

The thing is, no one is stopping anyone from investing in cryptocurrencies or on any high-return, high-risk investment programs, however, the money that one should be investing is something that he/she can afford to lose. It is a gamble afterall.

Many fall into investment scams and are not able to get out of the dumps simply because they put not only all their life savings but also borrowed funds into high-return, high-risk investment programs. Such that if the unfortunate happens, they are left not only with nothing, but also a lot of loans to pay after.

The Bangko Sentral ng Pilipinas and other regulatory agencies have not faltered in reminding people about various types of investment scams that are proliferating nowadays. Please don’t fall into these enticing traps. Remember, if it is too good to be true, then it must be. 

Scroll to Top