From the days of bitcoin and ICO (initial coin offering), the crypto industry has evolved to be a diverse set of manifestations, and a much richer ecosystem of players, investors and other stakeholders. Why is there an increasing interest in crypto? 

We outline ten interesting facts about the crypto and NFT space that give you an insight into this elusive field.

1. There’s more to crypto than just coins

First and foremost, there are crypto exchanges where you can buy and sell crypto coins. Some notable crypto exchanges in Southeast Asia are Crypto.com, Coinhako, Bitkub, etc.

We have players like Pluang, Matrixport and Babel Finance who offer not only crypto trading but additional services like lending, fixed deposits, loans, etc. They label themselves as crypto financial services in regulated jurisdictions like Sing apore, Hong Kong, etc.

Apart from these, you also have NFT marketplaces where you can buy digital art and GameFi (blockchain games) where you can use NFTs as characters.

Crypto players Southeast Asia

2. Centralized vs Decentralized crypto exchanges

Centralised: Users trade through accounts offered by the exchange. Though it is more liquid, there are potential security risks and it is highly competitive. 

Decentralised: Users trade with each other through their own wallets. It is more diverse with early stage assets with greater appreciation potential.

 

3. Who invests in crypto?

Institutional investors: Large financial services (like Tesla) that can move a lot of money, but they usually trade stablecoins like Bitcoin and Ethereum.

Whales: High net worth individuals who have the capital and a significant amount of money. They allocate a portion of their investment portfolio to cryptocurrency.

Early participants: Individuals who started trading Bitcoin in 2012/2013 or Ethereum in 2015. They have been in the market for a long time, so they understand the game and many have become rich.

Retail investors: Common public who trade cryptocurrency.

 

crypto security

4. How do crypto exchanges protect themselves against security threats?

Axie Infinity lost US$625 million in a security attack recently. Such threats are not uncommon in the crypto industry.

Many exchanges rely on their in-house security system, and gradually improve as they deal with various hacking/security incidents. A key challenge is to find third-party solutions or service providers that can respond fast enough to these risks.

 

5. Crypto exchanges want to control influence of the market through strategic investments

Crypto.com has extended a $500 million investment vehicle to invest in upcoming crypto startups and FTX announced a $2 billion fund as well. These investments in other crypto startups are not just to strengthen their market position but also to maintain trader interest/liquidity.

 

Axie Infinity

6. Investors on a wild hunt for the next GameFi success after Axie Infinity sensation

After the success of Axie Infinity, investors are ramping up their search for the next GameFi success.

 

NFT

7. Most NFTs are garbage

A majority of NFTs are garbage and amount to mere pennies. Only a rare few get valued at millions. You can categorize NFTs into two types:

        Scarce and high value (like Bored Ape) art created by renowned artists or endorsed by key celebrities. They are scarce, valuable and have high barrier of entry for holders (similar to traditional art auction houses)

        Hyped up rubbish that is minted at low value and has short-term hype. They have very low investor interest and their value will drop to negligible levels.

 

8. Sunny side up – Crypto exchanges are moving to the Bahamas and Singapore due to regulatory pressure

Crypto exchanges are moving their operations from Hong Kong owing to regulatory pressure. Singapore and the Bahamas has been a favourite among crypto players. 

FTX decamped to the Bahamas while Crypto.com became a Singapore-based company. Globally, there have also been increasing regulations to curb money laundering and retail marketing.

On the other hand, countries like Indonesia and Thailand have taken a welcoming stance towards crypto-based companies.

 

9. Crypto, saranghaeyo

A major part of crypto investments come from South Korea.

 

10. Indonesia has a horde of crypto exchanges

Crypto trading boomed in Indonesia during the pandemic and user numbers more than doubled within a year. The Indonesian government has licensed  13 crypto exchanges and legalised 229 crypto assets.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.