Cryptocurrency is a digital, decentralized currency that has revolutionized how the world views currency. Since 2017, companies have been gradually incorporating Bitcoin and other cryptocurrencies into their businesses to try and ride the wave. This has been seen worldwide, and especially in Hong Kong.
Hong Kong business investors have increasingly gained more wealth thanks to investments in crypto, but regulatory uncertainty has led some to move their operations to other markets. Still, Hong Kong remains a hot location for crypto and blockchain, and many major global powerhouses in the industry started in Hong Kong.
The amount of crypto in Hong Kong is substantial. Blockchain data firm Chainalysis said Hong Kong had US$60 billion (HK$468 billion) in incoming crypto from July 2020 through June 2021. In general, two out of three people who actively invest in cryptocurrency are men; however, this difference dissipates in Hong Kong. In Hong Kong, there is almost no difference in investment between men and women. As a result, Hong Kong has played a significant early role in the evolution of the cryptocurrency economy.
What is cryptocurrency?
Cryptocurrency is a currency that exists online without any backing from a bank or other financial institution. It became popular because investors wanted to avoid fees, retain anonymity as well as access more investment opportunities. It first emerged in 2009, and now numerous exchanges offer digital money.
Since 2009, tens of thousands of different cryptocurrencies have been created. The total value reached its all-time high of US$2.9 trillion (HK$22.6 trillion) in 2021. Bitcoin alone, at that time, was valued at about US$932.4 billion (HK$7.3 trillion).
But it still comes with pros and cons. For example, volatility, infrastructure stability issues that come with scale and a lack of regulation. However, on the flip side, It creates a decentralized currency that doesn’t reveal people’s names, yet it exists on several devices. The extraordinary security provided by the network of computers forming the blockchain is a feature that many cryptocurrency proponents tout.
What is crypto used for?
The original creator of Bitcoin intended their cryptocurrency to eventually be used for everyday purchases. This vision has been slowly entering today’s society, but cryptocurrency has yet to be widely accepted by businesses.
Some companies like AT&T Inc., Overstock.com Inc. and Microsoft Corporation accept cryptocurrency on their websites. This allows crypto users to use their currency for everyday needs. However, there are other cryptocurrency users who don’t use crypto for everyday purchases but rather as an investment.
According to a new survey by Visa, in Hong Kong, almost a third of residents have transferred, exchanged or invested in crypto. Only the United States ranks higher in the use of digital money.
Why is cryptocurrency important?
In a recent 12 month period, Visa found increased engagement among people curious about crypto. It was a 58% increase in developed markets and a 38% increase in emerging markets.
For supporters of crypto, several different positives surround digital currency. They see it as the currency of the future, as it removes central banks from the money supply and adds blockchain as a secure process. Some speculators like it because of the increasing value and not as a money transfer strategy.
How do Hong Kong businesses use crypto?
In May 2021, Hong Kong government proposals said the city must license cryptocurrency exchanges there and only provide services to professional investors.
Several of the world’s largest cryptocurrency exchanges operate from Hong Kong. Regulatory changes and decisions continue to evolve there in the ever-changing market. Companies and individuals who purchase crypto do so on an exchange and then can move the currency to an online hot wallet or a cold wallet offline.
Why do people in Hong Kong like digital currency?
Huge interest exists among Hong Kong residents in digital currency and everyday, practical use. Almost nine out of 10 residents would be interested in crypto cards to spend digital currency at retail stores. And 86% of respondents would like to earn crypto as a reward for spending money at their favorite stores.
There are many reasons for this increased interest in cryptocurrency. Many see it as an investment, others see it as a more secure way to perform transactions and some prefer the idea of it being decentralized. Those that use cryptocurrency also avoid the effects of inflation, as there is always a set number of coins and the value only changes based on the coins’ demand.
How to predict cryptocurrency prices?
Predicting cryptocurrency prices is often difficult and, at times, impossible. However, while the average person cannot predict cryptocurrency prices, experts regularly make predictions about upcoming prices. In November 2021, Bitcoin hit US$68,000 ($HK531,000) for the first time, but by early 2022 was back below US$50,000 (HK$390,000). With price predictions being entirely speculative, experts expect bitcoin to reach upwards of US$100,000 (HK$781,000) in the long run.
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