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The Monetary Authority of Singapore (MAS) requires us to provide this risk warning to you as a customer of a digital payment token (DPT) service provider.
Before you pay your DPT service provider any money or DPT, you should be aware of the following.
1. Whether your DPT service provider is licensed by MAS to provide DPT services or not, please note that this does not mean you will be able to recover all the money or DPTs you paid to your DPT service provider if your DPT service provider business fails.
2. You should not transact in the DPT if you are not familiar with this DPT. Transacting in DPTs may not be suitable for you if you are not familiar with the technology that DPT services are provided.
3. You should be aware that the value of DPTs may fluctuate greatly. You should buy DPTs only if you are prepared to accept the risk of losing all of the money you put into such tokens.
Cryptocurrencies are popular for several reasons - a means for investments, trade, and profit, disassociation from governments, cryptography and technology, anonymity, and more.
A large factor of cryptocurrencies' popularity stems from the fact that it is not directly controlled by any governments or authorities (also called decentralised), unlike fiat currencies (the regular cash we use). Instead, all cryptocurrency activities are transparently made available in an online ledger, is operated by the peer-to-peer network, and is valued by the cost of production (mining), and demand.
Cryptocurrencies are often seen as the future of currency and money – a notion that comes from the non-traditional concepts and finance architecture advancements that cryptocurrencies offer. Cryptography and encryption has long been used in credit card and online payment methods, and advancements will gesture at improved and complex security and privacy in these payment systems and accompanying gateways.
One of the largest draw of cryptocurrency payments and transactions is anonymity. However, all transactions are made available on a transparent, public ledger. These transactions can be tracked – meaning that your identity could be uncovered if you were to make multiple transactions and let slip on your personal information, someone out there on the internet could try to piece the puzzle together.
You may now be wondering, 'How are cryptocurrencies created?' Just like the coins and bank notes that you carry in your wallets, cryptocurrencies are created when they are minted.
While regular coins are made out of metal, and paper money are printed in factories with specialised industrial machines, cryptocurrencies have to be produced as well. Cryptocurrencies are created digitally when miners solve mathematical puzzles on their desktops with the help of specialised computer hardwares. In the past, cryptocurrencies were minted on regular desktop computers. Anyone who had a computer, internet connection, graphic cards, and some interest could mine cryptocurrency in their own homes.
However, in today's climate, cryptocurrencies are minted with the help of specialised accessory hardwares called ASIC (Application-Specific Integrated Circuits). Since they're application specific, a Bitcoin ASIC miner can only be used to mine Bitcoins. Fun fact: anyone can purchase these mining hardwares online - for example, an Antminer S19 Pro unit will cost you around $17k upwards on Amazon. However, due to high electricity consumption of these devices, most of cryptocurrency mining takes place in China where electricity is reportedly cheaper.
So, when someone such as you and I create an account with a crypto exchange and place an order to purchase some cryptocurrency from another seller, e.g. 0.25 Ethereum (paying approx. S$1,300), an announcement of this order is blasted through the network of Ethereum miners. Miners around the world will then rush to validate this transaction with the help of an algorithm. Once validated, this transaction will be completed, and added to Ethereum's blockchain and public ledger. On your desktop screen, you will now see that you own 0.25 Ethereum.
What are the advantages and disadvantages of cryptocurrencies? The advantages of cryptocurrencies are commonly regarded to be transparency, anonymity, privacy, and lower transaction fees. On the other hand, disadvantages of crypto assets include governmental regulation, identification, and hacks.
One of the main advantages of cryptocurrencies is transparency - unlike traditional banks where all transactions are largely hidden from our view, all ingoing and outgoing cryptocurrency transactions are listed on a public ledger real-time (which everyone can access).
Another key advantage of crypto is the privacy that it offers. For example, if you were to make a transaction and purchase some cryptocurrency such as Litecoin, your personal information and data will be encrypted in the blockchain, ensuring your confidentiality and privacy.
Cryptocurrencies tend to have lower transaction fees as compared to banking services' fees, credit card payment fees, and trading fees. Cryptocurrency transaction fees are often lower if you opt for the 'Expert' trading softwares and account type, such as 0.26% on Kraken, and 0.25% on Gemini.
A key disadvantage of cryptocurrency (that has struck the industry most recently) is the risk of regulation and rejection by world governments. A significant regulation that hit the cryptocurrency market hard was China's crackdown on Bitcoin mining, a ban on crypto exchanges, and crypto payment methods in May 2021. The announcement of China's regulation caused a dramatic dip in Bitcoin's prices within a span of weeks.
Although cryptocurrencies have been praised for its transparency and confidentiality (thanks to the public ledger and blockchain technology), critics have pointed out that it is still possible for your personal identities to be exposed within the cryptocurrency community. How? Well, your crypto transaction details can be matched to real-world information to identify you (especially if you have made multiple crypto transactions).
One of the largest disadvantage of the cryptocurrency is the risk of a collapse, or what is dubbed the '51% Attack'. A '51 Attack' in cryptocurrency refers to orchestrated hacks by a malicious group of miners with 51% majority stake of the entire mining operation. They can modify, invalidate, and even reverse legitimate transactions so they can double spend the cryptocurrencies and coins involved. In fact, a 51 Attack affected Bitcoin SV (BSV) recently in August 2021.
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|Cryptocurrency||Price (7 Sep 21)||Market Cap (7 Sep 21)|
|Cardano (ADA)||S$ 3.47101||$78,503,116,041|
|Binance Coin (BNB)||S$ 587.366||$70,440,554,990|
|Ripple (XRP)||S$ 1.47517||$52,878,115,287|
|Solana (SOL)||S$ 225.402||$49,273,958,403|
|Polkadot (DOT)||S$ 39.8991||$28,108,799,480|
There are four main types of cryptocurrencies available on the market right now – Bitcoin, Altcoin (every other cryptocurrency that isn't a Bitcoin), Stablecoins (pegged to a currency of choice for stability), Shitcoin (cryptocurrencies that have been created but have no value or purpose).
What is a Bitcoin and how does it work? Bitcoin is a cryptocurrency - a peer-to-peer digital or virtual currency created in January 2009 by 'Satoshi Nakamoto' (the creator hides behind this pseudonym). Bitcoin is commonly considered to be the first-ever cryptocurrency to be invented and remains one of the most popular crypto assets today.
What are Altcoins? Altcoins are basically every other cryptocurrency in the market that came after Bitcoin – Ethereum, Litecoin, Dogecoin, Ripple etc. That means, every other cryptocurrency other than a Bitcoin could be considered an Altcoin.
Ever heard of Tether (USDT), or USD Coin (USDC)? These are all examples of Stablecoins - a type of cryptocurrency designed to be less volatile (more stable) in prices. These Stablecoins are usually used by crypto investors and traders as intermediary coins when they switch from crypto to crypto, or exchange to exchange.
|Crypto Exchange||Fees (Lowest Tier)||Coins & Currencies|
|Crypto.com||0.4% (maker taker fees), 3.50% (credit debit payment fee)||100+ coins, 21 fiat currencies|
|Gemini Exchange||S$1.50 to S$4.00, or 1.49% (Transaction fee)||46 coins, 7 fiat currencies|
|Kraken||0.9% for Stablecoins, 1.5% (all coins), 3.75% + €0.25 (payment fee), 0.5% (online bank fee)||69 coins, 7 fiat currencies|
|Coinbase||4% (credit, debit card payment), 1% (trading fee), 0.5% (trading fee, Pro account)||99 coins, 57 fiat currencies|
|Bitfinex||0.1% (maker fee), 0.2% (taker fee), 0.1% (bank wire fees, min €60)||228 coins, 5 fiat currencies|
|Bitmex||0.01% (maker fee), 0.05% (taker fee), 0% (deposit & withdrawal), Bitcoin Network fee (dynamic)||23 coins, 0 fiat currencies|
|Huobi Global||0.2% (maker and taker fees)||309 coins, 6 fiat currencies|
|OKEx||0.1% (maker fee), 0.15% (taker fee), 0.03% (futures settlement fee), 0.02% (option exercise fee)||>200 coins, 30 fiat currencies|
|eToro||0.75% to 4.9% (trading fees, in spreads), US$5 (withdrawal fee), 0.5% (transfer fee, to wallet)||17 coins, 6 coins (eToro wallet), 15 fiat currencies|
New to cryptocurrency, but looking to buy your first Bitcoin, Dogecoin, or Ethereum? Here's where and how you can go about buying cryptocurrency in Singapore.
There are three key ways you can buy cryptocurrency in Singapore - Bitcoin ATMs, online crypto exchanges, and DBS (if you are a private banking customer). The most accessible of all, are online crypto exchanges. Scroll up to see and compare some of the most popular exchanges in Singapore such as Binance Singapore, Gemini, Crypto.com, and Kraken.
Before you buy your first crypto, you will need to first register an account with your crypto exchange of choice. The process may include verification of documents (submitting images of your NRIC, passport, or SingPass), face recognition, and your residential address. Afterwards, you'll need to fund your account - the process will vary from exchange to exchange (some will allow credit card payments or bank transfers). Finally, when you have funded your account, you will be able to place an order via the desktop or mobile app.
Anyone can buy cryptocurrency. However, ensure that you have done enough research and reading to understand the mechanics of the crypto that you're buying into. Also, ensure that you can afford to risk that portion of your disposable income (without affecting your family's financial stability).
At the moment, there are over 2,000 cryptocurrencies (with their own native blockchains) and tokens (built on existing blockchains) available on the market. If you're a beginner, how do you know which cryptocurrency to buy? Here are 3 of the most popular cryptocurrencies - commonly dubbed as the 1st, 2nd, and 3rd generation of cryptocurrency - with the largest market caps to consider:
First released in October 2008, Bitcoin was recognised for its decentralised, peer-to-peer network which attempts to solve the longtime financial payment issue of double-spending via blockchain. Bitcoin uses the SHA-256 proof-of-work algorithm, and prices are affected by consumer interest, demand (there were only 21 million Bitcoins ever created), technical, and operational factors such as the recent semiconductor and chip shortage.
Created in 2013 by Vitalik Buterin, Ethereum is essentially an operating system (just like your Android OS or iOS) using blockchain technology. The benefits? High security for your data and anonymity. All activities on this Ethereum network executed by miners are measured by "gas" (basically the effort or work) which has to be paid for in Ether (ETH), the crypto coin of Ethereum that is commonly traded on crypto exchanges. Ethereum is set to move away from its Ethash proof-of-work algorithm in favour of a more energy-saving and secure proof-of-stake Ethereum 2.0 system.
Cardano was first introduced in 2015 by Charles Hoskinson (former co-founder of Ethereum who left due to dispute) who wanted to create a third generation of crypto after Bitcoin and Ethereum. Cardano's blockchain platform functions in a strikingly different way from its predecessors. Instead of publishing its own white papers, Cardano had experts around the world peer review and improve its own proof-of-stake protocol called Ouroboros (lauded to be more sustainable, scalable, and energy efficient).
|Crypto Exchange||Supports SGD|
What is a cryptocurrency wallet and how do I get one? When you sign up for an account with a crypto exchange such as Binance Singapore or Gemini, you automatically get your own crypto wallet on that application. However, the key consideration here is the security of these wallets. Since you'll be storing your private key (a long binary code) that unlocks your public key (the 'mailing inbox' where your crypto orders arrive at). Naturally, you would want to search for the most secure wallet which can keep your private key safe and secure. There are 2 main types of wallets: hot wallets and cold wallets. What are the differences between hot vs cold wallets?
A hot wallet is basically a cryptocurrency wallet that's online and connected to the internet. For example, the cryptocurrency wallets that you have on Kraken, Coinbase, or Crypto.com are all online hot wallets. While this signals greater ease of use, it also means that any loopholes in your connection, computer, or laptop itself may risk a breach in your wallet.
On the other hand, a cold wallet is a cryptocurrency wallet that's offline and not connected to the internet. This cues at higher security, especially if you're storing large amounts of cryptocurrency.