Beware of the cryptocurrency bubble.

The government has a plan to address and amend laws regarding cryptocurrencies (Bitcoin or other types of currency) accordingly, but this does not mean it approves their circulation. However, despite the risks, many people are still rushing to invest in this type of currency.

Cryptocurrency mining machines are selling out.

In 2013, the price of each bitcoin was only $13, but by 2014 it had risen to $1,200. From April to August 2017, the price of bitcoin quadrupled, reaching approximately $4,200 per bitcoin (as of August 24th). This also led to price increases for several other cryptocurrencies such as Linecoin and Ethereum. The price of bitcoin surged to a record high of $5,000 on Asian exchanges on the evening of September 3rd, before falling by about 5% in the following hours.

Currently, knowledge about Bitcoin, experience in building mining rigs, factory layout, troubleshooting operational errors, etc., are almost all publicly shared on the internet. Users with money and willing to invest time and effort can participate in this field.

In the Vietnamese market, some online Bitcoin trading sites are quoting prices of around 61.9 million VND for buying and 62.3 million VND for selling. The rapid price increase of this cryptocurrency over the past few months has led to hundreds of online Bitcoin trading websites, mostly small to medium-sized, with 1-10 computer setups. Besides seasoned professionals, the allure of cryptocurrency also attracts novices or investors with substantial capital but little experience.

Beware of the cryptocurrency bubble.

According to government directives, from now until 2019, relevant agencies will complete the review, research, and propose amendments, additions, and new regulations on cryptocurrencies. Immediately after information about this plan emerged, thousands of people investing in cryptocurrencies felt like they had struck gold, believing that if approved, Bitcoin and other "virtual currencies" would be recognized in Vietnam. Although this is only a research directive, thousands have responded enthusiastically, rushing to invest in Bitcoin in the hope of "changing their lives."

According to an employee at a computer parts store in Hanoi, each Bitcoin mining rig costs around 60-70 million VND. More than a year ago, they only sold about one or two machines a month. Now, with the increase in Bitcoin's value, the store sells out every batch it imports (each batch containing 5-10 machines). Many computer parts suppliers in Vietnam are even experiencing shortages of graphics cards due to the high demand for Bitcoin mining rigs. Mr. Hai, the owner of a computer parts store in Hai Ba Trung district, Hanoi, admitted that at its peak, his store's revenue exceeded 200 million VND per day thanks to customers ordering dozens of rigs.

Potential risks

Investing in Bitcoin also carries considerable risks because its price often fluctuates constantly. At the end of May, when its price unexpectedly dropped by 19%, the total value of Bitcoin globally evaporated by approximately $4 billion in just four days.

According to Bloomberg data, 15 cryptocurrencies that launched ICOs (initial coin offerings) this year have seen an average increase of over 100%, compared to a 13% increase in the price of IPOs (initial public offerings) this year. Since the beginning of the year, the total value of newly issued cryptocurrencies has exceeded $100 million and is expected to reach approximately $600 million for the entire year. However, Bloomberg also warns that this is not an investment for the faint of heart. The volatility of new cryptocurrencies is extremely high. One cryptocurrency investment fund called TaaS saw its price double in five weeks, then plummet 35% in just two days.

In 2014 and 2015, many cryptocurrency systems like Bitcoin were banned from trading in several countries such as China, Russia, and Thailand. Technical systems were also attacked by hackers in countries like Japan and Hong Kong (China), leading to significant losses for investors and the public. One of the most shocking Bitcoin exchange collapses in the world was that of Mt. Gox, based in Tokyo. The exchange was forced to shut down after suffering a cyberattack that resulted in the withdrawal of all available Bitcoin.

In a recent statement, the State Bank of Vietnam once again reaffirmed its stance (since 2014) of not recognizing Bitcoin as a currency. This is because the financial system, the capacity to manage monetary policy, public behavior, and international practices and experiences are all not yet ready for this currency.

According to Thanh Nien Newspaper