Written at the end of May 2021 by Sebastian H. Brousseau.
A) CRYPTOCURRENCIES OR “HOW I LEARNED TO STOP WORRYING AND LOVE THE DOLLAR COLLAPSE”
Any movie buffs will catch that little nod in the title. And if you think the US dollar is not on its way out from the Global Reserve Currency, you need more lessons in mathematics and economics. The simplest motto from economics is “Supply and Demand”. The supply of USD continues to increase almost every day, while the demand is falling. In the US, some businesses cannot find enough employees, and there is a particular meme going around that highlights the inflation going on in the US.
(Do note that commodities might go lower in the next months
because people spent more on goods than services last year due to COVID).
That picture is one of the many reasons more and more people are choosing to invest in cryptos. Primarily as a hedge against inflation, not just USD but all currencies, as well as a way to protect wealth and earn some profits. I am sure some of you have heard about “crypto millionaires” and that is why some people are now buying Bitcoin and Dogecoin, hoping that they will become rich overnight. This is not true. It is still investing and it requires knowledge, patience, and the willingness to lose. One rule of crypto is to never invest more than you can lose. Investing needs some discipline, like putting money on the side every month, conducting research, picking the right stocks, bonds, real estate investment, or cryptocurrencies. Finding a gem and getting 100X the return is rare. But Bitcoin has been the best investment continuously for 13 years in a row with only a one-year exception.
On May 17th, 2021, I sent a message to our clients telling them to be careful in this current economic situation. I was totally right. The next day, on May 18th, the crypto market collapsed. When it was down, I bought a little, sold 2 days later, and it collapsed again on the next day. Yes, it is volatile, but the gains you can make are exceptional.
I also believe the current stock market and real estate market are in a bubble just about to burst, but the economic stimulus handouts are postponing the big bust. Protect yourself, have cash available. There might be opportunities that you might never see again in your life.
The Crypto “Fad”
Many people have not learned about how to invest in cryptos and lost lots of money because they only saw easy money. There is no such thing as easy money. This is why lots of financial groups and market funds call cryptos a fad that will die away. However, that is not true either. Cryptos are not a fad and the blockchain technology that all cryptocurrencies use is here to stay. In my personal opinion, you should not believe the people who say “you will lose everything if you invest in cryptos.” But you COULD lose everything if you invest in cryptos. That is true for any stock or market. Risk is always a factor. The bottom line is cryptos are here to stay. Certainly not ALL the cryptos that are on the market today. But there is a high degree of certainty that a few of the cryptos today will be with us for the long term. Some are very likely to replace traditional payment methods and services.
Finding Information about Cryptocurrencies
As of today, there are more than 10,000 different cryptocurrencies traded. I will not try to list them all for you. The best resource for information on all cryptocurrencies in terms of volume, value, and general market performance is CoinMarketCap because of its easy-to-use interface and real-time market tickers. As far as news related to cryptocurrencies the best website is CoinDesk. There you can learn about major players in the crypto markets, innovators in blockchain technology, listen to conferences, and get tips and advice about investments and potential trends in cryptos.
When you want to learn about cryptos it’s very different from traditional markets and investments. There is no Wall Street Journal for cryptos, nor do any of the main media companies have separate “crypto business channels”, like CNBC or BBC Business. Instead, the majority of crypto news is found on Twitter. That in itself can have a serious impact as anyone who follows Elon Musk will know. But overall, there are many, many people and organizations that offer insight into cryptos. Here are three different articles from different sources on who to follow on Twitter for the best cryptocurrency news and trends.
– Here Are 40 Crypto Twitter Accounts That Really Matter
– 10 Crypto Twitter Accounts Everyone Should Follow In 2021
– 7 Bitcoin And Cryptocurrency Accounts To Follow On Twitter
I highly recommend following Vitalik Buterin because he is the creator of Ethereum. Full disclosure, Ethereum is my choice for the crypto that emerges on top and be used regularly in business transactions and contracts in the very near future. Ethereum might flip Bitcoin soon, but you must also think that other platforms like Solana, Cardano, or Polka Dot could become huge quite fast. You always have to keep track of what’s happening. De-fi or Decentralized Finance is the future and will hit banks hardly. Things are changing and COVID is an example. You have to adapt and this is why we are writing about cryptos this month.
Along with Twitter accounts, another good option for learning about and staying informed about crypto markets is, of course, YouTube. It is often easier to listen to videos on YouTube than to scroll through Twitter feeds to learn what you want to know. So, again I have some articles that can point you to the best YouTube channels for Crypto news and education. Be careful about the people telling you that they found the coin that will make people rich. You must select the right people. They are the ones who are honest, well-informed, pay attention to details, and have a good record of making the right investments. And, of course, do your own research. I like “Coin Bureau” on YouTube.
5 Must-follow YouTubers for Crypto
Best Crypto YouTubers: Top 5
And for a site that puts together the best videos on cryptocurrencies as well as lots of other crypto news and information check out Crypto Feed.
This is only scratching the surface really. There are thousands of Twitter and YouTube channels dedicated to the world of cryptocurrencies. And with that comes certain dangers from scammers, phishing schemes, and outright fraud. Not because cryptos are bad or dangerous, but because the information is concentrated on social media sites and the internet in general.
The laws that govern entities like The Wall Street Journal and CNBC regarding “financial advice” are not nearly as effective or as easily enforced on the worldwide web. Any YouTube creator can simply offer a disclaimer that “I am not offering financial advice” or “I am not a financial expert” or even just a quick “this is only my opinion” and basically say whatever they want. The scammers, snake-oil salesmen, and Ponzi schemes you will find all over social media are some of the main reasons people distrust cryptos.
Genius, Madman, Huckster
I am sure you all know who Elon Musk is. He has single-handedly made people into millionaires and in less than 24 hours reduced them to beggars. Only using less than 72 characters and a few emojis on Twitter. The actions of Elon Musk have highlighted the power social media has on markets and economies as well as businesses and personal finances. Furthermore, the effects of Elon’s tweets mean it is very important that the information you are relying on comes from verifiable sources. It is worrying that only ONE person can move the market up or down in crypto, but this is crypto: volatile, new technology, fascinating and a world apart. Blockchains will be everywhere in the future, just like the Internet is now part of our lives. The Internet is Amazon, emails, Grab, Uber, AirBNB and much more. Blockchains will be bigger than the Internet. Be aware of that. They will be on your passport, IDs, title deeds, medical records, tickets that you buy, financial transactions, insurance transactions, lottery, music or video streaming, everywhere. They assure a level of security that has never been seen before.
Whether Twitter, YouTube, or some other social media platform, you need to make sure you are getting information from actual people or organizations that have a real stake in the crypto market. There are a few tips you can use to make sure the accounts you follow are worthy of your attention.
1. Verified Accounts – All social media platforms have verification processes that ensure the person/entity is what it claims to be. Make sure you are following verified accounts. This means a blue checkmark next to the name on Twitter and on YouTube, it will be a grey checkmark next to the channel name below the title of the video.
2. Creation Date and Followers/Subscribers – Sometimes, accounts are not verified but are still actual people/entities. That is because they don’t have enough followers or simply haven’t completed the verification process. In which case, check when the account was created. If it was a week ago, beware! If it was 2 months ago, proceed with caution, and if it was 2 years, you are probably dealing with the real deal. Likewise, followers/subs can be a real clue. Are there hundreds of thousands following a 2 month old account? Those are likely bots or “sock puppet accounts”. Meaning they are not real people. Here are two articles to help understand more, Spot a Bot: Identifying Automation and Disinformation on Social Media and How fake accounts constantly manipulate what you see on social media – and what you can do about it.
3. Independent Research – One of the easiest ways! Simply google the channel or account and see what comes up in the results. If you fail to do this simple task any financial losses will be on your shoulders.
As for Elon, I don’t think he is trying to help anyone other than himself. The latest example is that he is trying to pump up a crypto called “Cum Rocket”. If you seriously believe anything with the word “cum” in the name is a genuine financial investment, you should not be playing the crypto market. (This is a reference to a tweet he made and a crypto called CumRocket). As of writing this newsletter, it seems the internet has begun to turn on Elon, even though his tweets continue to influence the ups and downs of the cryptocurrency market. That said, there are likely to be more “influencers” who will shake up the market after Elon leaves the scene. So, again due diligence is the most important step you can take when investing in cryptos. The crypto market is highly volatile and speculative and will continue to be that way. Make sure you never invest more than you can afford to lose and be prepared for the ups and downs.
There is a lot of scams in crypto, be very careful. But I can tell you that I made more money in crypto in the last 3 months, even during the latest crash than at any time in my life. When you have opportunities like now, and most economists will agree that the market at the moment is like nothing ever seen before, it can be the time that you make a lot of money, or you can lose a lot of money.
B) CRYPTOCURRENCIES IN THAILAND
First of all, trading cryptocurrencies is legal in Thailand. One of the registered crypto exchanges in Thailand is Bitkub.com. Only recently have they started to accept new account registrations. Here is an article on the recent increase in new retail traders on the site. This site is better than Zipmex with higher prices.
April sees surge in retail cryptocurrency traders
Bitkub had to stop accepting new accounts because the SEC of Thailand ordered them to do so. During the latest Bitcoin surge in January, the platform had several serious “glitches” that interrupted trading and caused the site to crash. In fact, the site crashed three times in January. That is what caused the SEC of Thailand to issue its order. The involvement of the SEC highlights another one of the uncertainties of crypto trading, and one of the main concerns of cryptos in general – computing power and bandwidth. You can read about what happened here.
Bitkub told to fix platform issues
How to Trade Cryptocurrencies in Thailand
Another major trading platform in Thailand is Zipmex. They also have an English language option but have fewer cryptocurrencies on their platform than Bitkub. Some of the other larger crypto exchanges are Coinbase, Kucoin, and Binance. Each exchange will have different trading fees, which you MUST be aware of. Likewise, each exchange has different rules regarding trading limits, the cryptocurrencies available for buying and selling, and most importantly, converting cryptocurrencies into local currencies such as Dollars, Euros, Yen, and Baht. I sometimes use Binance but I can’t link it to my bank account. So I transfer what we call stable coins bought on other platforms. I lost some on the transaction fees but have more possibilities.
Furthermore, all crypto exchanges must comply with AML/FT regulations, which stand for Anti-Money Laundering and Financing Terrorism, in order to be licensed to operate. All crypto exchanges must also perform KYC (Know Your Customer) for all accounts to ensure the people/entities are real and are subject to some kind of tax jurisdiction and regulations. This means when you create an account at any crypto exchange you will be required to provide proof of your identity. Normally, you will give a scanned copy of your passport, some form of tax identification (ex. Social Security Number for US citizens), a verified email address, phone number, and a photo of yourself holding your passport and some piece of paper with the date on it as well as the URL of the exchange.
Recently, new laws in Thailand that will go into effect in September will require in-person registration to open a new account on any crypto exchange in Thailand. And the exchange must report any transaction over 1.8 million THB ($58,000). See below.
Thailand’s New Cryptocurrency Regulation Requires Users to Be Physically Present to Open Accounts
So, if you are looking to open an account with a cryptocurrency exchange in Thailand, we suggest you do so before September when these regulations will go into effect. Even if you are unsure about trading cryptos, it would be in your interest to get an account created digitally. That way if you do decide you want to start trading cryptos in Thailand you can save yourself some serious travel time and expenses.
Now that we know about a few of the exchanges out there let’s get more in-depth. There are 3 primary ways people invest in cryptocurrencies.
1. HODL – This stands for “Hold On for Dear Life”. Essentially it is purchasing cryptos and holding them for a certain amount of time in the hopes of a large payout. It is the easiest way and the least risky because you aren’t actively trading but rather placing a bet on a certain crypto to increase in value. It is similar to a stock option put. Again you should only invest what you are willing to lose (like sitting at a blackjack table in a casino) and you should also set a cash limit – the amount of profit you wish to make.
2. Day Trading – Just like in a normal stock market you buy and sell multiple cryptos in a single day in order to make small or marginal profits. Usually in the 1-3% range. This kind of trading requires extensive knowledge, research, and a good amount of your time in the day. It is extremely fast-paced and can be quite stressful at times due to the massive fluctuations that happen in the value of different cryptocurrencies. Don’t attempt to be a day trader unless you have the time, money, and knowledge to do so.
3. Bandwagon – This is just what it sounds like, and another reason cryptos are called a fad. Essentially you wait for a crypto to suddenly gain in value or one that is projected to be highly successful and go all in. Then when you have made enough profit you sell everything. It’s what Elon Musk seems to be doing yet again with Cum Rocket and what he previously did with Bitcoin and Dogecoin. More than likely, unless you are one of the earliest buyers of a certain crypto that people will pile into, you are not going to make much money. In order to make money using the bandwagon approach you need to be “first in, first out”. This is not a recommended crypto trading strategy but nonetheless has many people thinking it’s the best way to make fast cash.
Cryptos and Taxes in Thailand
Making “fast cash” with cryptos is what everyone thinks is going to happen. Unfortunately, that is not true. You see, the problem is not being able to buy and sell cryptos on an exchange, it is cashing out those cryptos to a local currency in your bank account. Not all exchanges will allow you to link a bank account where you can convert your crypto sales into actual money in a legitimate banking institution. Binance is one such exchange. The flip side is that getting an account at one of the exchanges that have no cash-out option is much easier than the ones that do.
The other major obstacle you must overcome when cashing out is taxation. The moment you sell your cryptos and cash out you now have capital gains, which are subject to taxes in most countries. However, the tax rate is different in every jurisdiction as well. In Thailand, the tax rate for corporate capital gains is 30%, while personal/individual capital gains are taxed at 35%. This is very important to know if you cash out from an exchange into a Thai bank account. Even if you are a foreign national, they can still tax you on your capital gains regardless of your visa status. This is one of the more important things to know and be prepared to deal with when you are trading cryptos in Thailand.
On the other hand, there are countries with no capital gains tax such as Antigua. The catch is that you must be a legal resident in Antigua to cash out without paying taxes. Other countries have very low capital gain tax rates. Singapore, Portugal, and Georgia all have very low tax rates. Dubai is another tax “safe haven”, but it is quite difficult to get incorporated there.
No Free Lunch
Like all financial investments, there is usually a price to be paid when you take any kind of profit. This is very true in Thailand, as we mentioned you will be paying 35% of what you make from your crypto sale when you cash out to a Thai bank account. So you will have to ask yourself if you can afford to do so. 35% is the personal tax income if you are on the large portion but if you make fewer profits, it can be lower. Companies have lower taxes at 30% and 300,000 profit per year is tax-free.
I could develop and tell you that in Antigua if you are a resident, there is 0% capital gain tax. Or Dubai but to set up a company there is about $7,000. Singapore and Portugal offer about 17% tax and are considered crypto-friendly. Recently, El Salvador announced in Miami that they will not tax cryptocurrencies to attract investors. Georgia is another good place if this becomes your main source of wealth.
To protect yourself, have a strong password with a 2-factor level of authentication. Do not tell people if you have lots of cryptos or not: Actually, I sold mine COMPLETELY! Jing Jing!
You can also use digital wallets (like trust wallets) or hard wallets (like Trezor) to secure your investments. But if someone puts a gun on your head and asks for your password, it can also be a problem for you. Hackers are another problem that you have to be aware of.
I use artificial intelligence to help me decide about what could be a good or bad investment but this is not easy for everyone. Artificial intelligence was used by famous investors like Jim Simons or Cathie Wood from Ark Investments, one of the best results for hedge funds in the last years but this year, things are turning.
If you have cryptocurrencies, you can also place them on some places like Nexo or Block-Fi that could give you around 8% interest per year and you can even borrow money from your crypto as collateral. Which bank gives 8% interest these days? So there are tremendous benefits that you can join with crypto, even if it is risky.
Cryptocurrencies are here to stay and blockchains will explode. If it is not your cup of tea, I can understand. When the Internet started (I was on networks in 1982 but I had my first email in 1992) people didn’t understand its power. Each year, the Internet doubled the number of new users. Crypto is only maybe 5% of the population now but it will grow. Nobody can stop it. Yes, countries can ban them or implement rules and that will surely happen. However, I am 100% sure that it is the future and it’s inevitable. Just be careful in these turbulent times and you might thank me one day for having told you about De-Fi (Decentralized finance) and investing maybe 1% to 3% of your income per month. Investing is a discipline and must be done regularly. Especially if the social security nets, like in Thailand, do not protect you much when you get older.