Crypto Trading - Everything you need to know about Cryptocurrencies in Malaysia
Categories: Crypto Trading
Publish date: 2022-11-30
Cryptocurrencies are becoming increasingly popular, but what exactly are they and how do you buy them? Here's everything you need to know about buying and using cryptocurrencies in Malaysia.
Table of Contents
- 1 Crypto Malaysia - What is Cryptocurrency?
- 2 How does Cryptocurrency Work?
- 3 Examples of Cryptocurrency in Malaysia
- 4 Buying vs Trading Cryptocurrency in Malaysia
- 5 How to Buy Cryptocurrency in Malaysia
- 5.1 Choose a Crypto Exchange or Broker
- 5.2 Create and Verify Your Account
- 5.3 Fund your account
- 5.4 Place an order
- 5.5 Select a Storage Method
- 6 How to Trade Cryptocurrency in Malaysia
- 1 Sign up for a FXCM account
- 2 Fund your account
- 3 Start Trading
- 7 Frequently Asked Questions (FAQ)
- 7.1 Is Cryptocurrency Legal in Malaysia?
- 7.2 Does Malaysia tax Cryptocurrency?
- 7.3 Are there any risks with cryptocurrency in Malaysia?
Crypto Malaysia - What is Cryptocurrency?
Cryptocurrency, or crypto for short is a type of electronic currency that uses cryptography to secure transactions. It's based on a decentralized system to record transactions and issue new units, which means it's not under the control of any government or central authority. The best known example of a cryptocurrency is Bitcoin, which was created in 2009 and started being used in 2010. Since then, numerous other cryptocurrencies have been created such as Ethereum, Ripple and Litecoin.
To use crypto, you first have to sell your local currency into tokens – a process which has to be done through exchange platforms. Once you have bought the tokens, you can use them to purchase goods and services online or even start investing and trading.
Cryptocurrencies are still in their early stages, so there are many uncertainties about their long-term viability. However, as they gain more widespread acceptance, they could become an important part of the global economy.
How does Cryptocurrency Work?
Cryptocurrencies are based on blockchain technology. A blockchain is basically a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems to make it impossible for hacking and cheating the system. Units of cryptocurrency are created through a process called mining, which involves using computer power to solve complicated mathematical problems and earn coins as a form of reward.
Cryptocurrencies are encrypted by default and can be transferred using an assigned address or public key. They don't have physical form so they can be instantly exchanged online without the need of an intermediary like a bank.
As a side note, cryptocurrencies have no intrinsic value at all. Their perceived value comes from people's belief in them, which makes them volatile and highly speculative. Experts recommend that you should only invest money in cryptocurrencies that you can afford to lose.
Cryptocurrency exchanges allow you to buy and sell cryptocurrencies for other digital currencies or fiat money (legal tender declared by the government such as the MYR).
Examples of Cryptocurrency in Malaysia
- Bitcoin (BTC)
- Litecoin (LTC)
- Ethereum (ETH)
- XRP (XRP)
- Solana (SOL)
- Cardano (ADA)
Buying vs Trading Cryptocurrency in Malaysia
If you're looking to make money through cryptocurrency, it's important to choose the right strategy. You can buy and hold for the long term, or you can trade the highs and lows in price. Neither is guaranteed to make you money, but trading consistently requires a higher level of skill and a larger amount of time in return for a good profit margin.
Buying and holding cryptocurrency is a strategy for most beginners that can lead to better fortune. For example, if you bought Bitcoin in the bull market at its lowest price, it can potentially turn into a great profit when the bear market arrives. There can be benefits to buying and holding cryptocurrency as an investment strategy, but picking up the right crypto is not that simple. Thousands of cryptocurrencies are around lately and it can be hard to determine the right crypto to invest if proper research is not done. Despite possible benefits, it is important to take account of risks when buying crypto because there is no guarantee in such a volatile market.
Compared to trading crypto, buying and holding is a simpler and easier way to earn profit in a long term strategy. However, it can take up to months or even years to be able to see the results since the initial buy. One of the differences between them is buying crypto owns the token outright while trading speculate on the crypto's price movement without having to take ownership. The advantage in this is trading does not have to worry about the storage of cryptocurrency and actions like theft or hacking would not happen. Another significant difference between buying and trading crypto is that trading can be short or long at any given time depending on your viewpoint while buying crypto can only be long, which usually is compelled to hold the crypto and hope it can shoot up in value in the future to make a profit margin.
While for crypto traders, you can position yourself in either direction and take the opportunity to trade directionally. For example, by trading Bitcoin on margin or leveraging your position, you can take advantage of the price swings in the market while minimizing your investment. This flexibility can be a great way to invest in Bitcoin, especially when prices are volatile. Finally, trading crypto actively allows the use of entry orders, stop losses, profit-limit orders, and risk management techniques that are just not possible when simply purchasing Bitcoins.
In the end, there is no universal answer to whether you should buy or trade cryptocurrency. It entirely depends on the situation, such as your time available, skills and knowledge. Becoming a successful trader requires hard work and dedication, but it can be incredibly rewarding if you stick with it.
How to Buy Cryptocurrency in Malaysia
After understanding what cryptocurrency is and how it works, you can buy and invest or trade crypto yourself and we will guide you on how to do that here. First of all, cryptocurrency can’t just be bought simply anywhere, there are only a few ways which include buying cryptocurrency from crypto exchanges or online trading platforms.
If you're just getting started investing in cryptocurrencies, it can be a little confusing at first. But following these five easy steps will help you get started quickly.
1. Choose a Crypto Exchange or Broker
Cryptocurrencies are fascinating and complex investments, but that doesn’t mean you have to be an expert to get started. In fact, some of the best and most popular cryptocurrency exchanges offer simple interfaces that make it easy for new investors to get involved.
To buy cryptocurrency, you'll need to pick a broker or a crypto exchange. While either option will let you purchase crypto, there are some key differences between them to keep in mind.
Cryptocurrency brokers are usually more user-friendly than exchanges and can provide greater stability and security when trading. On the other hand, exchanges offer greater liquidity and often have lower fees. It's important to choose the right platform for your needs before starting any investment!
One important note: Before you start buying cryptocurrency, make sure your exchange or broker allows fiat transfers and purchases. Some exchanges only allow you to buy crypto using another crypto, so you’d have to find another exchange in order to invest in tokens on that platform.
2. Create and Verify Your Account
After choosing a cryptocurrency broker or exchange, you can sign up to open an account at their platform. Depending on the platform, you may have to verify your identity because this is an essential step to prevent fraud and false identity.
Before you complete the verification process, you might not be able to do cryptocurrency transactions. The platform might ask you to submit a copy of your driver’s license or passport, or even a selfie to match the documents you submitted.
3. Fund your account
To buy crypto, you'll need to ensure that you have the funds available in your account. You could deposit money into your crypto account by linking your bank account or any other alternative online payment. Depending on the platform and payment method, you probably have to wait some days before using the money you deposit to buy cryptocurrency.
4. Place an order
You can usually place an order with the click of a button on your broker's or exchange's platform. You can buy crypto of your choice with a click away after selecting the amount of crypto, types of order etc.
5. Select a Storage Method
After buying your cryptocurrency, you'll need to store the private keys to your crypto asset to protect it from theft and hacks. While some exchanges or brokers have built-in crypto wallets in their platform, you can move it to a more secure location if you do not like the providers or the exchange platform.
The best way to store your cryptocurrency is by using a cryptocurrency wallet. There are two essential types of wallets:
- Hot wallet: "Hot wallet" are connected to the internet and can be accessed via your browser or your phone. You can send your crypto exchange wallet to your hot wallet if necessary for storing separately. It utilizes online software to protect the private keys to your crypto assets.
- Cold wallets: Cold wallets aren’t connected to the internet unlike hot wallets. They are also known as hardware wallets that look similar to USB drives. They are considered more secure than hot wallets as they rely on offline electronic devices so they aren’t as vulnerable to hackers.
How to Trade Cryptocurrency in Malaysia
The act of speculating on cryptocurrency price movements through a Contract for Differences (CFD) trading account, or buying and selling the underlying coins through an exchange, is known as cryptocurrency trading.
CFD trading is a type of derivative that allows you to speculate on cryptocurrency price movements without owning the underlying coins. You can go long ('buy') if you believe the value of a cryptocurrency will rise, or short ('sell') if you believe it will fall.
Both are leveraged products, which means that you only need a small deposit - known as margin - to gain full exposure to the underlying market. Because your profit or loss is still calculated based on the total size of your position, leverage magnifies both profits and losses.
Similarly to buying crypto, the steps in trading crypto are pretty much the same except for the difference in crypto trading: they do not have to store their crypto. There are many cryptocurrency brokers available for you, but few are as easy and secure to use as FXCM-Markets. If you're looking to get into cryptocurrency trading, FXCM is a great option. With low fees and easy access, we can help you to trade the most popular cryptocurrencies CFDs such as Bitcoin, Litecoin Ethereum, Bitcoin Cash. So whether you're a beginner or an experienced trader, FXCM is the perfect place to start your journey into the world of cryptocurrency CFD trading!
In order to trade cryptocurrency CFDs on FXCM, follow the steps below:
To create an FXCM account, follow the steps through the link to complete the application process.
2. Fund your account
You need to ensure that you have the funds available in your account in order to trade crypto CFDs. You could deposit money into your crypto account by linking your bank account or through any other alternative online payments.
3. Start Trading
Once you have finished all the steps previously, you can venture into the journey of crypto CFD trading right away! Do take note trading crypto CFDs can be risky so you have to take responsibility for all your own losses.
Frequently Asked Questions
Is Cryptocurrency Legal in Malaysia?
The exchange of services or assets of cryptocurrencies in Malaysia is not prohibited by any laws. However, crypto is not legal tender in Malaysia. Meaning cryptocurrencies are not recognised as legal payment methods.
Does Malaysia tax Cryptocurrency?
With the recent publication of Guidelines On Tax Treatment Of Digital Currency Transactions by LHDN Malaysia, the document said that "a person who actively trades digital currencies may be considered as generating revenue from the activity, thus gains from this digital currencies trading is taxable. On the contrary, gains obtained by individuals who trade occasionally may be viewed as capital gains which are not taxable in Malaysia."
To summarize, capital gain refers to earnings that you obtain via investments while revenue gains refer to the earnings that you gain from business transactions or trading on a regular basis. In other words, if you invest in cryptocurrency where you hold on to it for a period of time, then you will not be required to pay tax. While revenue gains from business transactions and trading will be taxed.
Are there any risks with cryptocurrency in Malaysia?
Cryptocurrency is not regulated by any central bank or financial institution. Thus, the value of cryptocurrency is determined solely by supply and demand. This means that there is a risk that the value of cryptocurrency could plummet at any time. The risk is even higher for those who invest in cryptocurrencies that are less established.