How To Invest In Cryptocurrencies In The Philippines 2023

8 Minutes
Updated Apr 28, 2023 01:31

Cryptocurrencies have been one of the most enchanted investment vehicles in recent years. Their widespread popularity didn't spare any country, including the Philippines. However, investment in digital assets is more complex than people perceive it. Besides having a sound understanding of the technology, you must hold profound market exposure and expertise to remain successful in the crypto world.


This article briefly discusses the basics of cryptocurrencies, explaining what they are, how they work, and why investors are attracted to them. We also talk about the regulatory framework in the Philippines and list step-by-step instructions on investing in cryptocurrencies in the country. We believe reading this guide will help you concrete your concept about cryptocurrencies and help you make informed investment decisions. 

What Are Cryptocurrencies?

Cryptocurrencies, also called virtual tokens, are blockchain-based digital assets that operate as a medium of exchange. Crypto assets use encryption techniques to secure transactions and create new units. They offer an alternative to traditional currencies and a financial system where transactions are slower, expensive, and government-controlled. Instead, they employ a peer-to-peer network for recording and validating transactions involving negligible cost. 


While Bitcoin (BTC) is the world’s first cryptocurrency, the market now has over 22,000 crypto coins, with Ethereum, Litecoin, Dogecoin, Solana, Ripple, Tether, and Cardano being the most popular ones. As of this writing, the global market capitalization of cryptocurrencies is estimated to be $1.22T.


How Do Cryptocurrencies Work?

Cryptocurrencies are received, sent, and stored using crypto wallets. These crypto wallets have unique addresses used to identify the target recipients. All crypto transactions are verified by crypto miners using powerful GPUs. They solve complex mathematical equations to validate transactions before adding them to the blockchain ledger - a public record of the entire history of the cryptocurrency.


Why Do Cryptocurrencies Appeal To Investors?

Higher yield and independence from centralized banks are two of the main selling points of cryptocurrencies. Let's briefly discuss and list a few more reasons below; 


Decentralization: Unlike fiat money, cryptocurrencies are autonomous, which means no central government or financial institution regulates them. Their decentralized nature makes them attractive to those looking for greater flexibility and independence. 


Anonymity: Cryptocurrencies offer privacy protections which isn't the case in the conventional banking system. Therefore, Investors who prioritize privacy and want to transact funds without disclosing their identity prefer to use cryptocurrencies.


Inflation Protection: Because of their limited supply, many cryptocurrencies are immune to inflation. Investors seeking hedges against inflation will find them appealing for this reason.


Trading Flexibility: Because you can trade cryptocurrencies around the clock on worldwide exchanges without observing timings or limit constraints, cryptocurrencies ultimately offer you more trading flexibility. The limitless volume of crypto transactions also makes them highly appealing to investors. 


Speculation Opportunities: Due to its extreme volatility, the crypto market presents numerous investment options. Speculators seeking high-risk, high-reward investments find this market appealing for the same reason.


Portfolio Diversification: Also, many investors turn to cryptocurrencies to diversify their portfolios beyond stocks, bonds, and real estate.


However, cryptocurrencies are highly volatile in nature and can observe sudden price jumps leading to catastrophic losses. The absence of regulatory checks and incidents of hacks and thefts make them even more unsecured. Therefore, investors should carefully assess the associated risks and conduct extensive due diligence on cryptocurrencies before staking their money into them.

Legal Environment of Cryptocurrencies In The Philippines

Even though cryptocurrency laws are still evolving in the country, the government's attitude towards their adaptability seems welcoming. The Philippines government recognizes digital assets as legal in the country as long as entities dealing with them hold registration from the concerned regulatory authorities.


The Bangko Sentral ng Pilipinas (BSP) is the prime authority that deals with crypto regulations. The country's Security and Exchange Commission (SEC) also plays its part in helping the bank to devise and implement a legal framework concerning the scope and use of digital assets within the Philippines.


The BSP issued its first circular in 2014, acknowledging cryptocurrencies as a medium of exchange or store of value. While the BSP continues invigilating digital assets, it issued another circular in 2017, requiring crypto exchanges to register with it being remittance and funds transfer companies. Similarly, startups looking for Initial Coin Offerings (ICOs) must hold an SEC registration certificate before going public.


According to the country's legal framework, all crypto exchanges and Virtual Currency Wallet Providers are required to adhere to strict AML/CFT guidelines to continue operations. As a tool to enhance monetary transactions in the country, the BSP remains actively involved in research and development into blockchain technology.

How To Invest In Cryptocurrencies in the Philippines?

Phippino clients can invest in cryptocurrencies using multiple platforms such as crypto exchanges, brokers, or peer-to-peer marketplaces. Examples include but are not limited to Binance, Coins.ph, PDAX, etc. Let's take you through a step-by-step guide on how to buy digital assets in the country.


1) Research & Understand The Risks

Since cryptocurrencies are highly volatile and carry massive risk exposure, you must weigh the risks and rewards of cryptocurrency investment before making any commitments. Identifying your risk tolerance and thoroughly researching the market, besides understanding cryptocurrency fundamentals and performing the technical analysis can help you make informed trading decisions.


Not to mention, If you want to get a handle on the risks, you need to do more than just read the news and blogs; you must seek out credible information resources like industry reports, white papers, and specialized websites. In addition, you can consult a financial advisor to help you weigh the risks and rewards of cryptocurrency investments.


2) Select A Crypto Exchange or Broker

Selecting a reputable crypto platform is crucial, especially when dealing in a decentralized market where most crypto exchanges tend to be self-regulated. You may also need to consider other factors when evaluating your prospective crypto platform, such as;


  • Security: It should have robust security measures like two step-authentication, SSL encryption and cold storage options. Also, make sure the platform has never been hacked. 


  • Fees: You may also want to know the relevant costs to buy your crypto assets. Check and compare different platforms and select the one that offers a competitive pricing structure. 


  • User Interface: Interfaces having steep learning curves are typically challenging to navigate, especially for newbies. Therefore, your prospective platform should have a user-friendly interface with all the essential tools available at your disposal. 


Supported cryptos: A platform supporting a wide range of cryptocurrencies is preferable. Most importantly, it should have your desired crypto asset on the list.


3) Open An Account

Once you've decided on the platform, you must open an account with it. The signing-up process involves filling up the registration form and completing the KYC process. You can use your ID card, Passport, or Driving license for identity verification. The platform may also ask you to submit a copy of your utility bill or bank statement as proof of residence.


4) Deposit Funds

Next, you must add funds to your account to buy your desired cryptocurrencies. Typically, crypto exchanges support multiple payment options, including but not limited to Debit Cards, Credit Cards, PayPal, Skrill, Neteller, Wire transfers, etc. 


Each payment method may have some associated fee for deposits and withdrawals besides having a minimum or maximum threshold. Therefore, it is vital to check and compare the cost of different payment options and select the one that fits your budget. 


Remember to check the payment processing time, too. It shouldn't take more than 24 hours for your funds to arrive in your account, except for wire transfers which typically take 3 - 7 working days.


5) Invest In Cryptocurrencies

After having some funds in your account, you can start investing in cryptocurrencies. There are primarily two options to consider, i.e. buying real crypto coins or trading them as CFDs. Depending on your budget, you can go either way. The difference between the two options is the amount you must spend and the nature of control. 


Buying real cryptocurrencies offers full ownership and requires you to settle the entire amount. On the other hand, you only need a fractional amount to enter a CFD contract for your desired crypto asset. Remember, due to regulatory restrictions, crypto CFDs may not be available in some parts of the world. Thankfully, that's not the case with the Philippines. 


There are some other factors you should consider while staking your funds in cryptocurrency; 


  • Market Conditions: Cryptocurrencies tend to be highly volatile, so you must watch out for your selected coin's prices and trading volume to stay abreast of the market and make informed moves. 


  • Order Types: Platforms support different order types, such as market orders, pending orders, stop-loss orders, and limit orders. Make sure to use them effectively. At least do not open a trade without employing a stop loss. It'll help you limit your risk exposure. 

Transaction Cost: Coins are bought and sold for a gas fee. You must carefully consider if these are comparable to other platforms.

Safekeeping Your Cryptocurrencies

Crypto assets are valuable and must hold securely. For instance, 1 BTC is worth around $30,000, approximately equal to ₱1,685,100. So, you wouldn't want their security to be compromised. There are several ways to store and protect your digital assets in the Philippines.


Generally, you store them in digital wallets. Multiple types of wallets are available in the market, such as hard, soft, and exchange-provided wallets. However, there are certain factors to consider before selecting them. Let's quickly go through each type of wallet below;


i) Hardware Wallet: Hardware wallets are known to be the safest of all. It's a physical device with private keys to access your crypto assets. The best part is that they are not linked to the internet, making it impossible for intruders to hack them. Keepkey, Ledger, and Trezor are some of the best options for clients looking for hardware wallets in the Philippines. Make sure to buy them from a reputable seller and that the device is genuine. 


ii) Software Wallet: Keeping your coins in a software wallet is another option readily available in just a few clicks. You only need to have them downloaded and installed on your PCs or mobile devices. Although software wallets are less secure than hardware wallets, they offer considerable security. Just ensure you keep their private keys safe and secured besides using two-step authentication to access them. Popular options for software wallets include Trust Wallet, Exodus, MyEtherWallet, etc.


iii) Exchange Wallet: You can also keep your assets in, an exchange-provided wallet, though we do not recommend it. Exchange wallets are the least secure to hold your cryptos. Here are some of the reasons why we believe so; 


First, keeping your coins in an exchange-provided wallet means entrusting your private keys to a third party. Doing so gives exchanges complete control over your digital assets; they can access your funds anytime. 


Second, exchange-provided wallets are connected to the internet, making them vulnerable to cyber-attacks. Although reputable exchanges employ advanced security protocols, there is always a risk of their security being compromised. In the past, several incidents occurred when even reputed crypto exchanges lost control over their funds and got hacked. 


For instance, a hacker stole 7,000 Bitcoin (now worth about $212 million) from Binance in 2019. Similarly, Hong Kong's Bitfinex cryptocurrency exchange was hacked in 2016, losing 119,756 Bitcoin (now worth about $3.5 billion). A flaw in the hot wallet security of both exchanges allowed theft to occur.


Finally, insider threats are another potential issue for exchanges. This raises the possibility that an insider at the exchange could steal money from its consumers.

Some Interesting Facts

  • According to a survey conducted by YouGov in 2021, 76% of Filipinos are aware of cryptocurrencies, and 40% have used or owned them.

  • The Philippines ranks #1 in the world for "Bitcoin" searches on Google Trends. 

  • The rising popularity of cryptocurrency in the Philippines has inspired Filipino artists to paint portraits of well-known politicians acting as crypto dealers. These portraits were sold for thousands of Pessos. 

  • Filipino hackers were caught illegally mining Bitcoin (BTC) with government-owned computers in 2018.

Cryptocurrency Investment Strategies

After you have acquired your altcoins, whether through direct purchase or some other means, what, exactly, can you do with all the digital assets you've amassed? Below we list some popular crypto investment strategies.


1) Trade Your Altcoins

Trading altcoins involve keeping tabs on the market and making calculated judgments about when to buy and sell your cryptocurrencies. You can do technical analysis to predict price changes based on the analysis of historical data. As the news and events surrounding particular cryptocurrencies can affect their pricing, keeping up with such developments is also crucial.


If you've recently purchased Bitcoin and notice that its value is on the rise, you can decide to liquidate your Bitcoin holdings in exchange for Ethereum, which is now trading at a cheaper price. After waiting for Ethereum's price to rise, you can trade it back in for Bitcoin at a profit.


However, there are some inherent risks with crypto trading owing to its increased market volatility, and making regular profits in trading calls for a high level of expertise, skill, and experience. You must have a proper risk management strategy in place to shield your investments from unexpected price declines.


Remember, trading your altcoins can be a lucrative investment strategy if you do it right, but you need to give it a lot of thought and work.


2) HODL (Hold On For Dear Life)

You don't need to buy and sell coins constantly. Instead, you have the option of holding on to your assets indefinitely or selling them at a later date when their value has skyrocketed. Although HODLing cryptocurrencies is a relatively risk-free strategy, it only benefits those optimistic that their digital assets' value will continue climbing.


3) Portfolio Diversification

Like any other investment market, portfolio diversification is also essential in the crypto world. The volatility of any one cryptocurrency can be mitigated by diversifying your holdings across several other coins. You can capitalize on market opportunities and market shifts with the help of diversification.


4) Seek Professional Assistance

Last but not least, consider hiring a professional investment platform if you are new to crypto investing or lack enough time or energy to manage your assets independently. In the Philippines, several platforms like PDAX, Coins.ph, BloomX, etc., offer automated investment management services to help you manage your portfolio and make educated investment decisions. 

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Conclusion

Considering the widespread adoption and evolved regulatory outlook, investment in cryptocurrencies seems much more mature and regulated in 2023 worldwide. The Philippines also follows the global trend. The Central Bank is actively participating in multiple crypto projects and is registering an increasing number of exchanges. On the other side, authorities seem busy polishing crypto regulations. To lessen its reliance on China, the country is rapidly approaching its future role as the region's cryptocurrency hub. 


Even though digital assets hold massive potential for generating substantial profits, you must remain cautious while investing your hard-earned money into such a highly volatile market. Your overall financial objective, risk tolerance level, and current financial status should form the basis of your investment decision.  

* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

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