Table of Contents
Luno Review — A Popular Bitcoin Investing App
In this article, we’ll be going through:
- What is Bitcoin?
- What are the pros & cons of investing in Bitcoin?
- How to invest in Bitcoin
- Luno Review
If you already know what you need to know about Bitcoin and you just want to skip ahead to the Luno review, you can scroll down to
It’s no doubt that Bitcoin is an investment popular amongst us millennials.
According to polls, millennials are 3x more likely to invest in Bitcoin compared to our Gen X friends. Even more interestingly, 27% of those aged 18-34 prefer Bitcoin over stocks as investments.
It makes us wonder, why is this the case?
Are these preferences warranted or is it down to hype?
Are people buying into this cryptocurrency in belief of its potential or could it be advice from friends?
Young people tend to be easily influenced by peers. The availability of knowledge on the internet is so vast that we could easily do our own research and come up with our standpoint on Bitcoin.
However, we noticed that views on Bitcoin are either way too bullish, in that they’ll go up to a million bucks, or way too bearish saying they’ll be worth nothing.
And we don’t want to end up reading too much opinions from either of these sources as they only tell one side of the story.
So, we’re gonna break down the arguments from both sides and come up with our conclusion & recommendation!
Let’s start off with, what actually is Bitcoin?
What Is Bitcoin?
At its core, Bitcoin was made to become a digital currency, not backed by any other fiat currency we currently have (USD, MYR, etc).
What this means is we can’t exchange our Bitcoin for a fixed amount of Malaysian Ringgit. Instead, you’ll get what others are willing to pay for it.
It started in 2009 during the Global Financial Crisis with the purpose of creating a decentralized currency, meaning it isn’t controlled by a central bank or government.
Unlike the money we currently use, ie, the MYR is controlled by the Malaysian Central Bank (BN) and the USD by the Federal Reserve (Fed).
During the Global Financial Crisis and the more recent pandemic, governments had to pump out money to their citizens to prevent a massive economic downturn.
Had it not been for their interventions, stocks markets and the economy would have most likely been worse off than it is today.
The problem with this is that the printing of money devalues it. The more USD there is circulating in the market, the less valuable it is. And it makes us all poorer.
What happens when too much money is printed?
Imagine if tomorrow, every citizen in Malaysia wakes up to RM1 million in their bank accounts. Would be great, don’t you think? Well, not so much.
If you had a million bucks, maybe you’d be thinking of buying your first house tomorrow.
You wake up, dress up, and get excited to get the keys to the house you’re ready to pay for in cash!
You head over to the real estate agent and to your surprise, there’s a massive queue.
Turns out, everyone wants to buy a house with their new found wealth.
The real estate agent realizes this and decides to double the listed price of their houses. House developers find out about this, and charge double for raw materials and labour.
Suddenly, no one can afford a house again.
People realize everything’s more expensive now and demand double the wages from their employers. Prices of everything goes up, nothing is gained.
The big problem happens to your savings. Imagine grinding up to an RM1 million savings account and overnight, everyone has the same amount. What happens to the value of the million bucks you saved up in cash? Whoosh.
Back to the topic, Bitcoin was created to prevent this from happening. The only way to add more Bitcoin is to mine it, and the supply is limited.
What Is Bitcoin Mining?
Disclaimer alert – we’re not 100% confident in our understanding of this so some parts may be inaccurate. But let’s give it a shot!
As a digital currency, Bitcoin can be used to make transactions in the purchase of goods & services.
Everytime a transaction is made, it needs to be verified and recorded so everyone can see the “money” flow. They audit these transactions and ensure everything is transparent.
To verify a transaction, miners have to solve complex puzzles done by their computers. In truth, “solving” this puzzle is guesswork and only the first miner to do so will be rewarded with new Bitcoin.
For the most part, mining Bitcoin can be very expensive to operate so not everyone tries it out. This way, the new supply of Bitcoin is limited and controlled.
No one can simply come up and print new Bitcoin, thus preventing massive inflation.
Without diving too deep into things, let’s take a look at some of the positives and negatives of owning Bitcoin.
Pros of owning Bitcoin
1. Hedge against the devaluing paper currency
2. Increasing demand and popularity, ie, being accepted in KFC, Burger King & Starbucks
Cons of owning Bitcoin
1. Government intervention
2. The valuation of it derives from how much people are willing to pay for it — adoption is key
Our Opinion On Bitcoin
We see Bitcoin’s potential at a 50-50 right now.
It could play a critical part of our financial lives in the future or just as well be blocked by governments/have low adoption rates and drop in value.
Our position in this is, it has a great risk/reward ratio.
Let’s say we decide to invest RM100 in Bitcoin.
Could it drop to RM0? Although we think this is unlikely, it could. In this scenario, we’d be down RM100.
Could it double in value? If it manages to fulfil its potential, it could very well go up 10x, or even 50x.
When we say this, we mean in comparison to fiat currency (USD,MYR). Our initial RM100 could then technically be worth RM1,000 to RM5,000.
With this, we have an incredibly favourable risk/reward ratio. Risking RM100, we have the potential to make RM900-4,900.
However, this is an incredibly risky investment so we should treat it like one.
Currently, our Bitcoin ownership is <1% of our entire portfolio.
We’d personally recommend to not go above 5% of your portfolio in cryptocurrencies.
This way, we’re maximizing our losses at small amounts (0-5% of portfolio) in hopes that one day it’ll be worth a lot more.
Do note that Bitcoin is extremely volatile in it’s price, so only put in an amount you’re willing to lose.
If 1% of your portfolio is RM1,000 and you can’t stomach the feeling of seeing this drop by half, then reduce that amount.
The same goes for all investments, only put in an amount you’re comfortable with.
Bitcoin is way more volatile than most stocks, so this amount should be smaller.
How To Buy Bitcoin? Luno Review
If you’re an eToro user, you can purchase Bitcoin from the app itself. It’ll give you great convenience in managing your entire investment portfolio.
For us however, we prefer to go with Luno.
The reason for this is that Luno not only allows users to invest in Bitcoin, it’s actually a wallet that lets you transact in.
This means that we’re the rightful owner of the Bitcoin we buy.
We can use it to send Bitcoin to friends, or even to pay for services if the business accepts it.
On the other hand, eToro does not allow you to transact in Bitcoin and you’re not the owner of the cryptocurrency.
We’d personally much rather own the actual assets ourselves. It’s also dedicated to cryptocurrency and has a large following with good reviews.
Is Luno Safe?
Luno is probably as safe as it gets when buying cryptocurrency.
We own it as an asset and together with cash in our account, it’s being held in a trustee account that can be recovered should anything happen to them.
They’re also regulated by the Securities Commission Malaysia and is the first cryptocurrency exchange to get the approval in Malaysia.
What Can I Buy In Luno?
Other than Bitcoin, they also have Ethereum & Ripple as choices for cryptocurrencies.
Luno Fees
Currently, Luno has no fees for those setting a limit order on purchasing, meaning you set a price you want to buy at and will wait for it.
If you want to buy the Bitcoin immediately, Luno charges a 0.2% fee which is not too bad.
For a full list of fees Luno charges, you can click here.
Luno Platform & User Interface
The platform is also rather simple to use, so that’s a big plus!
The main thing we didn’t like is that they didn’t have too many options in depositing.
The only way was to make a bank transfer which we don’t find too convenient.
However, we can look past this since it’s unlikely we’ll be depositing too often.
If you wanna try out Luno, you can use my referral code Y5SZ8B so we both get RM25 once you buy RM250 worth of Bitcoin! 🙂
Final Thoughts…
Bitcoin is a new investment that we’re sure to keep our eyes on.
It’s unique and it has the potential to change the way we interact and transact with money.
Our app or broker of choice to buy Bitcoin would definitely be Luno, since we can use it as a Bitcoin wallet, unlike other brokers like eToro.
However, we do wish that Luno would give us more flexibility in depositing our money, instead of having only 1 option which is to make a bank transfer.
Enjoyed reading this article? Share it with your friends! It’d be mean a lot to us 🙂
Read these articles next: