09.03.2021, 07:00

FOMO landed to Vietnam: from Bitcoin fever to Pi

FOMO landed to Vietnam: from Bitcoin fever to Pi

Bitcoin is now surpassing $51,000 rushing investors in Vietnam to look for other cheaper cryptocurrencies with the hope to make some profit from the effect of the Bitcoin fever. Thousands of Vietnamese who did not appreciate cryptocurrencies are now rushing to mine Pi coins.

by My Huyen

Mr. Kenn Smith has been living in Vietnam for more than 20 years. Being a person in the financial industry, he told people that he will not invest in a house in Vietnam because the monthly rent he paid for several decades was only half the price of a house he lives in. He is not interested in property investment but recently is in a crypto. He joined Pi Network and mines Pi every day. Although there were warnings from experts about the Pi Network project, he thinks Pi could be the evolution of money in the future. He also invited 12 other people including Vietnamese to join: “I don’t have to pay for the usership nor a Pi coin. If Pi Network asks for money, I will just stop. Then I would only lose my information like giving a business card to someone. When Pi works as digital currency, I can use it for international money transfer.”

Mr. Dao Nguyen used to spend all his time taking care of Ong Vang Farm, an agricultural-tourism business he founded. Recently, following people rushing to Pi, he also installed the application from Pi Network to mine Pi coins. Though he is not sure when it will be profitable in the future. Two days ago, he mined 6 Pi, which he thinks will be $1,200 as estimated by previous miners. He consulted with his IT friends, so he believes that Pi Network will become an ecosystem to “bring real life to virtual platform” and Pi will become a new currency.

Thousands of others who were not interested in crypto in the past, are recently studying what is cryptocurrency by the effect of Bitcoin’s price. Because Bitcoin is skyrocketing, the newcomers think Pi is their best option to own a virtual currency with the hope of making surprised profits. Everyday they only need to login to Pi Network from the phone app and press the start button to mine Pi. They assumed that is the cheapest way to own a cryptocurrency, because the registration was free.
Dr. Pham Nguyen Anh Huy, Lecturer, Economic and Finance at RMIT Vietnam University calls the rushing for cheap cryptocurrencies is FOMO (fear of missing out) state. For 13 million people joining Pi Network in a short time, they also want to make easy and quick money in addition to FOMO. They are not investors because they do not have to pay money for a Pi coin.

Dr. Huy recalls the cases of ILCOIN and Ilgamos. When ILCOIN was introduced in the Vietnamese market, they used multi-level marketing tactics to increase the number of users and ILCOIN was mined centralizedly. Now Pi Network is using the same tactics and promoting commercial ads. Later, Pi Network will abandon the multi-level marketing business model and listing its crypto on a credited exchange to go mainstream. However, if an investor invested $10,000 in ILCOIN in 2015, they have lost about 98.5% currently. Pi is earning money from advertising sales and this has not had an impact on investors currently. Users will have to provide access to the directory, full name and phone number for the Pi Network. However, the biggest lesson is that a cryptocurrency tied to a multi-level marketing business model is a clear sign of a failure of a crypto project.

Joining the Pi Network and earning Pi coins easily which means the network does not have a clear limit on the supply of the Pi. Dr Huy estimates that Pi Network is providing at least 40 million Pi for free to more than 13 million users everyday. The amount of Pi provided will continue to increase as the number of users increases. Although the Pi Network applies a halving mechanism, still the amount of Pi is based on the total number of users. This cannot hide the fact that Pi Network does not have a clear limit on the supply and that the amount of Pi depends on the number of users.

Notably, the Pi Network system is closing the source code, so the information given is difficult to confirm. For example, Pi Network introduces a consensus algorithm built on Stellar, but it is difficult to verify which algorithm they are actually using. Therefore, it is not feasible to hope for an unlimited supply of crypto to exist. Even the popular Bitcoin only has 21 million coins issued. But the charm of the Pi lies in the massive investment with the fear of missing out.

Dr. Nguyen Thi My Linh, Lecturer, Economics and Finance at RMIT Vietnam University said that amateur investors should cool down their fear of missing out. They should study a certain cryptocurrency and market before following the trend. They need to learn which coins have good fundamentals, come with their own functions. A crypto with no clear functions, no mechanism or sometimes just ideas, should not be invested in. The cryptocurrency market still has high returns now, however, with high price volatility. Therefore, investing in crypto is still risky because a lot of increase and decrease come just in a short time.

Dr. Huy cited a researcher from Statista that the popularity of cryptocurrencies in Vietnam ranks second in the world. Hence, the crypto investment fever will continue to thrive in the country. But people should prepare themselves and not follow the crowd as well as involve multiple levels marketing business models in the name of cryptocurrency.

Therefore, according to these two experts, it is necessary to have the role of the state and legal framework to regulate the market. Governments around the world are also gradually introducing regulations related to this market, for example in anti money laundering, ICOs and taxes. Besides cryptocurrencies, decentralized finance will explode in the near future in Vietnam if government policy is more open to crypto and fintech. What needs to be done is to quickly create legal frameworks for mainstream cryptocurrency exchanges to increase transparency and ensure a safe investment environment. At the same time, the laws on income tax from cryptocurrency trading should be in place to increase budget revenue.


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