Can bitcoin and ethereum challenge the traditional world of fiat currencies?

THEIR price may be volatile, they may be used by a few rogue elements and lack traceability, yet cryptocurrencies such as bitcoin are all the rage now.
Going by some reports, there are more than 900 cryptocurrencies based on blockchain technology today, but the market is led by the main ones such as bitcoin and ethereum.
Bitcoin has risen by some 771% over the last three years to hit an all-time high of US$2,871 recently. Notably, it started seven years ago at a value of almost nothing. Newcomer ethereum has seen its price spike by more than 5,000% year-to-date.
The interest of many Malaysians has been piqued, wondering if they should jump on the bandwagon. The talk is that there are a few Malaysians who have become bitcoin millionaires, as they had invested in them early. Some are bitcoin miners, a process of verifying transactions in the system, which pays in bitcoins.
But cryptocurrencies lie largely in a grey area of the law. Their actual usage is limited. So, why are people rushing to buy them?
“It is mostly (buying on) speculation and to some extent a hedging mechanism,” says an investor.
A much-written phrase on the Internet today is this: “If you bought US$5 of bitcoin seven years ago, you’d be US$4.4mil richer”. A single bitcoin was then worth a quarter-of-a-US cent.
Investors can buy these currencies through exchanges spread across the globe, including some in Malaysia.
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One such exchange is called Luno, which describes itself as a global company with a local presence. On its website, it says you can buy bitcoins by transferring money into its Maybank or CIMB accounts. It provides a price list of its bitcoins and charges a fee to buy and sell bitcoins via its exchange.
Another is CoinHako, a Singapore-based cryptocurrency exchange that allows the trading of bitcoin and ethereum.
Its CEO and co-founder Yusho Liu says it started the exchange three years ago, after discovering that there was no easy way to trade in these currencies in this part of the world. Malaysian users can use the ringgit to purchase these cryptocurrencies on this exchange. CoinHako charges a fee of 0.9% for every transaction and RM2 for every withdrawal into ringgit or Singapore dollars, which will take two days to process. However, CoinHako places a trading limit of RM30,000 per user per day.
Liu says there are more than 10,000 Malaysian users of his exchange to date.
The app also allows users to use their bitcoins stored in the CoinHako wallet to buy goods and services in outlets where they are accepted.
Given that there are not that many outlets that accept bitcoins, Liu points out that a cafe called Jeq In The House in Section 17, Petaling Jaya, accepts bitcoins. The legality of these exchanges, though, is not clear.