Story Highlights

• A growth hacker by day, Akshay presently owns 77 bitcoins, among other cryptocurrencies
• Akshay started trading in bitcoins after failed attempts at mining them
• He's seen more than a 15x uptick in his holdings

It’s close to noon, and it’s taken a tedious Uber ride for me to reach the Culture Machine office in Goregaon, Mumbai. We’re about to meet their growth hacker, Akshay Haldipur, who has had an impressive run with his investments in cryptocurrencies.

Haldipur owns around 77 bitcoins at present, and also holds stakes in other cryptocurrencies, such as Ethereum, DASH, and Ripple. Thanks to bitcoin scaling to an all-time high, he’s seen more than a 15x uptick in his holdings. We’re about to record a video in which he shares his trading strategies and tools of the trade.

“Well, I come from a background of PEN-testing (penetration testing), and web security. This kind of a thing really excited us back then (2013),” he says. On first impressions, Akshay doesn’t seem to fit the hacker persona — he looks like a guy who can bench press 300 pounds.

At some point in early 2013, Haldipur and his friends had created a mining pool to see if they could earn bitcoins the hard way. The group didn’t make any headway, and some damaged their PCs in the process. “I burnt my ATI Radeon GPU when I first started mining four years ago. Then I realised I should just save some money and buy bitcoins,” says Haldipur.

Also: The story of a Bengaluru techie hacked, sucked into the Bitcoin black hole

Akshay purchased around 24 bitcoins at that time, costing around $200-250. It was a good time to get in. By late 2013, bitcoin’s price had risen to over $1200 on Mt Gox, one of the largest currency exchanges at the time. As they grew in value, he sold a few of them to buy other cryptocurrencies, diversifying his bets.

While Mt Gox no longer exists, bitcoin has survived many such calamitous exchange meltdowns. Last year saw considerable value appreciation for bitcoin, from $400 to $800. By January 2017, bitcoin had breached the $1000 barrier again for the first time in three years.

In March this year, bitcoin was worth more than an ounce of gold. Its prices continued to scale after it became accepted as a legal payment method in Japan in April, rising to over $2500 in the months that followed.

The tools of his trade

As a cryptocurrency trader, Akshay does most of his shopping from international bitcoin exchanges, as he feels Indian exchanges are not competitive. He routes the money and gets investments done in US markets and cryptocurrency exchanges to get more bang for his buck. “So, for example, if I have to invest in one bitcoin, in a Poloniex, which is a US-centric exchange, it would be close to around $1200, but when it comes to India, it costs around Rs 2 lakh. So, there’s a margin of around Rs 50,000-60,000 because of the premium charges that they (Indian exchanges) consider,” he says.

He names a few exchanges he frequents — Bitstamp, Bitfinex, and Polinex roll off his tongue — but is wary of betting on their resilience. “I don’t want to name anyone for certain, because, the very same guys could turn out to be scammers,” he says. Akshay advises the use of exchanges that are well known in the bitcoin fraternity.

Some of the top-funded, VC-backed bitcoin exchanges include San Francisco-based Coinbase, Tokyo-based Bitflyer, and London-based Bitstamp. In India, Coinsecure, Zebpay and Unocoin have secured VC funding. “There are many websites out there, like Localbitcoins where you could meet a person and buy bitcoins from them,” he says.

Given their past history, it makes sense for Akshay to remain wary of keeping his money on exchanges. “In the past, portals like Bitfinex and many others out there have got hacked. While you cannot hack into the blockchain… these exchanges are hackable,” he says.

Hong-Kong-based Bitfinex was looted of $70 million worth of virtual currency by hackers in mid-2016, the largest such attack since Mt Gox was hacked for $450 million in early 2014. In May, Bitfinex announced that it had repaid its customers after issuing them IOU tokens.

Bitcoin exchanges have a dismal track record, according to a study funded by the US Department of Homeland Security. Nearly one-third of bitcoin trading platforms have been hacked from 2009 to March 2015, it reported, and about half have closed shop in their first six years.

Akshay recommends turning on two-factor authentication on these sites wherever available and using hardware ledger wallets.

“There are three of them (hardware ledgers) that I know of, and have used in the past — Ledger Blue, Ledger Nano S, and Trezor. These act like hardware ledgers where you can store your bitcoins, depending on certain capacities. They have the capacity to support different types of coins. But, yeah, bitcoin is the one that they usually support,” he says.

Designed like USB dongles, these hardware ledgers help users safely store their private keys. The Czech-made Trezor, a crypto-vault, priced at $99, seems like the one to buy. Its FAQ lays out some of the most disastrous scenarios to a cryptocurrency buyer, from compromised computers and phones to hacked exchanges and servers. “Even if your host PC is compromised, the attacker has no way of getting your private key,” the product literature boasts.

“Well, there are other mobile ledgers as well, called Jaxx, which you could use. This could also act as a ledger for you to save your bitcoins on a hardware level versus just keeping it on these exchanges,” he says.

Resilience through diversification

Beyond the tools of his trade, it takes a certain mindset to invest heavily in cryptocurrencies and stay invested. “Unlike the share market where shares drop overnight, or people sell them off, so they don’t make losses, in this kind of an environment, it’s important not to sell these coins when you see a drop,” he says. He cites the recent example of how bitcoin prices fell to a $1000, and then hit all-time highs, trading at up to $3000 on some exchanges. “Selling bitcoins overnight because you have seen a drop is the most foolish thing one can do,” he says.

He also believes in diversifying his portfolio, in terms of both the coins and the exchanges they are purchased from. “It’s advisable to not put all your bitcoins in one exchange. Diversify them, increase your portals to three or four different types of exchanges. Once you do that, it gives you the ability to play around with different coins, which in turn will give you a better understanding how multiple exchanges work at the same time,” he says.

Also read: The next three months will be crucial for India’s risk-taking merchants of Bitcoin

Bitcoin is also the currency of choice for the dark web, where it is used to trade everything from drugs and weapons to hacking tools. It was the currency of choice on Silk Road, an online black market. The recent WannaCry attacks again put the lens on bitcoin as an enabler of ransomware.

Nevertheless, bitcoin’s resilience has paved the way for other cryptocurrencies. At present, Ethereum is at half of bitcoin’s market cap. At the time of writing, seven other currencies apart from bitcoin had a market cap of over a billion dollars, and the total market cap for cryptocurrencies stood at $94 billion. Other cryptocurrencies, such as Ripple, DASH and NEM have skyrocketed in price and market cap this year.

Deepak Shenoy, founder of Capitalmind.in, a portal that provides investment guidance to beginners in financial markets, is on the fence when it comes to investing in bitcoins. “The risk is not just of a price crash, but also of a government clampdown. But, if you take the risk you might just come out before the bad things hit the fan!” he said, over a private correspondence.

“As a currency, it currently serves very little purpose, and it aids ransomware attacks and money laundering. It’s got good things like currency exchange, but the prices are too volatile (and the  spread is too wide). It might just work well if countries ignore it. But if bitcoin transactions become the norm, you can bet that there will be demands to tax, monitor, de-anonymise and, in general, make things more difficult for bitcoin owners.”

The Indian  government recently published a questionnaire asking members of the public for their views on whether cryptocurrencies should be regulated. The poll has received over 3800 responses.

Bitcoin’s WhatsApp Moment?

For bitcoin to become as ubiquitous as WhatsApp, it needs to support hundreds of thousands of transactions per second without any transaction fee, Sathvik Vishwanath, co-founder of Unocoin says. “We are not there yet and the infrastructure still needs to scale up,” he adds.

Bitcoin wins hands down over fiat currencies and other payment options in terms of fees, transaction time, and across borders, said Zebpay co-founder Sandeep Goenka. “Bitcoin’s WhatsApp moment will be when a global company like Airbnb or Uber starts accepting bitcoins,” he says.

For Akshay, who is a seasoned crypto-coin trader, none of this really matters. It’s all about finding a good bargain — buying low and selling high. “Each day, and each night you keep finding loopholes to find bitcoins at better rates, and then you can get them withdrawn at a better price.”

Also read: Bitcoins rally in India on the demonetisation move

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