A MAN has bought a $1million mansion in Dubai using Bitcoin after making $100,000 a month from mining the cryptocurrency.
Vineet Budki got into crypto after after noticing a customer at his travel agency making crazy requests for limousines, helicopters and private jets.
That customer ended up being Indian's biggest crypto miner and it wasn't long until Vineet had his own set up going.
After years of mining, Vineet turned his virtual currency into bricks and mortar in Dubai, where he's been living for the past 18 years, buying a luxurious three-bedroom villa in a gated community.
Investing in cryptocurrency can be risky and there have been lots of warnings about investing in them.
Unlike traditional investments they are not regulated and that means if something goes wrong you have no way to make a complaint.
Also, taking money from the crypto market to buy the house can be difficult as most banks won't take the virtual currency as payment for housing.
The risks of buying with cryptocurrencies
Investing and making a purchase in cryptocurrencies such as Bitcoin is risky .
Their value is highly volatile and City watchdog the Financial Conduct Authority has warned investors should be prepared to lose all their money.
Investing in cryptocurrencies is not a guaranteed way to make money.
You should also think carefully about making purchases with a cryptocurrency.
For example, Bitcoin has had wild price fluctuations in recent months and the price can change on an almost hourly basis.
The price of a Bitcoin was at $40,258 on January 9, according to Coindesk, but fell to $34,214 just three days later.
That's a 15% drop.
These price swings are risky for a business as you could sell an item for a Bitcoin at one price and the value may drop soon after, leaving you with less money from a sale.
Similarly, the price of Bitcoin has soared by more than 21% since the start of this week so it can be hard for a shopper to get an accurate idea of the price of an item if its value changes on a daily basis.
'I INVESTED IN A FEW PROJECTS THAT WENT BALLISTIC'
Vineet invested in Ethereum when it was worth $40 a coin. The crypto – which is one of the most popular – is now worth a staggering $2,000 a coin, making him an instant hundreds of thousands of dollars in profit.
"I invested in a few projects that went ballistic. It was right time, right place, right market. I became a believer," he told The Times.
Then, this year, Bitcoin reached $58,000 – a threshold Vineet set himself to cash in his profits.
On top of this, he owns a mining operation that has $1m worth of kit in a secret warehouse in Russia, which earns him $100,000 a month.
"Six years back, mining was you running a laptop PC, because there was not much of a difficulty level," he explained.
"But today it’s become a very specialised task where you’ve got to have special machines that can mint bitcoins"
5 risks of crypto investments
THE Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- Marketing materials: Firms may overstate the returns of products or understate the risks involved.
Vineet's fortune was ploughed into buying a three-bedroom villa in the Arabian Ranches – a gated community near Dubai's Global Village, costing $1million.
"The whole process took around 20 days," Vineet said, who is planning to move in with his wife next week. The sale itself took a mere 24 hours.
According to the former travel agent, the firm he went through done some due dilligence but he doubts they could track the origin of the funds, which crypto critics says makes it the currency of choice for gangsters and money launderers.
But for Vineet, buying a home in Dubai was about "a diversification of assets strategy".
"I had a feeling that there was going to be a fall. I sold some of my Bitcoins and today I can buy two Bitcoins for the same price," he said.
From there, the savvy miner had three options to buy a property using his new-found fortune.
The first was to find a developer who accepted Bitcoin as payment as more and more firms in Dubai are opting for that solution.
The second was going to a bank.
Some, like Citibank, offer customers the chance to transfer money into a traditional account via a cryptocurrency exchange, like Binance, which was banned by UK financial authorities amid anti-money laundering concerns.
Vineet said the bank then converts Bitcoin for a fee and transfers it into a bank account and used this method to pay off a mortgage on his first home in India.
"It’s easy. I had the money in my account in less than three hours," he said.
Vineet also had the option of engaging a broker who done "over the counter" transactions for a small fee of around 1.5 and 3.5 per cent of the transaction, which he ended up using.
How to spot crypto scams
CRYPTO scams are popping up all over the internet. We explain how to spot them.
- Promises of a high or guaranteed return – Does the offer look realistic? Scammers often attract money by making fake promises.
- Heavy marketing and promotional offers – If they are using marketing tricks to con customers you should beware.
- Unamed or non-existent team members – Just like any business you should be easily able to find out who is running it.
- Check the whitepaper – Every crypto firm should have a white paper. This should explain how it plans to grow and make money. If this doesn't make sense, then it could be because the founders are trying to confuse you.
- Do your research – Check reviews online and Reddit threads to see what other people think.
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