INSUBCONTINENT EXCLUSIVE:
Bitcoin gave a return of over 800 per cent during the financial year 2020-21From tech billionaire Elon Musk to actor Gwyneth Paltrow,
everyone's talking about cryptocurrency and the craze it has generated among people about a future that is largely driven digitally
But does it really hold that much water as an investment instrument? The crypto coins do have a high rate of returns, but they are equally
volatile and susceptible to frequent market crashes
So how does a person decide whether they should invest in these virtual coins that, Mr Musk says, could become the future currency of the
world.As of now, cryptocurrency is not a legal tender in India and most parts of the world, since the coins in circulation are predominantly
privately created and there is a lack of clear understanding of the disruption these coins may cause
So, the Reserve Bank Of India (RBI) has said it is planning its own crypto coin and it may launch it in a phased manner.However, investing
be used for trading and investment in cryptocurrency.BenefitsCrypto coins often give better returns than traditional investment tools
Many people made massive amounts of money when the crypto market was on a bull run during the first four months of this year
Consider this: Bitcoin gave a return of over 800 per cent during the financial year 2020-21
In April 2020, it was trading around $6,640 but by April this year, it had neared $65,000
Most other coins too witnessed a surge in their prices, giving handsome returns to the investors.RisksIn late April, the crypto market
crashed, bringing down the values of most cryptocurrencies, Bitcoin had slid under $30,000 but it has recovered to $40,000
So the crypto coins are extremely volatile and investors carry the risk of losing money
Another drawback is cryptocurrency cannot be used as widely as fiat currency to pay for goods and services
The scalability of cryptocurrency-- including the likes of Bitcoin-- remains an area of concern
Also, they lack regulation by governments so there are trust issues.The trade can be influenced by billionaire entrepreneurs and tech
Like Mr Musk had once supported Bitcoin but then switched his support to Dogecoin.Security And AcceptanceCryptocurrencies are highly secure
in nature with cryptography
There are no intermediaries involved in a transaction
Some countries are now warming up to the idea of these digital coins
El Salvador has announced plans to make it a legal tender
The corporate world is eager to make it mainstream as cryptocurrencies do not have regulatory oversight.
