Higher the risk, higher the profit, especially when it comes to cryptocurrency. Taking risks is an inevitable ingredient in investing. A bitcoin that was valued somewhere around $400 a few years ago now stands at approximately $60,000. A dynamic rise in numbers is one of the reasons for it being the talk of the town.
Everyone in the world is curious to know why are the prices of cryptocurrency soaring? The fear of missing out is compelling people to consider cryptocurrency as an option of investment.
“Millennials pull crypto out of the shadows in India” a very recent statement from the Times group proves how cryptocurrency has now become one of the preferred investment choices. But is it really safe to invest in cryptocurrency? Let us together figure out the answers to it and understand the concept of cryptocurrency.
What is Cryptocurrency?
A cryptocurrency is a virtual or a digital currency that is backed by cryptography which cannot be counterfeit or double-spend. The word “cryptocurrency” is derived from the techniques used in encryption to secure the network. Most of the cryptocurrencies that we see today are based on Blockchain technology which is a distributed ledger that is connected to a network of computers across the globe.
Key Points to Know about Cryptocurrency: –
● One of the prime features of cryptocurrency is that it is not backed by any central government therefore it is immune to government manipulation and interference.
● The first cryptocurrency that was invented is known as Bitcoin. It still remains the most popular and is also considered as the gold of cryptocurrency.
● Some of the popular cryptocurrencies are Etherum, Litecoin, Polkadot, Cardano, and others.
● Each cryptocurrency has a different project though it is backed by the same technology.
Now that we know what cryptocurrency is, let us understand how the crypto market is functioning in India?
Cryptocurrency in India
Very recently, we have seen a rise in the number of unicorns in India from the crypto space. This proves that buying and selling are not only easy but also adopted on a huge scale by the investors in the country. The trading in cryptocurrency is lucrative but it lacks regulatory laws and taxation policies, Therefore RBI (Reserve Bank of India) has not granted it a status of a legal currency/tender. Just like many other countries, India also does not have a concrete stand on the usage and implementation of cryptocurrency. Though the Indian government does not support cryptocurrency it hasn’t even banned it completely. That is why we see new users adding to the exchanges on a daily basis. In Spite of legal ambiguity and high volatility, the country has the highest number of users which is around Rs.10.7 Cr as per the records from the brokerchooser.
Is it safe to Invest in Cryptocurrencies in India?
The cryptocurrencies in the country lack legal support which means that there are no laws to protect investors. And a loss of an investor could be because of many reasons such as ransom attack, loss of password, device, malware, and others, which will permanently lead to loss of money. So, currently, cryptocurrency in India is a choice of investment for investors who are not looking for a safe and secured investment. Also, the technology is in its nascent stage which adds to one more reason to make it unsafe for small investors.
One can consider the alternatives of cryptocurrency for investment such as mutual funds, shares, debentures. These are not only safe from a legal point of view but also have a proven track record of generating profits for investors.
You must note that investment also depends on an investor’s risk appetite, as said “Whenever you see a successful person, someone once made a courageous decision”.
The Future of Cryptocurrency in India.
To regulate virtual currency in India “Cryptocurrency bill” is introduced but yet to be approved by the cabinet. The purpose of the bill is to create a digital currency for the country and to reap benefits of the blockchain technology. As the world is moving rapidly in leveraging technology the government is very clear that not all cryptocurrencies will be considered for payment and settlement. The government is trying to eliminate the use of currency in illegal activities like money laundering, drug trafficking, terror funding, and others. Even though cryptocurrency is not legalized in the country, the government has taken a positive initiative towards it. This indicates a bright future for all the investors. The primary reason for the bill is to identify the cryptocurrency and tax it accordingly. The future of cryptocurrency is still vague but one thing is for sure, everyone is looking forward to it.
Should one consider investment In Cryptocurrency In India Or Not?
All investments are subject to market risk. Therefore, it entirely depends on the investor. Those investors who are looking to take high risks and earn good returns can invest in cryptocurrency. You should make sure that appropriate channels are adopted to buy and sell the currency. And the respective companies have followed the KYC guidelines. Also, consider the current situation and analyze future prospects to make your decision.
Do not buy a currency considering the market hype since the market is highly volatile there might be huge fluctuation in the prices. Do some research before you buy a currency. Make sure that you have a diversified portfolio, investing in one might be of huge risk, “Do not put all the eggs in one basket” Make your investment wisely and in order to ensure that, it is always recommended to consult an expert, the aim of all the investments should be, attain your financial objective in the long run.
Note: Investing in cryptocurrencies is highly risky and speculative. This article is only for informational purposes and Fintoo does not aim to promote, recommend or suggest investing in cryptocurrencies via this article. Since each individual’s situation is unique, a qualified professional should always be consulted before making any financial decisions. Fintoo makes no representations or warranties as to the accuracy or timeliness of the information contained herein.
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