Cryptocurrencies gained a lot of unexpected popularity the previous year. Earlier, people used to put their money in gold, real estate, and equity markets. The equity market is already at its peak but real estate is not giving that much returns. Therefore, bitcoins are a good store of value to look at if one wants to invest in certain instruments as it is also a good hedge against inflation.
Successful companies like Tesla and PayPal have started putting their cash reserves in bitcoins so that if the currency depreciates, their cash does not deplete over time. At its core, bitcoins can be a good investment strategy and it’s likely to produce huge profits in the long run. However, the young investors are putting a risk at investing in cryptocurrencies but the traditional investors are yet not certain if cryptocurrency is worth the asset or not. You can get started with Bitcoin mining esily by using different platforms like BitQT App.
In this article, we will discuss all the factors related to investment in bitcoins and whether or not it is safe to invest in crypto considering various points of view.
Is it safe to invest?
Investing in bitcoins can be subjective. It is yet not classified as a definite financial asset like the equity market as it is still being explored and it is emerging over time.Although cryptocurrency is considered to be a good portfolio diversification,people are still more driven towards equities, real estate and mutual funds.
In the world of finance, especially in India, people have different arguments about whether or not altcoins, bitcoins or cryptocurrency is a safe investment. A lot of financial experts support their argument for cryptocurrency as a safe and fruitful investment by stating that the digital currency has a decentralized system enabling the transactions to be completely transparent.
Investment is a risk in itself. Traditional financial assets like equities or mutual funds are also subjected to risk. In a similar fashion, cryptocurrencies as an investment vehicle, too comes with its risks. The only difference is that it is a digital asset. Virtual market often goes through more volatility.
However, these risks are likely to reduce as and when cryptocurrency as an investment instrument gains positive popularity and grows trust within traders and investors across the country. Analysts show studies about the fact that cryptocurrencies sure come with a lot of benefits in the long run but also have its risks associated with it.
Simply put, when you are placing a bet on crypto and investing your money in it, keep in mind that the virtual market has a lot of ups and downs and involves high risks as well as fruitful benefits and returns. So in order to gain from trading in cryptocurrency, you should be ready to tackle all the risks that come with it. Note that cryptocurrency is extremely resilient than it is assumed to be.
Popular investors like Nischal Shetty who is also the Chief Executive Officer of the cryptocurrency exchange entity known as WazirX also supported this argument. He gave a fair point by stating that this digital asset has survived two global recessions in the past one decade and the financial experts should take this in consideration.
Bitcoins are a good store of value to look at if one wants to invest in certain instruments as it is also a good hedge against inflation. In simpler terms, the commodities that are accessible at cheaper rates in the present will shoot up in the future because the value of our fiat currency is depreciating over time and inflation is possible.
Ever since the pandemic hit, the countries started printing money vigorously. The United States of America, alone, printed trillions of dollars i.e equivalent to India’s GDP leading to the depletion of the value of currencies across the globe. This is also one of the reasons why cryptocurrency emerged the previous year and its demand increased like anything amidst the Covid 19 pandemic.
The fiat currencies and stocks easily get impacted by inflation or at the times of crises but that is not the case with cryptocurrencies. It is in fact a good alternative to gold if one wants to invest. Cryptocurrencies are highly preached about in these scenarios like global recessions.
To clear the misconceptions about investing in cryptocurrencies in India, it is absolutely legal and there are no laws as such that restrict individuals to trade these virtual coins as of now.
It is advised that people who are investing in cryptocurrency should get in only if they have the patience to take this journey for a longer period of time and should also be prepared to tackle all the risks associated with it. Having a proper research and brief analysis about the market is mandatory as it reduces the rate of risk.
Will Cryptocurrency get banned?
We discussed various risks that are associated with investing in cryptocurrency but the central problem is that many countries like India do not conduct proper regulations or have an oversight of cryptocurrency to support the traders with something. The Government remains poor under this jurisdiction and does not have a stand on cryptocurrency as of now which is the main reason behind the lack of regulations on crypto trade in the nation.
Discussing the possibility of a ban on this digital asset. If the government decides to ban the decentralized cryptocurrency system, the investors will face huge losses and India as an economy will also face a huge loss in the long run considering the emerging popularity of virtual coins. Setting regulations on crypto trade is what analysts are proposing.
The investors are getting discouraged and confused whether or not they should invest in cryptocurrency, stating the weak stand of the government as the major reason. The government should immediately come up with efficient regulations and have an active role in this since cryptocurrency is expected to be the next game changer in the world of finance.
In this article, we discussed the risks that cryptocurrencies pose if one wants to invest and also the government’s stance on cryptocurrency as a financial asset and it’s possibility of getting banned.