12 May Cryptocurrency – Shaadi ka Laddoo?
Well, I have added a statement in Hindi followed by a question mark. This quote actually means that the ones who are not married feel that marriage is the best thing in life and want to get married but the ones who are married feel that why did we get married. It’s a double-edged sword but the end result is subjective for each individual.
I have used this adage with cryptocurrency but I have followed it with a question mark also because will this investment get regretful over the years? Well, that time will tell but let’s see what is an investment in cryptocurrency all about.
Cryptocurrency, also known as virtual or digital currency has a history since 2009. It is also an alternative form of payment that is created using encryption algorithms. Not many people know but there are over 18000 cryptocurrencies in the world as of March 2022. There are three terminologies that a layman has to understand from the point of view of crypto trading.
- Decentralized: It is commonly known that cryptocurrencies are decentralized, which means that it is not issued by any central authority and nor it has any regulatory body to look over the transactions. It is created, exchanged, and distributed by a closed and robust peer-to-peer network.
- Digital currency: Digital Currency means that these currencies are traded only in digital form. One cannot convert this digital currency into physical coins or notes. Cryptocurrencies are not even linked to the value of any other currencies like dollar, euro, pound, etc, nor linked to any other assets.
- Cryptography: It is a mathematical technique used to secure one unit. This process is also known as blockchain technology. Blockchain is a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on blockchain
Bitcoin – Game Changer Currency
Out of all the cryptocurrencies present, Bitcoin has emerged as a game-changer. It was the first and foremost crypto developed through blockchain. It has become a household name since then. In 2013, it was recommended as the best investment by Forbes and a lot of businesses across the world have started accepting Bitcoin as a mode of payment. Most Bitcoin transactions are secure and involve no intermediary. The transaction cost is minimal too, making it a highly attractive investment avenue. Bitcoin trading is transparent as every transaction is recorded in a public ledger that is visible to all. And recently in India Bitcoin trading platforms have emerged rapidly like WaxirX, CoinSwitch Kuber, CoinDCX and many more.
Future of Cryptocurrency Investment?
As we know the popularity of crypto, we also need to bear in mind the consequences of investing in crypto. As these are digital currencies, there is always a threat of cybersecurity breaches. Certain crypto heists have caused a lot of trouble and panic among the investors. In one of the largest decentralized finances (Defi) breaches yet, hackers stole cryptocurrencies worth $625 million from Ronin in March 2022 . Ronin is a Blockchain platform behind the popular non-fungible token (NFT) game Axie Infinity. In Jan 2022 it was reported that around $12.1billion worth of cryptocurrencies were stolen between January 2011 and December 2021. Another major issue is the crypto wallet, where there have been multiple instances of wallets getting locked and investors losing a huge amount of money. Certain wallets give only a limited number of attempts to guess the password and once the attempts are over, investors’ wallet gets locked and the money is lost forever. All these issues also cannot be resolved centrally as there is no regulatory authority on these transactions.
So, coming back to my headline “Cryptocurrency – Shaadi ka Laddoo? yes, it definitely is. As much as it is attractive to invest, once you plunge into it there may be some regret later. Experienced investors like Warren Buffet have chosen to stay away from Cryptocurrencies, it is definitely here to stay for a long time. But as a well-known saying goes “Look before you Leap”, it surely applies in the case of cryptos.