If you ask me, what’s the easiest way to sneak in an iced latte, without leaving the house? (Consider the person in question is lazy enough to make one at home).Well, the netizens of the Internet Age, you know the answer. Given the upending pandemic, we the people of the Internet Age had high hopes from the only resort we had -The Internet. So, yes, be it iced latte, medicines, information, assignments, entertainment - do you use Internet or yet again the Internet?
Quite ironically, India was quite skeptical in adopting internet when it first came into existence and even now, is hesitant towards adopting a virtual digital currency - The cryptocurrency aka “the future of currency”. Well, actually, cryptocurrency or crypto assets are a store of value which can be transferred via digital exchange based on peer-to-peer exchange without the involvement of the middlemen. They are based on the Block chain technology and every transaction gets registered in the universal ledger. They are verified multiple times over by all the members in the nexus and thus double spending problems, or problems pertaining to transparency can be kept at bay. They do not have any intention to replace the legal tender or the fiat currency, in fact, it would be better at this stage, if cryptocurrency can thrive in our economy along with the legal tender (rupees). Various governments have extended their support towards investing this futuristic approach. Cryptocurrency is like virtual gold, so the faster you begin to accumulate, the more you can accumulate now and sell later for much higher prices but when you enter the gold mine/trade, make sure you have sound knowledge of where to dig in and possess the means to get out whenever you wish to.
However, shades of grey approach operates in everything and everywhere in this era and nothing is either black or white. Well towards the lighter shades, we find that Cryptocurrency is Revolutionary money 2.0.
Why so?
Low-cost credit for the poor
Great accessibility for all
Promotes savings and investment for all strata of the society
Fight corruption and terrorism funding - due to its traceability (block chain), no privacy issues
Fights inflation as Bitcoin supply is limited (21M bitcoins only) and addition rate is very less- no devaluation risk
Moreover, you and I won’t have to wait for banks to send OTPs when the delivery person says online payment only. Cross border payments too can become extremely easy and efficient.
However, darker shades exist - The Government is concerned about its decentralized nature as it not backed by any central banks. Banks would not be able to profit and this can add fuel to the unemployment ring of fire.
The market is highly volatile as it operates on the demand and supply mechanism. E.g. – Bitcoin plummeted up to 30%, and Ethereum up to 25% earlier this year but recovered up to 10% as well the next day. Other issues are finding terrorism, tax evasion, privacy theft, exacerbating losses to the investors, dark market amongst other illicit activities. However, such concerns are also based on the lack of proper knowledge about the innovation. Business analysts, crypto analysts and the Governments have put their heads together to formulate a system wherein we can derive the maximum benefits from this technology.
Let’s see it from the perspective of a college student like us-
Let’s say we have 10,000 INR at our disposal for investing (internship money maybe). So, let’s do portfolio diversification and put our money according to our capacity in mutual funds, equity market and so on and leave about 10% for Cryptocurrency. So, if we buy any of it now, since the prices are low and invest 10% just like an SIP scheme after periodic intervals, regardless of the market conditions, we will be reaping profit in the long run - amazing profit. Think about the profit larger investments can reap. However, there is caution, we should never ever risk the money we cannot afford to lose.
In an Eco-techno bubble like Cryptocurrency – Tech giants invests 🡪 Technology popularized 🡪People invest more blindly 🡪 Both people and tech giant profit 🡪 People feel like Warren Buffet and exceed their spending capacity🡪 Tech giants after attaining peak, starts selling its shares/crypto 🡪 Market faces risk 🡪 Market crashes.
Here, the people who are new to the game might face the brunt very harshly. So, the key is to maintain SIP like investments in the projects we have complete knowledge about for a long term.
The way ahead
If we Indians ignore this technological revolution right now, we might end up losing edge in the Digital phase revolution 2.0. Cryptocurrency markets need regulations, check and balances - Proper enforcement of KYC (Know your customers), proper taxation, tracking (using block chain technology) and policies in place.
Banning this technology will not only incur losses to the investors and the exchequer but also inhibit the growth of the budding entrepreneurs and risk takers. Dark market and illicit activities will continue regardless. It can be difficult to say whether this technology is a success story or a leaky pipeline in present day scenario but let’s say in the spectrum between black and white, it stands right there in the middle but it can become a success story, only if regulated well.
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