Cryptocurrency : How safe they are ? How much is the profit and what are the risks ? Read more
Is Cryptocurrency a safe medium of Investment? Yes, investing in crypto coins gives more returns, more profit but it also carries the same risks, there is a lot of volatility in the market
The craze of Cryptocurrency is now clearly visible from big businessmen like Elon Musk and Jack Dorsey to common investors. The idea that our future will be in the digital world is being widely adopted, but a fundamental question remains – can cryptocurrencies become a safe investment medium? Yes, Investing in Crypto Coins gives more returns, more profit if invested, but there is an equal risk in it, there is a lot of volatility in the market and the market (Cryptocurrency Market) sometimes suddenly crashes. In such a situation, how to decide whether to invest in it or not.
First of all, let us tell you that cryptocurrencies have not got legal validity in India. No, it is not that investing in crypto is illegal but, this is not a legal tender, there is no government regulation on it and this is the situation in most countries. These are generated by online mining, most of the generation are private and there is no clear picture on how much volatility these coins can cause in the transaction and monetary system. Perhaps this is also why the Reserve Bank of India has said that it can launch its own crypto coin in a phased manner.
Investing in crypto coins is not illegal and there are already many online crypto exchanges operating in the country. Crypto trading and investing takes place on crypto exchanges.
Benefits of investing in cryptocurrencies
Firstly, investing in cryptocurrencies can give you much better returns than any of our traditional investment tools or investment channels. The crypto market has seen a historic rally in the first four months of this year. During this time investors made tremendous money. Think of it in numbers. Bitcoin, the world's most popular and oldest cryptocurrency, has given 800% returns in the financial year 2020-21. In April 2020, it was trading at $ 6,640 and then in a period of one year i.e. till April 2021 it reached $ 65,000. Apart from bitcoin, many other crypto coins have seen a tremendous boom and investors have earned good returns.
Dangers of Investing in Cryptocurrencies
The market had reached a historic high in April this year. But at the end of April, the crypto market crashed. Most of the currencies fell in value. Bitcoin falls under $30,000. However, at the moment it has recovered to the level of $40,000.
In such a situation, it is important to understand that crypto coins are very volatile and there is a risk of losing investment money. The second drawback is that you cannot use cryptocurrencies everywhere like flat currency i.e. Rupee, Dollar etc. At present, there are very few places where you can use cryptocurrency for payment i.e. using it as an alternative to the rupee. There is no government regulation on this from above, so it can invite any unforeseen situation.
Another thing is, the crypto market is influenced by big businessmen and tech tycoons like Elon Musk. Elon Musk used to support bitcoin at first, but later he started supporting Dogecoin. This caused the price of Dogecoin to jump.
How safe are cryptocurrencies and what are the assumptions about them
If we talk about the security of cryptocurrency, then it is quite safe. They are kept secure by encryption technique- cryptography. There are also crypto wallets, where you get hot, cold and paper wallets. There are no middlemen or intermediaries involved in crypto transactions, which is a good thing. If we talk about adopting them, then there are some countries and many big companies, which are considering recognizing crypto coins and tokens. El Salvador has announced to make it a legal tender. If we talk about India, then the Indian Decor Brand The Rug Republic has announced to accept payment in cryptocurrencies a few weeks back.