Are Cryptocurrencies a secure financial future?

Investors look for good returns and a fair amount of risk as a secure financial investment.

While most cryptocurrencies have an extremely high rate of return, they are also very volatile. The lack of regulation around cryptocurrency makes their future speculative. Government policies could overturn the growing interest in cryptocurrencies; however, how likely is that?

Legality around Crypto

While Crypto is essentially a privately created financial asset, RBI, the apex monetary institution of India, lifted the ban on crypto trading in March 2020, allowing financial institutions and banks to provide crypto-related services. RBI announced that it is planning its own crypto, which will be launched in a phased manner. Therefore, cryptocurrency exchanges in India like ZebPay are entirely legal and safe for crypto trading.

Is crypto witnessing unstoppable growth?

In India alone, we can see an 18% month-on-month growth in crypto wallets (accounts) and more than 15 homegrown cryptocurrency exchanges, making it one of the fastest-growing crypto communities. A Bloomberg report in June 2021 stated that there are over 15 million people trading in cryptos. More than 50 million blockchain wallet users globally are expected to cross the 200 million mark by 2030, as per Deutsche Bank.

Investments in cryptocurrencies in India rose seven times between April 2020 to May 2021, from $923 million (~INR 68 billion) to $6.6 billion (~INR 490 billion). ZebPay, one of the leading cryptocurrency exchanges in India, saw a 4x growth in its active user base since March 2020 and is continuously growing. These stats are indicative of a bright future of cryptocurrencies.

As for the returns, occupying market caps worth trillions of dollars, the largest cryptocurrencies witness returns ranging from 700% all the way up to an 8000% growth in one year! The world went from asking ‘What are cryptocurrencies” to making large volumes on investments in crypto within a span of 5 years.

This most definitely comes with some massive risks and enormous price dips.

Looking at the rapid growth, are the risks involved with crypto investments being ignored?

Government regulations can prove to be a massive hindrance to cryptocurrency investments around the world. These government-mandated guidelines could be essential in ensuring the safety of investors from virtual theft and cybercrimes.

Cryptocurrencies are also highly volatile. Even though the Bitcoin price fell rapidly in April, it quickly recovered, making it a profitable investment for those that leveraged the drop. However, indulging in such levels of risk should involve a fair share of technical analysis.

While buying Cryptocurrencies in India, opting for safe cryptocurrency exchanges like ZebPay and substantial research is crucial to ensure the security of your investments.

What makes cryptocurrencies so attractive?

Cryptocurrencies are enabled by blockchain technology which is revolutionising the global economy. Soon, a simple phone purchase on EMI can also be driven by blockchain technology and smart contracts. The innovation in this technology is what makes cryptocurrencies extremely promising.

Most cryptocurrencies are independent of market changes in other stocks and currencies and, therefore, can prove to be a suitable investment to diversify your portfolio.

Operating on the concept of Decentralised Finance (DeFi), the accessibility and transparency offered by cryptocurrency is one of the most attractive features that is swiftly replacing conventional financial services of lending, borrowing, payments, etc.

Cryptocurrencies like Ethereum are coming up with crucial upgrades while Bitcoin is being referred to as the Digital Gold. StableCoins are providing highly liquid cryptocurrency options for a safe investment. Companies also invest billions in crypto, making it a fundamental part of their balance sheet. Based on current trends, the future of cryptocurrencies is certainly a disruptor of conventional financial systems. While some seasoned investors remain sceptical, some believe that with the right amount of security, it has the potential of leading the world into the new age of finance as long as there is the right support from the regulators as well.