Nowadays, we are receiving sales brochure pamphlets from crypto-currency exchanges wrapped with our shopping orders or daily newspapers. Crypto-currency promotion has now reached the point where brochures are put inside the groceries we buy. Yet, as we now learn, the real picture of Bitcoin and other crypto-currencies is considerably more complex and confusing than we previously anticipated. The rise in value of crypto-currency is appealing, but its unpredictable character remains over it. The crypto industry is riddled with unforeseen legislative changes, cyber-security risks, and market manipulation tactics. Furthermore, crypto-currency’s lack of intrinsic value and entire reliance on speculative behavior make it unlikely to be a dependable asset class.
The weirdest aspect of any of these crypto-currency sales pitches is the lack of disclaimers in their advertisements. In our country, as in any properly regulated market, no one can push or promote any financial product without a strong legal framework and disclaimers. Consider mutual funds. We would have read or heard the disclaimer that “mutual funds are subject to market risks”, whether or not we had invested in one. However, crypto-currency is being marketed without any caution or disclaimer, which is the biggest risk this entails.
Crypto in India is essentially uncontrolled, thus those who participate in it must face the financial consequences of their conduct. They should be able to risk their financial status on their own terms. However, current developments in the crypto-currency industry indicate that crypto-currency may become an inevitable element in the worldwide financial environment. We have reached a point where everyone believes that crypto-currency is a viable asset class. While there may be some regulatory difficulties, crypto-investors believe that these will be addressed in the future. With every spike in the value of the crypto-currency market, a fresh wave of naïve savers throughout the world jeopardizes their financial well-being by investing in crypto. Each surge wave will have a fresh set of prospective victims. Any speculative asset with the ability to arbitrarily double and halve is primed to attract new investors. Tragically, this is what is now taking place, and it is possible that this may continue in the future as well.
The question for individual investors is: How will we get ourselves out of this craziness? Finally, it is each individual’s obligation to cross this perilous territory with prudence. The continuous pursuit of quick profits should not be the guiding reason for our financial decisions.
