Bitcoins: Are they the real deal?
Musk made Tesla buy bitcoins worth $1.5 bn. RBI plans on banning cryptocurrencies. China is busy mining it – pretty aggressively. Whatever you feel about ₿, it’s been the news maker. Let’s take a look
But first the basics. Bitcoin is just one of many digital currencies (called as cryptocurrencies) based on the blockchain technology. Blockchain is a wow technology for those who pretend to understand it and pretty impressive for those who actually understand it. Touchy. Coming back
Let’s look into the differences between normal fiat currencies (₹, $) and bitcoin
1. Decentralized – no one controls it. You cannot print money just because you wish to
2. Libertarian values – if you own it, you can use it. Anywhere, everywhere, irrespective of your nationality
3. All the transactions done till date are available for everyone to inspect; however, they can never be altered
4. No trail of transactions – all of them are anonymous
5. Apart from Bitcoin you have other cryptocurrencies too – Ethereum, Ripple and others
Bitcoin as an investment option?
Many pandits said no. They recall the great fall in 2017 when its price dropped to $3k from $20k and believe that this is just another bubble. Stay away, they say
The supporters don’t agree though. They contend that most investments pre-2018 were by retail investors. However, many institutional investors are pouring money now. As per a recent survey, around 25% FIIs invest in bitcoin now. Fidelity, Cohen and some hedge funds have also put their money on the table
However, cryptos should not be seen as payment methods now but only as investments – extremely risky ones, so to say. We cannot put all our money in it, but if you spend ₹200 on coffee every day, you can do your tapriwala a favour and put ₹150 in crypto
There’s no underlying asset here so exercise some restraint but it’s also not a no-no. Coinbase, CoinDCX, Zebpay can be used to invest in them in India
That’s all. Wish you all the luck for Ballentine’s Day tomorrow.