Cryptocurrency can Multibagger or Loss , Bitcoin buy Tesla car and fundamentals analysis , Should you write investment in Cryptocurrency

 


The latest news Ellen musk has declared that you can buy a Tesla car with Bitcoin




Bitcoin it is a cryptocurrency and of late this huge search in the share price of Bitcoin in case you are not aware of Bitcoin price the recent Bitcoin price is somewhere around 45,491.90 United States Dollar, yes that's price of 1 Bitcoin they know what was the price of Bitcoin exactly 5 years ago in may 2016 1 Bitcoin was price 324.93 United States Dollar. It means in the last five years bitcoin has jump all most 140 times .



 I am sure he would have invested in Bitcoin 5 years ago but just in case you  invested 100,000 rupees 100000 then you would be sitting on an amount of rupees 1.4 crore. forget the 5 years ago. If you had invested in bitcoin exactly one year ago in may 2020 you would be getting 7 times return. Yes within one year bitcoin has 7times return and there is no other asset class that has given such enormous returns in the past.





 In fact if you follow the crypto market there is a cryptocurrency with the name Dutch coin. At the beginning of this year on January 21 this cryptocurrency was trading at 40 paisa. they do you know what is the current price of Dutch coin price today it is worth around 40 rupees that's hundred times jump in just 4 months yes hundred times jump in 4 months that insane isn't know many of you are regretting for not investing in cryptocurrency but the most important question is should you now invest in cryptocurrency or not I know there is a lot of confusion around

Cryptocurrency. The biggest confusion is that cryptocurrency is legal in the world . There are many people who don't know  about what exactly cryptocurrency is and how exactly it works. Then many people have questions like is cryptocurrency really safe?


I am sure you would want to know why there is such a sharp increase in cryptocurrency and the ultimate question is cryptocurrency, the future currency of the digital world.


what is cryptocurrency and how exactly it works .Then we will look at the top cryptocurrencies in the world that will try to understand why there is such a rise in cryptocurrency then we will cover the key risk with cryptocurrency finally we will discuss if you should invest in cryptocurrency or not and if yes how much you should invest alright let's get started .


What is Cryptocurrency and. How exactly it work


First, let's be clear that cryptocurrencies are completely legal in India. There is no law in India that profits  you from buying and selling cryptocurrency . only cryptocurrencies cannot be used as legal tender in India for example : you can't use gold for buying and selling goods and services . similarly you can't use cryptocurrency for buying and selling goods and services in simple language cryptocurrency is basically a digital currency that uses Cryptography to control its creation and management and what is cryptography it is a method of storing and transmitting data in a particular form so that only those for whom it is intended can read and process it so cryptocurrencies walk on the concept of cryptography and hence they are very secure.



 Now you might ask that when there are already so many currencies in the world like your dollar, rupee, pound, Euro and many more then why was there a need for a cryptocurrency so all the currency that discussed including in Dollar, Pound, Rupee etc are all centralised that is that controlled by the government however it was right after 2008 financial scam or housing bubble in the US that resulted in a recession all over the world hence there was a major trust issue with the banks as Central banks control the currency market of the world should cryptocurrency was designed with the intention that no Central authority should control the currency.


 In fact this control is given to people in a decentralized form and who created the cryptocurrency. when the first cryptocurrency was bitcoin and it was created in 2009 by person name Satoshi Nakamoto and as on today is anonymous nobody knows who exactly is satoshi nakamoto but it is said that he holds somewhere around 1 million bitcoins so current level it is worth somewhere around 58 billion dollar making him one of the richest person on the planet .


Now let's try to understand the technology behind cryptocurrency because it is very important to understand that so cryptocurrency is based on the technology called 'Blockchain' a blockchain is an open distributed ledger that records transactions in code. Let me simplified this for you imagine A wants to transfer money to B. Now this transaction is represented as a block this block is broadcasted to everyone in the network then it gets approved as valid by everyone in the network after the approval the block is then added to the chain providing a transparent record of the transaction so the information is stored in a decentralized form and information is available on internet .







Friends Blockchain technology is one of the hottest technology in the digital world and many sectors are adopting blockchain technology to transform their business. In Fact this technology is expected to grow at a crazy CAGR of 67% by 2025. So let us look at some of  the use cases of blockchain technology first use cases


1.Blockchain in financial sector

 

Blockchain in financial sector there is a huge significance of blockchain technology in the financial sector for example :  the UPI wallets that we use for transferring money from one person to another could use blockchain technology to provide a secure way of transaction in real time when we can send money within few second this is an increasing usage of online money transfer and blockchain technology can help in secure transaction second use case

 

2.Blockchain in supply chain


Blockchain in the supply chain one of the biggest problems in the supply chain is counterfeit products and the product moves from one place to another in the supply chain there is a lack of trust . Blockchain can help consumers verify the authenticity of purchase goods through blockchain-enabled supply chain products can be accurately tracked across different locations and stages in a supply 

chain 3rd cases .


3.Blockchain in healthcare


Blockchain in healthcare should doctors lack a clear and complete understanding of patient's medical history this hinders in providing effective healthcare solution. Counterfeit or fake medicine are also a major issue within the medical supply chain blockchain can serve as a secure database with patient medical records can be stored on a blockchain this will make it significantly easier for doctors to get a better idea of patients medical history. Blockchain would also help tag and track drugs at every stage of the supply chain. Patients also have the control over the data stored in the blockchain; others can view the data only if the patient grants them permission . There are many more use cases of blockchain technology 


Top Cryptocurrencies of the world


As of today Bitcoin is the largest cryptocurrency in the world and has a total market cap of more than 1 trillion dollars. it is followed with Ethereum with the market cap of around 477 billion dollar , Third position is of Binance coin with the market cap of 102 billion dollar, 4th position is a Dutch coin with a market cap of 66 million dollar and 5th position is of Cardano with the market cap of 55 million dollar there are many factors behind the craze of cryptocurrency . 



Why is Cryptocurrency Rising ?


1.Cryptocurrency usage increase at rapid rate

 so first factory is cryptocurrency usage has been increasing at a rapid rate does a rapid uses of cryptocurrency in the day to day life for example : Tesla is accepting Bitcoin to purchase cars , Microsoft is accepting Bitcoin for its online xbox even Starbucks accept Bitcoin although it is not popular in India 


2.Institutional are investing in Cryptocurrency


The second factor is institutions investing in cryptocurrency. Recently many institutions have invested in cryptocurrency, for example : Tesla has invested 1.5 billion dollars in Bitcoin . Now when a company like Tesla invest in Bitcoin there would be more trust and acceptance that would built around the cryptocurrency


3.Bitcoin trading is on rice all over the world 


 Third reason is Bitcoin trading is on rice all over the world. As per the latest news people all over the world including Indians are spending millions daily on cryptocurrency trading that again increase the price of cryptocurrency 


4.Emergence as an alternative investment class 


 4th the reason is Emergence as an alternative investment class traditionally people used to invest in gold as a hedging option against the stock market volatility but today the young generation is increasingly consider in cryptocurrency as an investment option to diversify the portfolio and fetch inflation beating returns having discussed the benefit let's not forget that cryptocurrency has multiple risk associated with .




Key Risk With Cryptocurrency


  • First is that unlike your fiat currency like Rupee , Dollar , Pound , Bitcoin and all cryptocurrencies are not regulated by centralised authority so you lose your cryptocurrency tomorrow you can't blame anyone


  •  Second risk is that since the market price for cryptocurrency is based on supply and demand that cryptocurrency rate could fall due to any lack of demand in case of negative news hence cryptocurrencies are highly volatile in nature 


  •  Third dress is that Indian government is working on a legal Framework around cryptocurrency there is always a risk associated with strict regulation for crypto trading in India




 Now as an investor, should you invest in cryptocurrency or not? At the end of the day it is all about risk versus reward. If you have the courage to take risks, cryptocurrency can reward you . Now if you are interested in cryptocurrency . 



What should be the right strategy to invest well? I would suggest investing a very small portion of your wealth. It could be somewhere between 1 to 5% of your wealth as you will lose all the money but looking at the risk versus reward .


 It is worth putting some money in cryptocurrency the odds are high that as we transformed into digital world cryptocurrency would exist in the future and if that happens the price would sky rocket and later you would not regret thinking that I should have invested in Bitcoin not cryptocurrency in the past. 


Moreover, it would also help you with diversification but do not invest as a lump sum. Since cryptocurrencies are trading at all-time high it is better to invest in parts just like your SIP.




 Note that this is a long-term investment strategy the exit would depend upon whether you want to book profit or want to stay invested in cryptocurrency for the long term 



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