Bitcoin Investment Risky, But Rewarding: India's Crypto Millionaires
The Quint spoke to investors to understand why they continue to invest in Bitcoin despite RBI's aversion.
(This story was first published on 9 July 2021 and is being republished from The Quint's archives ahead of the tabling of the Centre's Cryptocurrency and Regulation of Official Digital Currency Bill 2021 in Parliament's Winter Session.)
Video Editor: Prashant Chauhan
India's Bitcoin market grew from $923 million in April 2020 to $6.6 billion in May 2021, according to blockchain analytics firm Chainalysis.
The data also revealed that India witnessed a 612 percent increase in crypto investment year-on-year.
This surge in investments has come amid Reserve Bank of India's aversion towards digital currencies. In 2018, the RBI banned banks from supporting cryptocurrency transactions after digital crypto frauds were reported.
However, in March 2020, Supreme Court struck down the ban prompting RBI to notify that its earlier order has been reverted.
Cryptocurrencies, led by Bitcoin, have been gaining traction and global attention over the past few years, but there has been a significant uptick in Indians investing in crypto over the past few months.
The Quint spoke to Arpit Agarwal, an active investor, and Naimish Sanghvi, an active investor and CEO of CoinCrunch to understand why they continue to invest in Bitcoin.
'RBI Crackdown on Crypto Unreal'
Agarwal believes that there is no crackdown on crypto by the Indian government. He believes that it is mere speculation due to lack of information .
"While it is true that there is a large prospect that crypto can be used for money laundering, dark web activates and narcotics. However, there are several people like me who have nothing to hide. I have ensured that I am complying with all the laws, therefore I don't see any reason as to why I shouldn't' invest in crypto", he told The Quint.
On the other hand, Sanghvi believes that the decision of banning crypto has only surfaced in the news, and the reality is far from it. "Banning isn't the solution, people who misuse the technology will continue doing so even if it's banned, it won't make any difference," he asserts.
Investing vs Trading
Sanghvi notes that trading can be a thrilling way to earn a quick buck. However, like gambling, it can also lead to big losses. "If you don't know the technicalities of crypto trading, you are ought to lose money, so the best way is investing in cryptocurrencies and not trading," he explains.
On the other hand, Agarwal told The Quint that he has never sold any of his Bitcoin holdings.
Stock Market vs Crypto Market
Stocks and cryptocurrency are both types of investments, but there are several key differences between them.
When you buy a stock you own a share in a particular company that you believe will continue to grow in the future, but with cryptocurrencies, you buy tokens of a virtual currency and use them as a form of payment, or you might simply hold on to them in hopes that they increase in value.
Investing in crypto is different because unlike stock market, you are connected on the same technology and are transacting the same fungible token.
The advantage of investing in cryptocurrency over stocks is that there's greater potential for reward, notes Sanghvi.
However, despite its explosive growth, cryptocurrency is generally far riskier than stocks." The greater the risk, the more rewarding it can be and vice-versa," added Sanghvi.
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