Here’s why most investment experts recommend against investing in cryptocurrency

Apr 08, 2019 | 4 months ago | Read Time: 3 minutes | By iKnowledge Team

It is a huge risk to invest in cryptocurrencies, since the prices are extremely volatile and there’s major skepticism surrounding it.

 

Cryptocurrency is a term we’ve all heard. These are alternate currencies that have some value attached to it just like currency. For example, currently, the value of the rupee is Rs. 70 against the dollar, and the value of a Bitcoin as of 15 August 2018 is 4,50,469 Rupees[1]. It revolves around demand and supply. This might sound a little ambiguous to you, but it is a warning sign to not get tempted and invest in plans around cryptocurrencies.

 

Bitcoin exchanges have been under the radar because of pressure from the government. This is another reason to not make these alternate currencies a part of your financial portfolio.

 

 

Though these are some of the negatives in a nutshell, let’s look at these in detail and why most investors are not in favour of cryptocurrencies:

 

  • Extreme volatility: It is a huge risk to invest in cryptocurrencies, since the prices are extremely volatile and there’s major scepticism surrounding it. Secondly, there’s really nothing for experts to analyse here, which makes them even more wary. This means that there is not really an ecosystem to study these alternate currencies as in the case of other investments. There’s only speculation everywhere and hardly any clarity. Besides, the prices aren’t regulated, they rise even higher and this can eventually cause widespread losses.

 

  • Neither commodity, nor currency: There is absolutely no clarity about its origin. Much earlier, metals like gold and silver were used as currencies and then came currencies printed by the governments. Some people say it is mined using some technical formula that involves mathematics, but it isn’t even referred to as a ‘commodity’. Besides, it isn’t even controlled by any government, which makes it even more dicey.

 

  • An unregulated space: Cryptocurrencies are not regulated by the government nor banks, as is the case with other investments. In case there’s an issue, you can’t even approach Securities and Exchange Board of India (SEBI) for grievance redressal. So, if there’s a fraudulent transaction that happens through bitcoin, there’s no chance you are getting your money back.

 

  • Legal issues: There’s much ambiguity during the legal status of cryptocurrencies. Though it hasn’t been identified as illegal, they haven’t also been recognised by the Reserve Bank of India or any such authority as a currency. In fact, in the year 2013, the RBI issued a notice warning users, holders and traders of such currencies about several risks they could be the threat of. Additionally, it was also said that the user will be dealing in these virtual currencies at his/her own risk. There’s another huge risk involved here, which is the bitcoin users at the other end of the transaction remain anonymous and mask their identity. This in turn can become a breeding ground for cybercriminals and those indulging in nefarious activities.

 

  • Risk of Ponzi schemes: There’s no doubt that dealing in cryptocurrencies can lead you to be cheated. There is misinformation surrounding bitcoin trading, because of which many illegal activities are taking place and criminals are taking full advantage of this opportunity. You might come across schemes that might lure you to invest money and double it, but do not fall into this trap of unrealistic promises.

 

All in all, investing in cryptocurrencies is a huge gamble. A lot of people are getting lured by this trend, but the bubble is likely to burst soon. Instead of investing in such cryptic means, it is better to safeguard your financial position and go in for ULIPs that promise benefits and high returns on investments. Besides, it is also transparent.

 

In case if you are looking at such investment options, there are companies such as Aegon Life that offer plans to maximize the returns from your investment. Besides, there are no allocation charges as well, which gives you greater scope and exposure to the fund of your choice. You can choose from a range of six plans, based on your needs and requirements.

 

Cryptocurrencies might sound cool but aren’t rewarding at all. Make a wise decision and secure yourself and your family in a safe manner!

 

[1] https://www.coingecko.com/en/price_charts/bitcoin/inr


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