Is Crypto-Currency a gamble, trade, or Investment?

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Gone are the days when people spoke about which currency is stronger – the US dollar, GB Pound, or the Kuwaiti Dinar. This is the era of investment into cryptocurrencies where money can be made overnight and rags to riches is a common story.

Bitcoin was the first which started this new age trend and today many meme coins are the talk of the town with billions of money already invested by Indians who today are the highest number of cryptocurrency investors on a national level. This also brings us to a very critical question which most people get riddled with, ‘Is cryptocurrency a gamble, trade, or an actual investment?’

To answer this question effectively, we need to examine all the three in a more sophisticated manner to derive a logical conclusion which hopefully can cause a conclusive creation of positive financial results.

When we talk about investing, we are trying to put our money into those assets which hold the promise of a long-term gain while currently, all cryptocurrencies are mostly giving great returns, rather unimaginable returns. However, the certainty of returns is where they lack. Talking more deeply on this topic, investment can only be made in those assets which hold a stronger promise of capital creation, cash flow, or real financial value to the society. And this is where the cryptocurrency so far has not fared very well. Hence, we cannot call cryptocurrency an investment for sure.

So if cryptocurrency is not an investment, is it a trade?

Trade simply is an activity to buy an asset at a cheaper price, with the short-term aim of selling it at a higher price. This is an activity that can be done speculatively or using some sort of quantitative research. One such opportunity that presents itself in cryptocurrency is technical analysis-based trading. This can be done in cryptocurrency and other asset classes, as well in which people who are well versed in technical analysis can further expand their opportunities and returns. So in simple words, one cannot expect to buy a coin and hold it forever with the surety of making a big profit. However, one can trade in the same currency with the defined entry and exit to make a possible profitable return out of the same. This way, the risk of a coin becoming zero or crashing severely can be highly minimized. However, the bottom line for this will solely depend on the precision with which the trader trades, making it a profitable opportunity only for the skilled. Else, it will not differ from what people do in the stock markets. The one factor which works against Cryptocurrency right now is the fact that you can only buy them and not short-sell them in India.

So if cryptocurrency is not an investment, is it a gamble?

Frankly, the word gamble can be used in many areas because gamble simply means betting on something without doing any research and simply on the probability of a favourable outcome. And for most investors, investing in cryptocurrency is doing exactly that. They are mostly 18-25-year-olds who, without doing much research, are investing in coins that they do not even understand or, better yet, are meme coins. Meme coins are simply those coins that are based on a theme happening socially, i.e. PubG, Squid Games coin, etc. that are baseless. The rise of such coins and their returns has been exponential, attracting more gamblers and notice of people who don’t put their money in crypto-currency, clearly promoting cryptocurrency to gamble to financial glory.

Regulations on Crypto-Currency

There has been a long battle between the Reserve Bank of India and the Supreme Court on the decision of making cryptocurrency legal in India, which started in the year 2018. RBI has always been against the decision of allowing cryptocurrency to trade in India, which is why, in 2018, they issued a circular banning investment into cryptocurrency. This, however, was challenged only two years later by a statement by the Supreme Court of India superseding the Reserve Bank of India’s decision and allowing for the investments to continue. This created a surge in many small crypto exchanges in India. Currently, the Reserve Bank of India after a thorough meeting with the central government it is speculated to ban the cryptocurrency in India once again with the launch of their regulated digital currency.

The gist of the article is to understand cryptocurrency as what it is in the current regulatory and trade markets, to educate potential investors to be aware of the risks and strategies through which cryptocurrency can still be profitable. Once regulated, cryptocurrency can be a possible trade opportunity or a sure gamble, but surely not an investment. 

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