BENGALURU: Cryptocurencies are fast attracting investors world over with Bitcoin having surged a massive 900 per cent since March 2020 to hit $40,4024.6 last week.
Gold was still considered the preferred safe haven investment for the large part of 2020, with the pandemic taking out jobs and resulting in salary cuts, but cryptocurrencies have begun catching up as many investors have turned away from traditional asset classes. But will something like Bitcoin eventually replace gold as the most preferred asset class? Investment experts don’t actually think so.
Market experts say that the investments in digital assets are usually high-risk and therefore, should only constitute a small portion of your overall portfolio. Bitcoin has fluctuated wildly since its creation on a month-to-month basis, and although it is expected to continue its bull run throughout 2021, the volatility make it a less-than-ideal option.
Besides, the hacking of cryptocurrency exchanges, unsecured internet connected devices, and even compromised digital wallets remain huge concerns, which cyber security analysts say should be weighed in before one is lured towards the Bitcoin fad. In India, specifically, even though the Reserve Bank of India, and other financial institutions have begun looking into the segment, they remain unregulated and are considered by many to be worth the risk.
Experts say that in case one wants to invest in digital currencies, it is pertinent to consider the authenticity of any exchange before trading on it. Exchanges that require you to submit your KYC information are generally more credible. When it comes to buying cryptocurrencies, experts say that doing the transactions via debit cards or bank accounts are safer than using credit cards.
They also warn investors to consider the fees charged by exchanges for each payment option. The storage of your Bitcoins is another concern and it is advisable to go for your personal digital wallets outside exchanges or even offline or paper wallets which are less susceptible to cyber attacks. As for selling bitcoins, one can do that directly on exchanges or through P2P trading with other crypto-holders.