In recent times there has been an evolution of Cryptocurrency the name most probably knows this Cryptocurrency of Bitcoin beginners It has usually gained a huge amount of momentum among the people because of the huge gains it has provided to them. Let us move on and understand everything related to Bitcoin for beginners, and help them in investing in the cryptocurrency.
It is also important to keep in mind that a single value of Bitcoin could surge its value by more than 10000% in the recent 5 years, which is more than the within provided by any other form of investment.
The Initial Guide For Understanding Bitcoin
In such a situation, any person who wants to double his money or who wants to take the maximum return may always want to invest in this segment because, on the face of it, it appears to be the best mode of investment for earning the maximum.
But it is not true and requires a proper consideration for any investment needed in such a segment.
In this article, the attempt will be made to explain how Bitcoin should be used initially for beginners so that the speculation does not result in causing huge losses to the investors.
Why is The Investment in Cryptocurrency Not Safe?
After using the basic introduction it might be clear that Cryptocurrency is not a safe method of investment like the banking sector and even the stock market.
It is a very volatile sector that is completely based on speculation and has the tendency to increase and decrease in still be there by causing instant losses and instant gains, which is not heavy from the perspective of a stable economy like India.
In the year 2017, the value of Bitcoin crashed by 10 lacs at least just in a day, thereby resulting in the loss of around 100 crores by the Indians.
When the investors wanted the government to look into the matter and repay them, the government denied his involvement. It is said that this form of currency does not enjoy any legal tender in India and the government has no law to enforce Such currencies in India.
That is why it becomes important always to be careful while investing in Cryptocurrency in such a situation. There are no doubt gains can be huge, but the losses can be huge as well.
1. Nature of Cryptocurrency
One of the most important factors that have to be kept in mind before Investing in Cryptocurrency is the nature of this form of investment.
It is completely different from the traditional fixed deposits that you have been making.
It is also not as risky as the stock market because there are certain regulations by the securities regulator of the stock exchange. The regulations of SEBI cannot correct even a sudden market crash in the stock market.
However, Sebi can still order an investigation to bring forth the speculative trading and instances of insider trading that are causing search market crashes, thereby providing at least a remedy to the investors for their protection.
However, the nature of Cryptocurrency is completely different, and the same has been summarized in the form of the following pointers.
2. Based on Speculations
The only factor which tries to control the market value of Bitcoin and Cryptocurrency has been speculation.
There is no set defined market forces that try to determine the price No doubt, the price of even a share of a company cannot be fixed by a random person and even the security regulator of India.
But still, there are certain types of determinable factors that tried to get the value of such share determined.
But this is not the key with the help of Bitcoin. It is completely based on speculation and guesswork, and some countries consider it a form of gambling.
3. It is Volatile
An additional feature of Bitcoin form of investment has been the volatility of this investment.
Vitality refers to the instability e of a particular form of investment to stabilize itself No doubt, it is considered the biggest type of risk factor in the regulation of Bitcoin.
Still, it is also important to keep in mind that a certain degree of risk exists even when you invest your money in the banks and a greater degree of risk is likely to exist when you invest your money in the stock market.
But even Bitcoin is considered the riskiest form of investment because it does not give any time to the investor to even think for a second about his decision to withdraw the money.
The Extent of Volatility is Pretty High
It is important to keep in mind that most of the companies, along with the individual investors you should try to consider Bitcoin as the worst form of investment despite its tendency to provide the maximum amount of profit.
It is important to keep in mind that the reason for such a mine set has been the vitality and the quantum of volatility that can be experienced in this form of investment.
Even if the stock market loses a certain type of value, then the value deviation is not so large on the spot. However, it usually happens when the money has been invested in the stock market.
As already mentioned above, a crash of 10 lacs in a day is more than enough for any rich man to tolerate.
Lack of Regulations
The Reserve Bank of India regulates the Indian banking sector, and the securities exchange board of India regulates the stock market.
However, there is no present form of body or even law that could give on the Cryptocurrency in India for the time being.
The winter session of the Parliament is attempting to pass a law related to Cryptocurrency to prevent all the speculative trade in this form of currency.
So until and unless a legal regulation is not there to regulate the conduct of such form of investment, it is not seen for the beginners to invest their money in this.
It can be concluded that Cryptocurrency can be found to be an amazing method of multiplying your money in just a fraction of years, but it is not safe at all.
It involves a huge amount of risk and, at the same point in time, requires an additional amount of consideration. It has to be taken into account only with the help of expert advice.