The one huge party that everyone wants to go to. Crypto! The amount of advertisements, YouTube gurus, and Instagram millionaires is simply insane.
Back in 2009, few people who saw drawbacks in current banking systems created cryptocurrency, something that could not be controlled by a single government or the powerful people in the world. No restrictions across the world, governments, and regulatory entities. Bitcoin was the first cryptocurrency to be created. As of December 2021, there are over 8000 cryptocurrencies.
Nearly 2,000 cryptocurrencies have failed and continue to fail, according to reports. There are several reasons for the failure, but many of them are absolute frauds. The reason so many currencies failed is that it is simple to launch a new coin into the market since there are no regulations. Similar to an IPO, an ICO is an initial coin offering that will help to raise funds. Typically let’s say, a individual wants to start a new business sells you the idea and projects the potential of the business, and then gives coin in exchange for the investment you make.
These are fully unregulated, you do not require a banker to do due diligence, nor do you need SEBI clearance. The issue is that when something isn’t controlled, it leads to a lot of fraud, approximately 90% of the IOC have resulted in a scam. The pump and dump types.
The crypto market is very volatile, when something is volatile, it has the potential to make or lose a lot of money. Similarly, we all know that the stock market has a lot of potential for earning money, but we also know how many of them are actually profitable. The volatility can lead to losing money most of the time. When prices are manipulated, traders suffer massive losses due to the high leverage provided.
The crazy four-year rally of bitcoin from $3200 to 41000 dollars today is the reason for crypto sound. Also, with the recent institutional investor interest, you can also find Bitcoin ETFs listed on NYSE. But we need to understand just because something is listed doesn’t mean it’s safe. Everyone is looking at it as an investment rather than a currency.
People make investments in blind faith. The assumption is that they will be able to sell them at a higher price to someone else. However, as compared to stocks, when you invest in a company, you know what the company does and whether it can generate profits or not. But, the only belief in cryptocurrencies is that the price will go up.
Governments across the world are still finding out how to implement laws and regulations for cryptos, while China banned cryptocurrency trading in September last year.
Check out this sharp drop in an hour of Bitcoin and Ethereum in September as news of a Chinese regulatory ban spread on social media.
The Dogecoin spike and collapse, thanks to Elon Musk and the SM trend.
Cryptocurrencies are easy to manipulate. Take a look at this ad, Ayushman says funds are secured, and Bilkul Safe. He may be referring to the platform, but how many people think straight enough to make decisions? People make decisions based on unverified information.
I guess, for any business that involves a high risk of people losing money, it is ethical for businesses not to run ads, and the government should not let them either.
Since this is a hot topic right now, everyone around you starts making predictions or follow so-called experts, but the fact is that no one truly knows what will happen.
Do you believe cryptocurrencies will survive and continue to rise in the coming years?