Cryptocurrency or digital currency, especially Bitcoin bounced back after the 2018 crash and now it is continuously rising. Since last year, roughly it has grown by around 800 percent. Bitcoin’s value is touching new skies every day.
At the time of publishing this article, one Bitcoin was valued at around 37 lakhs, and there are high chances that it can rise in the future.
As per the latest reports of the surveys, India is among the global leaders in adopting cryptocurrencies. Leading crypto exchanger companies are continuously noticing the increasing popularity of cryptocurrencies among Indians. Surprisingly, Tier-2 & Tier-3 city investors too are investing in large numbers.
What are the possible reasons for this hike? What is driving people to invest in crypto despite the lack of detailed information?
Past of Cryptocurrency
A few years ago, cryptocurrency was supposed to be a fraudulent scheme, to most people it was a scam. So, what changed suddenly that people started believing in these virtual coins?
At this moment, around 8-10 Million retail investors are investing in cryptocurrency. Why it took so long to believe in the potential of cryptocurrency? What are the factors that made all these drastic changes in the world of cryptocurrency?
Let’s dive deep into the territory of the cryptocurrency and find out something interesting and must to know to every aspiring and existing investor.
Understanding Cryptocurrency Risks and Benefits (2021)
Factors Influencing the Cryptocurrency
Participation of Government
There were too many rumors about cryptocurrency, especially bitcoin. So, it was but obvious that investors couldn’t find its reliability.
But now Indian government is also keen on cryptocurrency. The Ministry of Corporate Affairs (MCA) has made it compulsory for companies to disclose crypto trading/investments during the financial year. Experts believe it is a positive step and expect the taxation rules to follow through. This can be considered the first step towards regulating cryptocurrencies in India.
Additionally, Government is planning to build the infrastructure of digital currency, as said by RBI Governor. So, ultimately, it created a sense of belief and trust among the investors especially retail investors about the potential of cryptocurrency.
Growing Interest of Corporate World
Most corporate leaders have realized the potential of cryptocurrencies and felt the need to incorporate cryptocurrency in their business.
In 2020, more operating corporate companies began allocating cash to digital currencies such as cryptocurrencies. They allocated a major part to Bitcoin than any other coin. This is a new dynamic step and a departure from more conventional investing.
Many MNC’s have already started adding digital assets to their balance sheets. Gradually, the corporate world is putting its steps into the world of digital currencies and hence bringing masses behind them.
One of them is Amazon. Amazon is hiring experts for blockchain technology and they are planning to develop Amazon’s Digital currency.
Availability of Reliable Information
One of the most convincing reasons for the growing popularity of cryptocurrency is the digital revolution. The Digital revolution has increased the reach of the common man. Several YouTubers, influencers, tech geeks, and finance experts are voluntarily creating awareness among retail investors.
People now have easy access to precise, reliable, and free information through their smartphones. So, they can find, analyze and implement the information they know. People with expertise in cryptocurrency and blockchain technology are educating people at zero cost and simultaneously adding value to their lives.
Limited Supply of Bitcoin
For now, unfortunately, most retail investors don’t identify cryptocurrency but they can easily understand bitcoin. It is to be noted that the supply of Bitcoin is limited to 21 million and 18 million of them have already been mined and are in circulation.
As the supply of more Bitcoin is not possible and demand is growing its value is increasing rapidly and hence people are like, “Take bitcoin, and earn money.”
One-Click access to buying crypto
The Digital revolution has made it all possible in just one click. With online verification, it became so easy to create an account and start buying cryptocurrency.
There is no requirement of expertise in trading to start investing in crypto although it is riskier, people are doing it.
If a person has a smartphone with an internet connection and basic knowledge of using any trading app she is ready to go! You can instantly add/withdraw money whenever you need it. Due to this liquidity and convenience, cryptocurrency is the new attraction of retail investors.
Acceptance of Cryptocurrency
Though the popularity of cryptocurrency in India is growing rapidly, yet there are many rumors and confusions about its acceptance. The government is taking steps, yet it will take a bit more time to normalize this currency in India.
Recently, one auto-rickshaw driver was in the spotlight. What he was doing surprised his customers. He was accepting cryptocurrency instead of Google pay, Phone Pay, or Cash, it was quite surprising but we should not forget to embrace this new normal.
Before the decades, online transactions were assumed to be unsafe and users were not sure of their reliability but today everyone got used to it and using it on daily basis. Who knows? Future transactions would be in cryptocurrencies and there are high chances of its success.
Technology is growing rapidly, the internet has made everything possible and easy. Why would not any government want to reduce the printing cost of currency? Why would not any investor want to invest in a high returning asset? Crypto is performing well in every aspect so there are chances that its future can be bright.
In 2018, there was a terrible crash of bitcoin, so people are in fear of any future bubble. To some extent, they are right if you see the volatility of cryptocurrency. There are several reasons for that but at this moment you can’t deny it its growing popularity, number of high network investors and expert’s opinion.
Digitalization is the future of the world so there is a high possibility of the rise of digital currency in the future.
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