Opinion

Should You Invest in Cryptocurrency?

How to invest in crypto is a much easier question to answer than should you invest. Here's what you need to know.

Should You Invest in Cryptocurrency?

Photo Credit: Bloomberg

Investing in cryptocurrency sometimes defies all logic, so is it a good idea?

Highlights
  • People ask how to invest in cryptocurrency but first think if you should
  • The market is volatile and can be quite risky if you're not careful
  • You'll need to spend a lot of time doing research if you do invest

Everybody wants to invest in crypto. Including my house help's 14-year old son. True story. I am always asked how to invest in crypto. But I think the most important question people should ask me is, "Should I invest in crypto?". Crypto is a new, small, highly immature, and extremely volatile market.

Don't invest in cryptocurrency because you think it's "cool". A fixed deposit with a boring bank might not sound cool but may be a better investment for many people. Let's start with six questions that you must answer honestly:

  1. Can you afford to lose your entire crypto investment?
  2. Are you tech-savvy and ready to learn how to keep your crypto safe?
  3. Are you ready to spend a good amount of time every single day researching cryptos and monitoring your portfolio?
  4. Can you wrap your head around the fact that crypto prices depend more on tweets by (evil?) billionaires like Elon Musk and less on logic and economics?
  5. Are you ready to understand the meaning of stuff like this? — "Sharpe Ratio is the average return earned in excess of the risk-free rate per unit of volatility. Volatility measures the price fluctuations of a cryptocurrency and is usually calculated using variance and standard deviation."
  6. Are you ready to spend time looking at graphs like this?

graph sample bitcoin graph

Photo Credit: Rohas Nagpal

If you can honestly answer "yes" to all these questions, then let's talk about some recent crypto disasters:

  • A cryptocurrency called Internet Computer (ICP) started off in the top 10 cryptos of the world. And then crashed more than 90% in a month — from a price of $737.20 to $20.08.
  • A cryptocurrency called TITAN went from $52.46 to $0.00000003 in 10 days! One of its most famous investors was the non-evil billionaire Mark Cuban. Yes, even super-smart billionaires make bad crypto mistakes.
  • A cryptocurrency called SafeDollar suddenly went to 0. And this was a stablecoin — its price was supposed to be "stable"!

If you are still sure that you want to invest in crypto, then let's get started. Over the next few weeks I will talk about:

  • How to trade and hold crypto
  • How to pick good cryptos
  • How to keep your crypto safe
  • Crypto metrics that every investor must know
  • Crypto indexes and stacks
  • How to profit from crypto staking and lending

And I have some homework for you - figure out which of the 3 types of crypto investors you are. For this, read about 3 cryptocurrencies - Bitcoin (BTC), Ether (ETH), and Dogecoin (DOGE), and decide which one you like the best.


Rohas Nagpal is the author of the Future Money Playbook and Chief Blockchain Architect at the Wrapped Asset Project. He is also an amateur boxer and a retired hacker. You can follow him on LinkedIn.

Cryptocurrency Prices across Indian exchanges

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