Debunking six myths of cryptocurrency amongst Indians
In recent years, we have witnessed a boom in the digital currency space. The Global cryptocurrency market size stood at USD 754.0 million in 2019 and is expected to reach USD 1,758.0 million by 2027.
While there is a lot of attention and excitement around cryptocurrency, the concept might seem unfamiliar compared to traditional financial systems. With several myths still surrounding the cryptocurrency sector, some Indian residents are skeptical of the technology — that’s why it’s important that we debunk these myths.
Cryptocurrency has several use cases and it enables equal access to finance and has the potential to massively improve financial inequality. It’s vital that Indians have awareness and confidence around cryptocurrency so they understand the different financial solutions at their disposal.
Myth#1: Cryptocurrencies are Illegal in India
While certain Indian officials have expressed various views about the continued legality of cryptocurrencies, to date no laws have been instituted or implemented that prohibit Indians from trading in cryptocurrencies. The Government of India has not yet ruled out crypto as an investment option after the Supreme Court overruled the RBI’s decision to ban banks from supporting crypto transactions last year. The Indian government is currently exploring the way forward, with the best interests of the larger population.
Myth#2: Cryptocurrencies Can Be Easily Tampered by Hackers
Trading or investing in cryptocurrencies is safe and secure. This is why crypto transactions such as Bitcoin utilize blockchain technology, which is very complex and nearly impossible to hack. The data fed on blockchain technology can’t be modified, which makes it more secure for payments and transactions. Blockchain is also decentralized, so not a single user or a group has control over any data.
Myth#3: Cryptocurrencies Are Used for Illegal Activities
Some perceive cryptocurrencies as a weapon for antisocial elements to facilitate illegal activities, like money laundering, drug trafficking, and terrorism. After the Silk Road incident, critics believe that cryptocurrencies like Bitcoin are only used (and misused) by criminals. This incident could have been made possible with other modes of payments and transactions as well.
India has also witnessed several cyber frauds over the years in the digital banking space. In the year 2020 itself, over 2.9 lakh cybersecurity incidents related to digital banking were reported. Regulation is needed in this sector to help protect consumers. With proper regulations in place, such as by implementing strict KYC and AML processes, Indians can experience the benefits of cryptocurrencies in a safer way. There is nothing about cryptocurrencies that make them more appealing to ‘bad actors’ than fiat currencies.
Myth#4: Cryptocurrencies Are Too Volatile
With every investment, there comes an inherent risk factor, whether you invest in mutual funds, stocks, or cryptocurrency. There’s value in diversifying investment portfolios to mitigate this risk. The greater the volatility, the more the chances of earning a higher return investment. Volatility doesn’t make any asset class ignorable. The main mantra of investing is that people should invest as per their capability. Cut your coat according to your cloth, as the old saying goes.
Myth#5: Cryptocurrency Transactions Are Anonymous
Cryptocurrencies are not completely anonymous, but they are pseudo-anonymous. Though your name and identity are never directly mentioned in the public ledger, there’s an identifiable address for every user in the network. No one necessarily knows who is behind each address unless one verifies their identity with an exchange. But as blockchain technology is extremely transparent, every transaction is traceable, and other users in the network can view the transactions made by anyone else.
Myth#6: Cryptocurrency Investing Requires Huge Capital
You don’t have to have a substantial amount of wealth to invest in cryptocurrency. Only invest what you are comfortable risking, but you can start with whatever amount feels appropriate. Looking at bitcoin as an example, you can start investing with as small as INR 222. This will buy you a partial Bitcoin, but it’s still an investment. Also, on a peer-to-peer marketplace, such as Paxful, there are no fees for buyers and the platform allows almost 400 different payment methods to buy and sell digital currencies, from gift cards to bank transfers.
Guest contributor Ray Youssef is the CEO of Paxful, a leading global P2P cryptocurrency marketplace that has recently expanded operations in India. Any opinions expressed in this article are strictly that of the author.