To buy or not to buy

Crypto is staying with us!

India-based cryptocurrency exchange CoinSwitch Kuber is on track to become the country's second crypto unicorn with an estimated valuation of $2 billion.

Solana, has grown over 300% in the past month and is up over 10,000% since the start of the year.

Bitcoin's price is hovering around $45k and El Salvador declared it a legal currency

Fluency, a startup launching a proprietary CBDC blockchain enterprise platform, announced its $1.3 million in seed funding from various Europe-based investors.

Mark Zuckerberg is betting on metaverse for Facebook's next set of growth.

The question which has come up time and again over the last few years is whether to buy cryptocurrency. Until a few years back, crypto was equal to bitcoin but now there are a lot more options. Regulations are well, still not clear, and doesn't seem like they will be in the near future.

However, one thing which is clear is that cryptocurrency is here to stay. The world is working on two extremes post-Covid- the ground reality and what can happen. The ground reality is manufacturing is disrupted, logistics are disrupted, exports are disrupted, people don't have labor and credit(capital) to work and what can happen is well, the metaverse. People are relying on blockchain to solve the inefficiencies of the supply chain and serve the unbanked but this will take some time to materialize.

But I deviate, coming back to the question of if it is a good time to buy crypto. Like any other investment, It depends on how you look at it, what you believe in, and thus if you feel(with data) it is going to be important for the future. The difference though is past data might not be the best indicator for crypto.

People are looking at it in three ways today:

1. Store of value: Over time, people have realized that bitcoin acts as a store of value like gold, and thus, a few decentralized finance applications are also being built on top of it. Just like gold loans, you have crypto loans or you can get interest on deposit if you keep crypto with the exchange. Vauld, Crypto.com, and Blockfi are some of the platforms that allow Indian borrowers to get credit against their crypto holdings.

2. Currency: This is how the cryptocurrency started but this use case seems very far because of the cost and speed of transaction. This also requires strong network effects which are still not prevalent.

3. DAPPs: Ethereum, Solana, Ripple and a few other blockchain networks are being used for use cases like NFTs, gaming, cross-border payments, smart contracts, etc. A few banks have also come together to work on various applications like IBBIC(blockchain for trade finance in India) using Infosys Finacle(You read it right, Indian banks!) and Identity verification using Monetago.

So, depending on what you believe the major use case is going to be, the investment strategy will change. If you believe in the store of value use case, bitcoin is good. If you think they will be used as a currency, wait for the CBDCs and check out which blockchain networks are being used to build them. If you believe, the world is wide open and the applications are enormous, Ether and Solana might be the way to go (other promising Ethereum competitors, including Cardano, Polkadot, Dfinity, Terra, Polygon, and Avalanche, have also increased in price tremendously over the past year or so). Then there are stable coins like USDC which can avoid some of the limitations of bitcoin like volatility.

“The most bullish thing for Ether is to be understood.” - Ryan Sean Adams, Bankless

It also depends if you believe in blockchain as a technology and the inherent benefits which come with it. There are ways in which it can improve efficiency in use cases like cross-border payments, identity verification, etc.

The word of caution here is, a lot of them are still in the beta stage and of course, regulations sit at the top. Thus, the risk is high.

At this stage, however, getting a minimum amount of crypto (which you are not scared of losing) should be a good idea as a token to the future. This will also keep you updated about the currency. You learn when you own and crypto has become too mainstream now to avoid.