When it comes to financial and investment instruments, cryptocurrencies have shown a lot of promise since their inception a decade ago. Cryptocurrencies work exactly how the traditional mode of exchanging payment does, the only difference being that it's digital. But is it easy for cryptocurrencies to gain peoples' trust as compared to the already existing traditional investment options? The question becomes more relevant since people have been opting for traditional investment plans for generations in India. However, going by the present popularity of cryptocurrencies, we can say that it does have the potential to impact traditional investments in future.
Here are a few ways in which it can do so:
1) Decentralised currency: Cryptocurrencies are not controlled by the government or any third party. While dealing with cryptocurrencies, you are the direct owner of your money. Cryptocurrency is getting more attention from investors since it doesn't include involvement from the government.
2) Accessibility: The usage of cryptocurrencies is all digital, which makes it easier for the masses in terms of accessibility. Anyone with an internet connection can have access to or participate in a cryptocurrency transaction. Fuelled by the craze around cryptocurrencies, especially Bitcoin, and the opportunity for speculative investments, many people have begun to trade in the virtual assets.
3) Banking: As cryptocurrencies are digital assets, an investor no longer needs to go all the way to the bank for transactions or investments. All that a person needs is access to the internet, and they can have complete control over their money.
4) Choice of investment: With the increasing popularity of Bitcoin — the world's oldest and largest cryptocurrency — the digital assets have managed to gain the trust of many investors. Those investing in cryptocurrencies know that they have a chance to bag better returns as compared to the traditional investment options, thanks to the volatile nature of the virtual coins.
5) No border limitations: Unlike traditional currencies, cryptocurrency is not restricted by geographical borders. It can be used in any part of the world. Its value will not change with the change in countries. This could make it even more popular among investors.
From an Indian perspective, many people are warming up to the idea of cryptocurrencies. Though in 2018, the Reserve Bank of India had banned all regulated banks from holding or facilitating cryptocurrency transactions, the Supreme Court reversed the ban in March 2020. Since then, many Indians have started to take more interest in cryptocurrency, with a lot of them even looking at it as a viable investment option.