Cryptocurrency is a new investment avenue that has attracted many investors. But like any other investment, it is important that people understand what they are getting into. They should evaluate their own risk tolerance and assess if they are well-suited to the wild price rides that cryptocurrencies go through.
Earlier this week, Rishabh Parakh, a chartered accountant and founder of NRP Capitals (formerly known as Money Plant Consultancy) was a guest on our weekly personal finance podcast, Simply Save. Like many advisors, Parakh too has been getting a lot of questions from his clients on how to invest in cryptocurrencies, how much to invest in them and several such questions.
Here’s what investors must know before they decide to invest in cryptocurrencies.
Is cryptocurrency an investment or just a currency?
A currency is usually stable and regulated. Most importantly, it should allow you to buy goods and services. Cryptocurrencies do not have a store of value and are volatile. And at the moment, at least in India, you cannot buy any item, say a laptop, or a TV with a crypto. For now, therefore, cryptocurrency is not a currency. Till the time that it becomes an acceptable