₹1 lakh: Value of a bitcoin, but don’t just rush to buy
On Friday morning, a notification bleeped on my smartphone. It read: “Bitcoin at ₹100,647.”
For those who’re still living in caves, bitcoin is a crypto currency created through encryption techniques.
The value of a bitcoin has breached the ₹1 lakh mark, making me wish I had bought more bits — or fragments of a bitcoin that one can buy and sell. One million bits make a bitcoin. I bought one lakh bits in September 2016, and these have given me a 142% point-to-point return.
While this sinks in, let me clarify that the purchase was purely triggered by professional curiosity. As a fintech and banking writer, I usually end up downloading all the apps, wallets, opening bank accounts (don’t ask how many accounts and wallets I have) and even taking loans to make my stories authentic. Since I was writing about bitcoins then, I decided to experience actually buying one.
The purchase happened on September 22 at ₹41,582 per bitcoin. At that time, a handful of companies in India had started app-based bitcoin sales. It was easy: download an app, register with a name and mobile number, provide bank details and permanent account number (PAN). Once verified, you could buy bitcoins as easily as you could a book off Flipkart.
Nobody knows what triggers a rise and fall in bitcoin prices and that is where my words of caution come in.
Don’t rush to buy bitcoins right away. Two reasons. One, remember the old saying: high return comes with high risk. Bitcoins have been extremely volatile over the period I’ve held them. To give you a sense, on February 14, the price was ₹72,247, it rose to ₹98,486 on March 3, only to collapse to ₹63,265 on March 24. And by the time I finished writing this story, the price of one bitcoin had receded to ₹99,982. Even stocks that are considered to be a volatile asset in the short term look sedate in the face of the bitcoin price movements.
Two, the bitcoin exchange, where all the trades take place, is an unregulated market. There is no regulator to solve problems of market manipulation, market failure or simple fraud if they were to happen.
For me professional curiosity has yielded unparalleled personal gain. Bitcoin has been my best investment but also the most volatile one. And, no, I’m not planning on buying more.