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India’s rookie crypto investors at risk as education lags rush to digital coin

New Delhi: Cryptocurrency has evolved and seen faster adoption in India than expected, but the country has lagged in creating adequate financial literacy about this product at the same pace, primarily because of regulatory and policy confusions.

That creates a risk, because the crypto industry is at a nascent stage and is flooded with many coins and tokens, much of which is bound to eventually die, and that will put big investors’ money at risk.

Cryptocurrency and blockchain experts say India must rapidly integrate the knowledge to navigate the crypto market and educate potential crypto investors on the new aspects that are unique to this asset class.

For example, Bitcoin has been the best-performing asset class over the past decade and majority of the Indian investors have missed the bus, failing to reap the supernatural returns from it simply because of lack of knowledge and familiarity.

Nischal Shetty, CEO, WazirX, said it is time for India to upgrade its financial literacy for the 21st Century. “Cryptocurrencies, in particular, should be a crucial part of the financial literacy programs,” he said.

“Over the past years, cryptocurrency has emerged as an advantageous investment that one can make in the current economic climate,” said Shetty.

India’s cryptocurrency use and investment volumes have been rising rapidly, and that places it on top of the world. Investing in cryptos is likely to increase in the coming days, and that calls for more focus on educating investors in the contemporary financial evolution.

Domestic crypto exchange CoinSwitch Kuber has begun its own initiative for investor education. “Given that crypto is still at a nascent stage, we have a long way to go when it comes to investor education. To bridge that gap, we have introduced a multitude of initiatives,” said Sharan Nair, Chief Business Officer, CoinSwitch Kuber.

“We advise investors to do their research before investing in any coin. That is the fundamental rule of crypto investing, or any other asset class for that matter,” he said.

Indian investors can reap the full benefits of the crypto economy, only if they have enough financial literacy in all aspects of the digital token and blockchain industry.

“The whole philosophy of cryptocurrency places the onus of financial management on the individual,” said Tanvi Ratna, Founder & CEO, Policy 4.0, a research and advisory firm on cryptocurrencies and blockchain.

A number of long-time investors have lost significant amounts of money repeatedly before they finally started managing it right and making returns, she said. “Increasing financial literacy is not a luxury, but a necessity for any crypto investor.”

The cryptocurrency industry has recently witnessed a healthy bull market after a steep fall in May. Also, rapid crypto adoption by institutions and the constantly growing support for it are expected to aid faster growth of the industry.

Of late, many investors have entered the market aiming for overnight multibagger returns only to end up losing significant chunks of their wealth when these coins took a dip. That, industry watchers say, is akin to borderline gambling, not investing.

Edul Patel, CEO & Co-founder of Mudrex, said the growing demand and acceptance of cryptos would require a lot of literacy and education in the investor fraternity, particularly among the gullible ones.

Industry experts say the informed investor has the upper hand to pick the right kind of crypto project. “We have lately witnessed crazy growth in signups from smaller cities and towns. A number of these new retail investors have barely any insight into how cryptocurrencies work. It is a major cause of concern,” Patel said.

There are over 11,000 cryptocurrency tokens so far. Many of them would eventually die and people who have invested in these would lose their entire investment money.

Industry watchers say the best way to safeguard oneself against such wealth destruction is acquisition of knowledge and developing understanding on the cryptocurrency ecosystem.

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