Since its inception, it is a point of debate whether an investment in Crypto Investment is safe or not. Though the potential returns came out to be very high but the debate kept coming up as well.
Crypto came out to be the best investment model if we speak about the last few years. It gave better returns than Gold or US dollars.
But alas! It was all a bubble. As is evident from the news. Last week it was the FTX that filed for bankruptcy.
FTX? FTX is the exchange for Crypto Currency. It is a place where people come to exchange their cryptos.
Why did FTX Collapse.
There are various reasons for the fall of the Crypto exchange. Some of them are given below.
Irregularities.
Various irregularities were reported by the agencies and platforms. One was the opaque fund management by FTX. FTT Token was bought and shown into prominence with the funds of the investors. FTT token is the in-house Crypto of the FTX.
Owner – Samual Bankman.
The Crypto exch is managed by Samual Bankman, a 30-year-old. Money matters take a lot to understand. It is beyond a certain age to run an exchange all on the investors’ money.
Alameda Research.
It is the subsidiary branch of the FTX. It is to be a separate business but it was not so. The money of the investors in FTX was deliberately taken up for Alameda Research.
Bubble Burst.
Binance came up with the news that it will sell all its FTT Tokens. Thus came the first prick in the bubble. Investors tried withdrawing their funds and FTX did not have that money. So the withdrawals came to halt. This led to a 78% fall in a single day.
Binance to Buy FTX.
This news came as a relief to the investors. But later Binance came up and tweeted that it would not be possible because of the Corporate Due Diligence.
To Invest or Not – Crypto Investment is safe or not
Crypto Investment is safe or not
There is less of a debate and more of an understanding about this.
No. It is the hard-earned money that we will risk at the hands of 30 years old. There is no short path to money. It is to be earned the harder and the long way.
If your money is already there then it is just too bad. No need to invest even if chances are there to even out the losses.
No Regulation No Investment.
Any matter related to Money needs monitoring at the central level. This is not the case with FTX or Crypto for that matter. If there is no regulation then there is no law as well. It is at the mercy of the Crypto Exchange only.
Government Stand.
The Governments are yet to recognize Crypto as a currency. And it is less likely as well. Indian Government has a tax of 30% on the gains out of Virtual Assets. Crypto Currency is not authentic in India as well.
RBI.
The stance of RBI is that Cryptos are a threat to the financial stability of a nation. Allowing these will undermine the authority of the RBI. So it is better not to invest till the time the air clears out. If you think there is any.
Recommendations.
Medhini recommends that hard-earned money not be at the hands of unregulated exchange houses. Earning money takes time and one needs to have patience. So the answer to the question is – Crypto Investment is safe or not. Isn’t it self-understood.
For a better investment model and financial awareness read our blog here. What is Cryptocurrency?