Four experts told us their long-term predictions for bitcoin — and the most crucial information that crypto novices need to know
Bitcoin is rapidly gaining popularity but many observers are concerned about its volatility.
Insider spoke to four crypto experts to understand what the future holds.
The experts also shared the most crucial information that beginners should know before investing.
See more stories on Insider’s business page.
Bitcoin is rapidly gaining popularity as many look to the cryptocurrency as a valid medium of exchange or storehold.
But the digital unit of currency has its drawbacks. Its volatility is widely recognized among many, which has led investors, including Warren Buffet, to criticize it and other cryptocurrencies as “risky” and “worthless.” And now, with the recent rollout of China’s digital currency, discussions about bitcoin’s vulnerability are gaining momentum.
Insider spoke to four experts in the crypto industry about their future predictions.
Brock Pierce, the former ‘Mighty Ducks’ star turned crypto titan
When asked where he sees bitcoin in 10 years' time, Pierce seemed bullish while also taking a swipe at the US government’s fiscal decisions.
He said: “After seeing the growth of btc in the last 6 months (Mkt cap exceeding $1T) I’m very optimistic about the future growth of this technology. Our government’s poor monetary choices (overprinting, excessive spending, etc…) only work in Bitcoin’s favor — and from what we’ve seen in the last year, there’s no sign of slowing down.”
For Pierce, the crypto landscape has drastically changed since its inception. But according to him, a major attraction of the cryptocurrency is the fact that “every transaction that has ever occurred is put on an open - public ledger making fraudulent applications nearly impossible”. This is why he added, “if you haven’t done research on bitcoin or Blockchain technology — I would urge you to do so!”
James Ledbetter, editor, and publisher of the fintech newsletter, FIN
As fears loom over the effect of China’s newly launched digital yuan on bitcoin, Ledbetter said: “In general, the development of Central Bank Digital Currencies (CBDCs) can be viewed as an encroachment on bitcoin’s territory. If the digital yuan gains wide acceptance, it may discourage some people in China and elsewhere from investing in bitcoin.”
With a new wave of young people investing in the cryptocurrency, he added: “It scares me if people are getting into the bitcoin market because consciously or unconsciously they think it will never go down.”
This is among some of the reasons why people “should never invest more in any given asset than you can afford to lose,” Ledbetter added.
Joey Krug, co-chief investment officer at Pantera Capital
The reason why young people are investing in bitcoin is down to the fact that in general, younger people tend to hold assets farther out on the risk curve than other groups, says Krug.
Young people see the government printing trillions in fiscal stimulus, threatening to rapidly debase the US dollar, Krug explained. Meanwhile, they have an increasingly strong sense that opportunities for socio-economic advancement are becoming fewer and harder to come by. “The result is that far more young people today own bitcoin than they own gold. That trend is not going to reverse,” he added.
Krug laid out three key areas for novices to pay attention to: He said: “First, remember that bitcoin could go down 70% or more. Second, know that it could go up many multiples of that. Third — and in light of #1 and #2 — figure out an investment size that will allow you to hold bitcoin without driving yourself crazy or losing sleep over each short-term price swing.
He added that “if you buy too much relative to your other assets, you will inevitably panic and sell when it does go down. Bitcoin investing is a long game, and it isn’t for the faint of heart.”
Lucy Gazmararian, founder and managing partner at Token Bay Capital
“Today bitcoin is increasingly being viewed as ‘digital gold’ due to its scarcity value as there will only ever be 21 million bitcoins in existence,” according to Gazmararian.
In terms of how she thinks bitcoin will be faring in five-ten years' time, it’s conceivable that it could become the world’s reserve asset, she said. “There are early signs of this happening today with corporates around the world beginning to add bitcoin to their balance sheets.”
She added that money is set to become “a far more complex payment instrument than it’s ever been before,” with the onset of digital currencies.
This is because, in her view, the future looks as though central bank digital currencies, cryptocurrencies, and other digital representations of value will interoperate seamlessly within our digital economy.
When asked about the essential information potential investors should know, Gazmararian highlighted two key points. “Develop your own view on this new technology and get clear on why you are holding it,” she explained.
She also believes “there are distinct operational risks associated with holding bitcoin “as it’s a purely virtual currency and can be stolen from your digital wallet if your private key gets into the hands of a nefarious actor.”
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INDMoney Adds Crypto Trading Amid Market Boom; Will Other Investment Apps Follow Suit?
Instead of directly buying cryptocurrencies, users can invest through virtual holdings of these currencies that can be redeemed for cash
Cryptocurrency is clearly the flavour of the season with the rise of Dogecoin epitomising just how quickly it has entered the mainstream even in India. Despite no clear cryptocurrency regulations, interest around cryptocurrency such as Ethereum, Dogecoin (which is considered a meme crypto by most), Cardano (ADA) and others has definitely piqued the interests of India’s fintech startups. The latest to join the bandwagon is INDMoney, which has added fractional crypto investments with its TechStars partnership.
Using the in-app INDCoins rewards, INDMoney users can invest in shares of cryptocurrencies such as Bitcoin, Ethereum, Dogecoin, Ripple, Cardano and Uniswap. Founder and CEO Ashish Kashyap, who announced the launch on his Instagram feed, told Inc42, “Cryptocurrency is the asset of the future. We feel that it will become an important element in diversification of investment for our customers. And we have had many customers give us feedback about wanting to invest in crypto.”
Kashyap said the initial goal is to deliver a simple experience for investors who may not be familiar with crypto investments. The Gurugram-based investment tech platform has enabled fractional virtual holdings through TechStars, a virtual exchange, which facilitates trading in virtual fractional holdings of Apple, Amazon, Google, Microsoft and other tech giants as well as cryptocurrencies.
INDMoney Tests Crypto Waters
Founded in 2018 by Ibibo cofounder Ashish Kashyap, Pratiksha Dake and Varun Bhatia, INDMoney is a personal financial advisory agent, which offers advice across asset classes, loans, and tax management. It enables consumers to organise and track their wealth across investment avenues such as fixed deposits, ETFs, mutual funds and more.
While the company has started with its proprietary INDCoins for the crypto investments, the plan is to broaden this to the extent that is allowed by any potential regulations for cryptocurrency.
“We will be enabling customers to buy crypto assets using fiat currency like INR. This will be going live in four-six weeks. We have taken a scalable approach with the INDCoins, which can be extended as we know more about the regulations,” INDMoney founder and CEO Kashyap said.
He added that INDMoney would also be adding a cryptocurrency wallet so customers can invest in real holdings and not just fractional virtual holdings.
As the company explains, a virtual holding is “a representation of a parallel value of a holding. It is not part of the real holding. A virtual holding, then, is essentially a method for calculating a value that is granted in the form of INDcoins”. It adds that a fractional virtual holding is just a portion of this holding.
In the case of INDMoney, redemption of the investments is possible, but it does seem a lot more complicated than it should be if the goal is to familiarise its user base with cryptocurrency. Users need to sell their virtual holdings on TechStars to get INDcoins in their INDMoney account. Alternatively, they can get cash in their accounts by transferring the virtual holdings to a friend who has to then claim those virtual holdings. Another option is the real monetary value of the INDcoins would be credited to the user’s bank account. Presently, the value for redemption on TechStars is 10 INDcoins is equal to INR 1.
Cryptocurrency Gains Mainstream Limelight In India
The foray into crypto, INDMoney’s Kashyap highlighted, was prompted by customer feedback across channels. “Our goal is to cocreate with customers. When we read all the feedback on our app store and other channels, we saw users need a one-stop shop for all investments.”
While some have derided these fractional holding models as not being real cryptocurrency investments, they have massively increased the addressable base by making it easy and affordable for Indians to invest — even though there are several challenges still to overcome.
For example, CoinSwitch Kuber claims to have over 4 Mn users in India and is targeting to cross 10 Mn users by the end of 2021 on the back of mainstream promotions. It crossed $4.2 Bn in transaction volume in February 2021. In the growing Indian crypto market, CoinSwitch competes with several other homegrown exchanges such as WazirX, CoinDCX, Unocoin and Zebpay, among others.
Given that cryptocurrency is currently a self-regulated market (i.e. no overarching regulations from RBI or SEBI), there are a variety of models at play. Fractional investments in cryptocurrency is essentially what CoinSwitch Kuber, CoinDCX, WazirX and other exchanges in India offer. Crypto investors can buy up to 0.00000001 of a virtual holding (up to the eighth decimal). Investors are allowed to ‘withdraw’ these investments to external crypto wallets for a fee, which is usually quite steep.
Essentially, fractional investments are used for trading between cryptocurrencies, or cryptocurrency-based fixed deposits and loans, as in the case of Bengaluru-based Vauld (formerly known as Bank Of Hodlers).
Other investment tech and fintech platforms are also exploring cryptocurrency as an investment class or a way to drive activity. Fintech company CRED partnered with WazirX last month to offer Bitcoin as a reward as part of a promotional campaign. With the crypto industry hopeful of regulations, will widespread adoption of crypto be the key to finally bringing it to the mainstream and out of the shadows?
Will Crypto Regulations Come At The Right Time?
INDMoney’s Kashyap strongly believes that regulations will come in for crypto just as it has for all investment asset classes. While he did not speculate on how the regulations will play out, he was confident that the industry will grow on the back of these rules, and there will be opportunities for INDMoney to partner with dedicated crypto platforms too.
In recent weeks, Indian cryptocurrency exchanges have alleged that payment gateways are blocking their transactions on instructions from some of the country’s leading banks. “Confusion in India’s banking industry is hurting 1.5 Cr Indians in crypto,” Nischal Shetty, cofounder and CEO of Mumbai-based cryptocurrency exchange WazirX wrote on Twitter earlier this week.
Kashyap believes that the current roadblocks will be cleared for all kinds of crypto operations in due time. It will pave the way for more innovation around cryptocurrencies, he said.
While in 2018, the Reserve Bank had barred banks from providing services for cryptocurrency trading and to crypto companies, this was overturned by the Supreme Court in March 2020. The SC had called the RBI bar as ‘unconstitutional’, but one year later, banks are still wary of providing financial services to crypto exchanges. At the same time, the National Payments Corporation of India (NPCI), the umbrella body for retail and digital payments, has refused to block fund movements for cryptocurrency trades and has left it to each bank’s risk and compliance team to take the call. Naturally, confusion abounds for the crypto industry.
“Ideally, it would help the industry if RBI could give some clarification. As currently, banks are not willing to provide access to the crypto industry due to confusion about whether they’re allowed to service the industry or not. If the RBI could clarify its stand to all the banks under it then that would tremendously help this fast-growing sector in India,” WazirX’s Shetty told Inc42 earlier this week.
Lobbying efforts from the industry continue to call for regulation so that crypto companies can go about scaling up their businesses and driving economic value. IndiaTech.Org — an industry association representing India’s consumer internet startups, unicorns and investors — has proposed a five-point recommendation on boosting India’s cryptocurrency economy potential to 12 government departments such as the income tax department, ministry of corporate affairs, and other bodies including the Reserve Bank of India.
The proposals have been made to bring in more clarity over various aspects related to cryptocurrency investments, taxation, transaction traceability and money laundering. The association has also demanded that crypto companies be recognised as startups.