The hype around cryptocurrencies continues, but the question is: Can the lure of fast money control your financial decisions?

The other day I received a sales flyer for some Bitcoin I received a flyer containing bitcoins in my grocery order. This was news to me because, as far as I know, bitcoin advertising has not reached the level where brochures are inserted into grocery stores. The sales flyer contained an AI-generated illustration of a young man running to catch a bus in 2050, while wistfully thinking, “Kash, papa ne 2024 me Bitcoin liya hota.” The back of the flyer featured a graph of bitcoin prices, along with the following message: “Bitcoin prices have skyrocketed after each bitcoin halving.” financial advertising It doesn’t get any simpler than that. However, as readers understand, the reality of Bitcoin and other cryptocurrencies is far more complicated and obscure than this marketing material suggests. The promised increases in value are enticing, but cryptoThe volatile nature of the sector weighs on it. These brochures gloss over the fact that the sector is prone to unpredictable fluctuations. regulatory changescybersecurity threats and market manipulation schemes. Additionally, cryptocurrencies’ lack of intrinsic value and their complete reliance on speculative behavior hardly make them the type of asset you can rely on to ensure your children don’t have to use public transportation in 2050.

However, the strangest part of this sales pitch is not what it says, but what it doesn’t say. Unlike any other financial product, there is no disclaimer on the brochure. In this country, as in any well-regulated market, no one can advertise or promote a financial product without substantial legal oversight and disclaimers. Take mutual funds. Whether someone has invested in one or not, they must have heard or read: “Mutual funds are subject to restrictions.” market risks. » Yet Bitcoin can be advertised without any warning or disclaimer. All that brochure said was: “Registered by the Government of India.”

In the aftermath of the FTX debacle last year, I was actually glad there was no cryptocurrency regulations in India.

To some extent, one could argue that cryptocurrencies should remain unregulated, allowing those who engage in them to face the consequences of their actions. They should have the autonomy to risk financial ruin on their own terms. However, contrary to what one might have hoped, FTX Scandal did not prove to be the death knell for cryptocurrency. This suggests that the cryptocurrency market could become a permanent part of the global financial landscape. The FTX incident showed that a cryptocurrency business can attract billions of dollars investors All over the world, they mismanage the system, and yet fundamentally they do not question the fundamentals of cryptocurrency. The profit potential is simply too great and easily achievable.

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We have reached a point where everyone believes that cryptocurrency is a legitimate asset class. While there may be regulatory hurdles, these will eventually be overcome. As the sales brochure claims, a further surge in value is inevitable, leading to a substantial increase in the price of cryptocurrency. wealth of those who own cryptocurrencies. With each wave, a new wave of unsuspecting savers around the world will put their financial well-being at risk. With each wave, there will be a new batch of potential victims. Any speculative asset that can randomly double or halve is well-equipped to be exploited to attract new entrants. It is clear that this is a role that Bitcoin is currently playing. Unfortunately, this could continue for the foreseeable future.

The question we must answer as individual investors is: What will we do about it? How will we get out of this madness? Ultimately, it is up to each of us to navigate this perilous terrain carefully. The relentless lure of quick money cannot be the guiding principle of our financial decisions. Some will understand this and others will not. Which group will you be in?

The author is CEO, SEARCH FOR VALUE

(Disclaimer: The opinions expressed in this column are those of the author. The facts and opinions expressed herein do not reflect the views of www.economictimes.com.)

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