The country's top fund manager - Nilesh Shah - Managing Director of Kotak Mahindra Asset Management Company in an interview to Outlook Business advised investors to put only that much amount of money in cryptos which they can afford to lose.
"Crypto is basically a mindset where I believe there will be someone who will be willing to buy this at a higher price from me tomorrow. That mindset allows crypto to appreciate the day the ratio reverses and everyone believes that tomorrow's price will be lower than today everyone will be a seller. So invest with eyes open it is a high risk high return gamble," Shah said.
"Maybe crypto is future, or maybe crypto is the biggest fraud,” Shah added. "I am used to invest based on certain analysis. How do you analyze crypto, there's nothing underlying”.
High trading charges also add to uncertainty about investing in cryptos, Shah said. "Transaction charges are between 15 to 20 per cent for a two way trade and if 15-20 per cent will go as transaction charges then how can you make money.”
He recommends investors to do proper safe keeping before investing in cryptos. "Please remember to do proper safekeeping. Because you don't want to invest in an asset which disappears because you forgot the key or the hard drive crashed or the exchange on which you traded disappeared”.
Meanwhile, Shah believes that India should create its own crypto. "If we create an India promoted crypto, we will be able to attract capital from outside in India, we will be able to create crypto based organizations in India and our millennials’ energy can be diverted towards crypto," he said.
"We should leverage crypto to attract offshore capital, for example, India can launch a crypto which is backed by government of India securities, since they are all zero coupon you don't pay any interest and be assured by the full faith and credit of government of India that whatever money you invest in that crypto, it will be backed by government securities and whenever you want to exchange will give you rupee," Shah said.
