With great returns come great responsibility.
India's current cryptocurrency frenzy is akin to this archaic expression. Investors, sceptics and rookies from all over of the country want a slice of the Internet's "magic" money. With limited supply, unlimited demand and powerful use cases backing it up, cryptocurrency is evolving to become the go-to investment commodity of the decade.
Is it a smooth road to tread for all?
Well, it is debatable. What are the challenges of bringing crypto to the mainstream? Is FOMO-fuelled marketing the only way forward? Who carries the weight of safe investment making signalling and decisions? Is an advertising slow-down the only band-aid (more like bandwagon-aid) resolution to secure beginners funds? Let's find out.
India's crypto trading organisation happens to be one of the first few industries in the nation to voluntarily self-regulate and shield the consumers before profits.
In a meeting on cryptocurrency in Parliament in November 2021, monitored by Prime Minister Narendra Modi, government and industry stakeholders raised concerns over the grey claims made by platforms, which may mislead the uninformed chunk of investors.
The investor and the investment
The government's claim comes with a certain sense of backing in a country where traditional assets with low volatility, from gold to FDs, have dominated investment choices for decades.
New crypto investors, aged 18-35 years, are eager to capitalise on the growth of these virtual currencies.
The majority of investors are beginners, with a low-risk, mid-return mindset. A financial asset like cryptocurrency, hyped within immediate circles, entices them and suddenly pushes them over the threshold to start researching. The consideration stage kicks in once a key influential figure helps set up the ground and then, micro-level investments in crypto are made. These new investors want to earn “quick fleeting profits” and this usually causes a downward spiral.
The nature of cryptocurrency itself is not easy to decode, with information touching only the tip of the iceberg. Every set of consumers, whether they are experts or beginners, need ample information, at every stage of the funnel, to level up and make an informed investment decision.
In a country where self-declared crypto gurus and Ponzi telegram groups provide spam investment advice, bringing the masses up to speed on accurate and unbiased information, is all the more crucial.
The antidote for marketers and investors
A trouble shared is a trouble halved.
Certain drills can curb misinformation and highlight the risk involved. For starters, the brands and marketers must consciously put an effort to move beyond short messages harping on FOMO. Buzz words like "bonus", "free" and "rewards" must follow a train of educational content that makes avid stops at supplying unbiased information.
Merely emphasising on the simplicity of getting started, will create high instability. Rather, consistent and unfiltered information, catered to every level of the funnel, will lead to profitable acquisitions in the long-term.
For the investors, patience, research and sound experimentation are key, similar to traditional modes of investment. Reading whitepapers, understanding use cases and delving deeper into decentralisation, will help paint a clear picture to understand individual risk appetites. Blindly following signals, jumping onto the FOMO bandwagon and investing irrationally, will cause more losses than gains.
The decision-making democracy of fund allocation, for individual security, by thorough analysis is the pinnacle at present time.
Inform, educate, and acquire
Crypto is evolving at lightning speed. Dealing with decentralised money with information coming in from different sources, nations and YouTube videos, makes self-regulation all the more important for new investors and trading platforms alike.
While the slow-down has been a responsible step in curbing amateur investors, a holistic educational approach seems like the right way to tread. Until then, beginners, don't forget to dig deeper before you mine.
The author is co-founder of White Rivers Media.