Since last year, the popularity of cryptocurrencies has exploded in India, as more investors try their luck in the lucrative virtual coin trading market. In 2021, Indian cryptocurrency exchanges confirm that they would be adding more users to their platforms.

Cryptocurrency exchanges are optimistic that the burgeoning asset class would continue to draw more investors in India, owing to its rapidly growing user base. In India, however, cryptocurrency investments are a small proportion of traditional investment-class assets such as shares.

While younger Indian investors are betting on crypto assets rather than traditional investments, the pattern shows that a huge number of people are still wary, despite their desire to learn more about the cryptocurrency market.


The answer is complicated because, like equities, commodities, and mutual funds, it is still a new asset class that has not yet garnered universal acceptance.

Whether or whether it is safe to invest in cryptocurrencies is a hotly disputed topic in the financial world, with many people supporting the decentralized digital money and an equal number opposing it.

However, the dangers connected with Bitcoin, Ethereum (Ether), or any other cryptocurrency, from a purely financial standpoint, are no different than those involved with other traditional assets, with the exception that the virtual coin market is more volatile.

All cryptocurrencies are hazardous assets, according to analysts, and dramatic price swings are usual in the virtual coin trading market. As the asset becomes more widely accepted, this is expected to decrease.

However, investors should be aware that the crypto industry now has tremendous risks and rewards. To put it another way, to profit from crypto trading, you must have a high-risk appetite.


Cryptocurrencies, like gold, operate as a hedge to protect fiat currencies and stocks, according to Shetty. This is one of the reasons why bitcoin demand exploded during the pandemic’s first wave.

Cryptocurrencies, unlike fiat currencies and stocks, are less affected by inflation and are a good alternative to gold, which is another popular hedge investment.

It’s also worth noting that investing in cryptocurrencies is legal in India, and there are no regulations prohibiting people from purchasing or selling virtual currency.

Exploring the cryptocurrency industry may not be such a bad idea for persons with a high-risk appetite and the patience to stay engaged for a longer period of time. Before investing, people should be certain that they have done their homework.

Having said that, there are obvious dangers that must be considered.


The largest risk in bitcoin trading in India, like in many other countries of the world, is a lack of legislation and control. The absence of regulation is due to the government’s inability to take a firm stance on bitcoin.

The issue began in 2018 when the Reserve Bank of India (RBI) issued a circular prohibiting such trading entirely.

The Reserve Bank of India issued a circular in 2018 warning users, holders, and traders of virtual currencies, including Bitcoins, on the potential hazards involved in dealing with them. It has warned all businesses under its jurisdiction not to trade in virtual currencies or provide “services for assisting any person or entity in dealing with or settling virtual currency.”

While the Supreme Court overturned the RBI circular on March 4, 2020, banks remained wary of dealing with cryptocurrency. Banks have just lately begun to interact freely with cryptocurrency exchanges after the RBI clarified its stance on the subject.

The likelihood of a ban is another issue that poses a threat to crypto commerce in the country. Though the government has recently modified its attitude, it is still unclear whether a complete ban or regulation would be implemented.

Investors in India could lose a lot of money if the government decides to outright prohibit decentralized virtual cryptocurrencies. Experts experienced with virtual currencies and analysts, on the other hand, believe that regulating the crypto trade would be a better alternative, given that it is developing as the financial world’s next great asset.

Many eager investors are put off by the lack of governmental protection when it comes to cryptocurrency. Aside from that, cryptocurrencies face other threats like hacking, permanent loss in the event of a forgotten password, virus assaults, and scams.

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