Thinking of making big bucks off bitcoin? It could be a risky investment

 The frenzy over the incredible rally in bitcoin prices (up 18-fold this year) has made many regret not investing in the virtual currency. Some are curious about getting in on the action at least now, hoping that bitcoin will surge further. Madhur Todi, an Ahmedabad-based certified financial planner and bitcoin investor, has this to say to them: "It's a very risky and volatile asset class. I would say to not get into it to make a quick buck. There are no benchmarks because the ecosystem is new." 

Todi believes an investor should not put away more than 1-2% of his net worth in bitcoin. "You should be prepared to lose it." Todi first bought the currency at around Rs 20,000 per bitcoin in 2015; now it is around Rs 11 lakh, and he is bullish about its future. Bitcoin is a cryptocurrency which does not fall under the purview of a central authority. It works on a technology called blockchain, which is a record of all transactions on a decentralised network of computers across the world. 

Stories abound about those who have become significantly richer, thanks to their early investments in bitcoin. The Winklevoss twins, who fought a legal battle with Mark Zuckerberg over the idea behind Facebook, reportedly invested $11 million out of their $65 million settlement in bitcoin in 2013, which is now worth $1.6 billion. Then there are others like venture capitalist Tim Draper, who invested in the likes of Tesla, Skype and Hotmail, and who reportedly has bitcoins worth over $530 million. There are also reports that Satoshi Nakamoto, the anonymous creator (or creators) of bitcoin, owns nearly a million bitcoins, which would put his holding at $17.3 billion.  

Risky Business
But this is all speculation and that is how it should be treated. Investments in bitcoin are not like investments in a listed company (in India, shareholding of more than 1% has to be disclosed) or in a startup at a certain valuation. It is hard to gauge who has how many bitcoins or any other cryptocurrency. 

Besides, there are serious questions being raised about the future of cryptocurrency. India's Finance Ministry and central ban ..

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