Everyday, the moment I open my smartphone, the first thing Google News throws at me is "Bitcoin, in upper circuit....",
At work, a colleague has to certainly quiz me, "Sunaa Kyaa Sir, Bitcoin aaj $...." (Have you heard it Sir, Bitcoins is today at $.....)
Bitcoins do appear to be a work of technological marvel, but the recent spotlight on their prices, has infiltrated every day conversations. A simple Google-search analysis reveals that "Bitcoins" have been the most trending word on Google search. In fact, they are the only ones that have trended on Google News for a record 7 consecutive days.
By the way, since you are reading this, you should also be aware that one bitcoin has traded to an astronomically high-price of $17,000, according to Litecoin, an exchange. If this is how bitcoin rallies, then this weekend, be prepared to be tutored from your local Pan-waala, driver, or even the Chaai-waala (no, not Mitron), on bitcoins.
An image of a hardware mining resource farm in US
For the record, the graph below illustrates how much it grew in 4 days, precisely from Tuesday to Friday. On Friday, bitcoins were trading at $16,077.61 per coin. Rs 10,36,041.19 is the price if you calculate the current Dollar-INR exchange rates (1 USD is equivalent of Rs 64.44).
By the end of Friday, bitcoins have traded to $17,000 per coin.
It all started on Tuesday, with a stray thought on why not to invest in Bitcoins. After all, they were trending, and yes, it really made sense that one investment and there was a potential of making $2000 within one day. But soon, I came across the phrase: "it is great expeditions that are conducted on choppy waters, but not investment bets."
Investments in Gold
I observed that while bitcoin observed a pheno-mental ascent, interest for the Yellow Metal aka Physical Gold was fading. The 24 Karat or pure 99.99 Gold was selling in Mumbai at a price of Rs 30245.99. Had you invested Rs 10.36 lakhs in Gold, you could have had an asset of 34.25 tolas or a total of 342.25 grams.
Even in the instance physical Gold were to appreciate by Rs.500, it would have taken at least 6 months to do so. At that rate, I would have reaped a profit of Rs 17125 in 6 months. Bitcoin definitely made sense, if I wanted to double my money.
Investments in Real Estate
I pondered really hard. What about real estate? Residential rates in cities like Mumbai, Kolkata, Hyderabad, Delhi, Chennai and Bengaluru have indeed skyrocketed, but certainly not to such a level that a 100% appreciation could occur within 4 days. Bitcoin indeed appeared like betting on a dead-horse on a sultry Saturday evening at the Worli racecourse.
But then does one even need logic in a market which has been driven primarily by shady news reports and absence of credible trust source. I even ventured to guess, the returns that equities could give.
How about Equities?
MRF, considered a stable company and the most well-traded scrip on the BSE stock exchange was a good bet to begin with. Being the most actively traded and the most costliest scrip, I thought I could have at made decent returns. By the way, the MRF scrip is priced at Rs 68128.20. And on the BSE index, it had returned a margin of 1.56% or a profit of Rs 1047.66 within half a day.
Had I been an intra-day trader, I could have easily made Rs 1047.66. At an investment of Rs 6 lakhs, I could have purchased minimum of 8 scrips, and made a cool profit of Rs 8000 within a day, I tell myself.
But it would have been foolish to assume that the price of MRF would appreciate for four consecutive sessions. Had the unthinkable been achieved, I would have made Rs 32000 in 4 flat days, but still not decent enough to match the lakhs in returns that Bitcoins promised.
In case you are interested, you can check out the other stocks trading in five digits, such as Bosch (Rs 19580.05), Eicher Motors (Rs 28999), Shree Cements (Rs 17163), and Page Industries (Rs 22677.30).
Trading with an established and credible entity like the BSE or the NSE is assuring, but certainly not as profitable as it is with bitcoins.
Algorithmic trading may boost chances of mining newer coins, but with only 21 million in circulation, there is mystery on what happens once all coins are depleted.
Commodities, Equities as well as real estate are sound investment bets, where making profits may appear like fishing. But Bitcoin appeared like the big-thing. It certainly is the in-thing too.
While I did venture a guess to invest in them, I also took time to evaluate the instance of a bumper loss. What if the investments that I had made into bitcoins, suddenly saw them sinking value?
In 2008, during the financial crisis, the stock market saw a decline. Real estate too slumped and so did Commodities market. But these have bounced back within a year or two. Would the bitcoin bounce back? Does not appear likely. A lack of credible source and rationality, has lead most economists to conclude that this is a bubble.
The mere logic why it surged is because the CME group reportedly had been quoted to open a new bitcoin exchange. There are rumours too that the Nasdaq was considering a futures trading index based on bitcoin. Back home, the RBI too was reported in the media to consider Lakshmi-Coins.
To my utter misfortune, the bitcoins have rallied. Within a period of four days, they have soared from $10,000 to as much as $17,000, nearly Rs 11,00,000. But in the probability of markets tanking, I would have been left of only this image. An image, put to good use as a souvenir hanging around my TV-rack.
I need an investment that returns profits, not a souvenir to hang around my TV-rack
My milk-man is still to accept these coins, so is the local Dominos, McDonalds store, and even the Central Bank and SEBI. Last heard, some Russian pizza-store exchanged loyalty points for bitcoins.
Amid trying times, where logic and fundamentals have clouded investment grades; Bitcoins, however profitable they appear are worth a skip.
I will certainly thank God that I missed the opportunity to invest in a lunatically crazy system. And for those who have been considering investing in one... Well you can take it as that missed call from that pesky tele-caller trying to sell you a vacation to the moon, but one without return-tickets.
If you are still hellbent on thinking optimistic, "something certainly is better than nothing, but nothing is far better than nonsense."Also read, the factbox of Cboe and CME's future's trading portal.