Should investors continue to invest in cryptos in the light of massive hack—What is the way forward?

Ambitious investors with high-risk appetite tend to opt for cryptocurrencies to make quick returns and at times – to make huge returns in the long run. Sadly, from time to time, some fraud here, and another hack there shakes the boat to such an extent that cryptocurrencies as an investment instrument get a bad name and are seen as a hot potato, particularly for retail investors.

Last month WazirX, a leading crypto exchange in India, saw a massive security breach leading to the loss of over $230 million, which accounted for 45 percent of customers’ funds.

The stolen tokens reportedly included $100 million worth of shiba inu and $52 million in ether.

Interestingly, this was not the first time that such a massive loss took place in the crypto sector. From FTX in the US and Quadriga in Canada to digital currencies scam in Uttarakhand, a slew of frauds occurred in the recent past, thus shaking the trust of investors in cryptos as an asset class.

But what one would wonder is whether it is rational to invest in cryptocurrencies when such massive scams can reel the sector and leave a major crypto exchange beleaguered with a loss of gigantic proportions.

In the Budget 2024, there was no explicit positive development that could please crypto currency investors while 1 percent TDS on crypto transactions continues.

Hope still lingers?

For the optimists, there are numerous reasons to stay upbeat. One of them is US Presidential nominee for Republicans Donald Trump who started accepting crypto donations in May and recently stated at Bitcoin Conference in Nashville, Tennessee, that if crypto is going to define the future, “I want [it] to be mined, minted and made in the USA. If bitcoin is going to the moon … I want America to be the nation that leads the way,” he said.

Meanwhile, back home in India, stakeholders of the crypto sector are more enthused than not. 

Balaji Srihari, Business Head, CoinSwitch, says, “I understand that the recent hacking incident was unfortunate but it is not wise to let this single event overshadow the entire ecosystem. Instead, we should focus on learning from these challenges and improving security measures, recognizing that safeguarding user interests is an ongoing endeavor.” 

“Crypto ecosystem is heavily influenced by global macroeconomic conditions. Recent developments, such as the implementation of the Markets in Crypto-Assets (MiCA) regulations in Europe, the approval of Bitcoin and Ethereum ETFs in the United States, and discussions by former leaders about establishing Bitcoin reserves, highlight the growing significance of crypto,” he adds. 

Shivam Thakral, CEO of BuyUcoin, says, “Bitcoin is currently riding a wave of positive momentum amid heightened trading activity spurred by former President Trump’s announcement to establish Bitcoin as a US strategic asset at Bitcoin 2024 in Nashville. The global cryptocurrency market is reflecting this enthusiasm, boasting a market cap of $2.47 trillion. This surge in interest highlights the growing confidence among investors and the broader crypto community.”

To sum up, one can view a hack or scam as an accident of sorts and move on, while it can also be seen as symptomatic of an unregulated scheme of things where risk outweighs gain.