COMVERSE-DECEMBER'22

BUSINESS BUZZ

According to Ray Dalio - "The world exists in recessions, expansions and long-term debt cycles." Have you heard about the recession going on with the second largest Crypto investor Sam Bankman Fried whose crypto worth $ 35 billion got bankrupt and even Bitcoin had a 70-75% crash in its market share value? On the flip side, we can even have a look at an Amazon company whose share value got crushed by 95%, and since then it is giving 560 times return.

So, are you also looking forward to learning more about and investing your money in this dynamic world of cryptocurrency? Then you should read this piece.

INTRODUCTION

What is cryptocurrency? How does it work? Why is its price so volatile?

Let's take a practical instance.

Suppose, Mr. X gives services worth Rs 10 to Mr. Y but he pays with a stone rather than Indian currency. Then, they put an ideology to keep things as simple as possible. But as the time is becoming digital so they digitize the stone and make a digital stone. As many people previously had a problem with fiat currency, if the currency is mine then why does the government or bank or agencies keep control over it whenever inflation or deflation occurs? So they decided to make a currency decentralized, which will not be controlled by anyone. But the digital stone has a lot of problems: it can be stolen or anyone can copy it or can be multiplied by many times or anyone can send it to anyone from anywhere. So there is a solution i.e. each transaction should be noted in a ledger. But it's not an individual man who controls it. Because he can also do fraud, hence there is a revolutionary solution i.e. the ledger will be shown on every computer very clearly. So if someone tries to do dishonesty, then in all the computers the ledger data will be mismatched and he will be caught.

Now relate the above case with cryptocurrency. The digitized stone is a cryptocurrency. Crypto means secret and currency means a medium of exchange of goods & services. Thus, this is a secret or private currency. Some known names of cryptocurrency like Bitcoin, Ethereum, Ripple, etc. The public ledger has been maintained by peer-to-peer networks. It is done through a revolutionary technology called Blockchain, the term blockchain means millions of transactions make a block and each block keeps making the chain longer, so any fraudulent transactions get revealed easily. Crypto miners solve difficult puzzles and add transactions to a distributed ledger in order to verify transactions and create new blocks. No human does this, this is system generated, it is automatic, but it needs special software and computers. The miners get rewarded for the money and time involved in the entire process. Now, it’s clear that cryptocurrency is a decentralized digital currency and all transactions are recorded in a public ledger, maintained by blockchain.

The strong pillar of cryptocurrency is cryptography which means everything is coded. It is previously defined how many currencies are fixed or limited. Therefore, its price depends upon its demand. The supply of Bitcoin is 21 million. So its price depends on its demand. Its market price in 2010 was Rs 20 and by increments in 2021 it rose to Rs 30 lakhs. The price of cryptocurrency also depends on factors like its status in news media, and how companies and investors are planning. For example, on 24th march, 2021, when Musk said that Tesla would accept bitcoin as payments for cars, its demand and price boosted upwards to $60,000. Later on 13th May, they refused to do the same, then the demand and price fell downwards to $30,000.

source: seekhegaindia.com

Bitcoin and Etherium are some well-known cryptocurrencies that are considered the safest. The entire cryptocurrency uses blockchain technology where all the transactions are recorded in an online manner. Cryptocurrencies are run in both centralized and decentralized manners. In a centralized manner, one individual or a group of individuals exerts pressure on the market area whereas in a decentralized manner; it is not run by a single individual, rather it is a smart contract that gets self-executed. Bitcoin and Etherium are examples of decentralized cryptocurrency trading whereas Ripple and OneCoin are examples of centralized markets of cryptocurrency trading. However, there are a bunch of cryptocurrencies on which trading is done.

IS CRYPTOCURRENCY LEGAL IN INDIA?

Yes, but legal only for holding, investing, and trading but doesn’t have legal tender of money, which means it can’t be used as a medium of exchange. Although in 2018, RBI circular came shortly, major Indian banks started warning customers against using their services to trade in cryptocurrencies. Fortunately, in 2021, SC allows trading in cryptocurrency. Thousands of Indian citizens began to invest in the same.

source— seekhegaindia.com

WHY IS CRYPTOCURRENCY BUZZING?

The market of innovative technologies has been continuously evolving around and has come across the bustling trade system of cryptocurrency. Cryptocurrencies are dying, that is almost 99% of the cryptocurrency are dying, but 1% are the safest ones, such as Bitcoin and Etherium which are seen as the most trending cryptos area. Yet there is a share of big bulls in cryptocurrency as 1 crypto = 32.

The consequent reasons applicable for interest in cryptos are as follows:-

1. TRANSACTION SPEED: The advantage of cryptocurrency is that it can be completed in a matter of minutes. They do not require much paperwork and standing in a queue and quick transactions are ensured.

2. TRANSACTION COST: The cost of Canning out transactions is quite low in cryptocurrency as compared to other ways of the transaction, for example, bank services nowadays charge rupees 17.70 for facilities provided.

3. ACCESSIBILITY: Anyone can use cryptocurrency, we just need to have a computer or smartphone with us. The process of setting up a Crypto wallet is extremely fast compared to other ways of the traditional banking system.

4. SECURITY: Games have no access to the private key of the Cryptocurrency wallet, making it impossible for them to sign any other person’s transaction or access their money with full security. The money in our account cannot be recovered, however, if someone obtains the crypto wallet’s key.

5. TRANSPARENCY: All cryptocurrency transactions take place on the publicly distributed blockchain letter. There are tools that allow anyone to look up transaction data. This level of transparency reduces fraudulent transactions but opens up all the information publicly about the account holder.

Apart from all the advantages provided by cryptocurrencies, the biggest advantage started provides is the highest return that one could get that is on cryptocurrency is approx. Rs.13,83,477. Even after so many advantages provided by cryptocurrencies and the highest return provided by it, 99% of the cryptocurrency are unsafe for investment and only one percent are surviving which includes Bitcoin and Ethereum as the best ones.

However, there is a seeing that where money is there it is always followed by scammers. Cryptocurrency is also becoming a field where a lot of scams have taken place. In February 2022, the cryptocurrency exchange platform wormhole lost $320 Million after a cyber attack. In addition, according to FTI statistics, cryptocurrency scammers stole more than $1 billion in 2021.

Some recent fraudulent activities in the field of the crypto market are as follows:-

1. THE MOTHER OF ALL SCAMS: Scam of Sam Bankman Fried (SBF) owned FTX which was a simple trading exchange where people invested money and earned profits. It was taking money from individuals and then leveraging it as loans for gaining interest on it. When individuals demanded their money, it was unable to repay it and was declared bankrupt.

2. BITCONNECT: It was a lending and exchange platform powered by Bitconnect Coin which advertised large profits and there was a lot of hype around it. It was soon discovered that it was a Ponzi scheme and was charged with orchestrating $2.4 billion.

3. ONECOIN CRYPTO SCAM: It was another Ponzi scheme run by Ruja Ignatova who scammed investors of $4 billion and suddenly disappeared and is on the FBI’s most wanted list.

4. BITCLUB NETWORK: This trading site is advertised as the most innovative and lucrative way to earn digital currency. It also turned out to be a fraud. It solicited money from investors in exchange for shares for distorted cryptocurrency mining poles and rewarded investors for recruiting new investors to the scheme. This team made a scam of $722 million.

5. PINCOIN: It is also a cryptocurrency project that promised 300-1200% interest rate which was a major Red flag and soon resulted in the fraud of $600 million from the investors.

Thus, it could be concluded that all the cryptocurrencies are very dynamic among which major of them are fraud. Thus, investing our money into the best platforms like Bitcoin and Ethereum could provide higher returns as a major part of new emerging cryptos are fraud.

A little insight into the crypto world can be extracted from the below-listed points:

1. Bitcoin fell by 0.98% on 7th December 2023 and again recession fears are backed after FTX Collapse.

2. Bitcoin dropped by 1.41% over the next 24 hours and Ethereum by 2.68% according to the coin market cap.

3. Dogecoin slumped by 5.47%.

4. Polygon declined by 3.47%.

5. Asia equity markets retreated following Wall street's overnight. The Nikkei 225 by 0.72% and the Shanghai Composite Index inched down to 0.4%.

Thus, crypto has become highly toxic and dynamic where even a slight movement makes spectacular news for the media and individuals.

THE WAY FORWARD

It could be said that the community size of Crypto is very small, as it will expand with time as it will become distributed and therefore, the price volatility of Crypto will also come down over time, this happens with almost all assets classes. However, Crypto like Bitcoin can yield much more than expected returns at a time when both real estate and gold will become degraded. So as an investor one need to prepare himself for the worst as a big debt bubble has been created around all of us which could burst at any time and recession could be seen.

CONCLUSION

In light of all of the foregoing in consideration, this article has reached the conclusion that Fraud & Crypto are two different things so as long as you stay away from fraud people as well as fake investment companies like network marketing and so on, it is okay for you if you want to earn more in less time.

Whatever the investment is, either in stock, gold, cryptocurrency, or mutual fund, do your best as per your risk-taking capacity. Don’t invest in a greedy mood.

Consider these things before investing:

Where and how much to invest?

Which portfolio is suitable for you?

How much risk potential do you have?

Good fundamental research is the answer to all of the above questions and you are good to dive into the journey of investing sensibly.

Disclaimer: All of the views expressed above are sourced from various media and educational platforms and are meant for only educational purposes.

STUDENT PANORAMA

Is being in college expensive for you? Are you suffering from financial fears as well?

Worry no more! Everyone wants to make the most out of their college life, but money at times, becomes a barrier in leveraging every sort of opportunity and enjoying college life to fullest. Hence, it becomes quintessential for students to be cognizant of the expenses waiving out of their pockets in pursuit of higher studies. Sometimes, coping up with the pockets of the high class, middle class students end up having no penny in pocket. There is a need to prioritise spending, especially by college-goers. Here is how you can manage your college expenses as a college student:

1. PREPARE A BUDGET: It will help you in estimating how much money you are going to spend on things like books, food and other daily expenses during the course of the semester. This can be done by creating a spreadsheet or list of all of your monthly expenses, as well as how much money you have available each month. On probing about the same, a third year student at Hindu said, “First of all, I was travelling from South Delhi to North Campus everyday, so, I made a travelling budget accordingly which included the metro charges and rickshaw fare for a month. Secondly, as I live in a PG and the food wasn’t that good, so, I had to eat from the canteen. I made a budget that I have to spend a maximum of Rs. X on my meals in a day.” Tracking the expenses and setting up limits like this can work like wonder!

2. KNOW YOUR EXPENSES: Once you have prepared your budget, make sure that you add up all your monthly expenses in it and see where exactly they are coming from. You can use apps such as CLASSTALK and STUDENTLAONSTOCOMEHELP.COM for this purpose. In the words of another final year student, “I try to spend less on unnecessary trips, parties etc. I buy only the most necessary things of daily routine and shop from local markets every now and then. I try to avoid paying extra for home delivery.”

3. KEEPING RECORDS OF DEBTS GIVEN AND TAKEN: Whenever you lend someone or borrow from someone always try to make a note of that and keep systematic records of that so that no confusion is created at the time of repayment.

4. ALWAYS MAKE AN EMERGENCY FUND: It is a common habit between students to usually incur more on food, parties and travels just for entertainment. By doing this they held themselves at risk during emergencies like illness, month-end grocery etc. To overcome such obstacles it is best to create an emergency fund so that such hardships do not arise out of nowhere.

5. ALWAYS PREFER XEROX INSTEAD OF BOOKS: Students usually have a habit of buying new books but that could be costly and futile. To make up for that you can either buy readings of the subjects or take photocopies of the books by issuing books from the library. Purchasing read-books from thrift stores also help.

6. 50:30:20 RULE : The rule is actually very simple to understand. Divide your cash on hand into three differently sized amounts. 20% of income is to be set aside for savings and investments, 30% to be spent on wants, 50% on needs. You will have established buckets for everything and be working inside each bucket's permitted limitations. If you do this, it will assist you in developing discipline while ensuring that you don't compromise your long-term goals or your way of living.

Now, the question arises - How to be financially independent in college life?

Financial independence is the capacity to fulfil one's responsibilities and live comfortably for the remainder of one's life without depending on a job.. For students, juggling a part-time job to earn some money while attending class full-time might be difficult.

However, there are a number of smartphone apps that might help students simply earn some extra money in their free time. Like the NOTESGEN app, where all you have to do is upload or share your notes to start others starting to get paid for their work. Another helpful software for college students is GIGINDIA. By working with well-known brands and businesses, doing quick projects, part-time labour, and working from home, you can earn money online.

Apart from these, there are many other ways for College students to make money. Here are some:

1. APPLY FOR SCHOLARSHIPS: Take advantage of the many scholarships available to college students. You can search online for scholarships that are related to your major, interests, or hobbies.

2. START A SIDE HUSTLE: Consider starting a side hustle to make some extra money while in college. You could start a tutoring business, become a virtual assistant, or start a blog.

3. SELL YOUR STUFF: Take a look around your room and see if there are any items you can sell. You can sell clothes, textbooks, furniture, or other items you don't need.

4. DO FREELANCE WORK: Freelance work can be a great way to make some extra money. You can search for freelance jobs like graphics designer, video editor, website development and many more.

5. LEVERAGE ED-TECH:This is a very effective way to supplement your academic career with income. This part-time position will fit you best if you have a natural aptitude for instruction. You have the opportunity to impart your knowledge to those who are interested.

To sum it all, even if you have thousands in hand, always try to spend as little as possible because you never know what emergency or urgency can occur in future and what obstacles you need to face. By understanding the future uncertainties and applying thrift habits in your lifestyle, in no time you will find that you are saving quite a lot and your expense management is just brilliant. Afterall, "A penny saved is worth two pennies earned."

LAST MONTH AT A GLANCE

1. With the management of pension funds, Axis Bank entered the retirement industry and has amassed assets under control of more than Rs 100 crores.

According to the announcement, the bank has entered the retirement market by launching a step-down subsidiary called Axis Pension Fund Management through its subsidiary Axis Asset Management Company. Amitabh Chaudhry, the chief executive and managing director of Axis Bank, stated that the Axis Pension Fund will take advantage of the group's distribution power and investment management expertise in order to capitalise on its position as the preferred provider of retirement solutions.

2. Indian economic growth "extremely fragile", needs urgent support: Jayanth Varma

RBI revised its growth estimates for financial year 2023 to 6.8% from earlier 7%,while, World Bank revised upwards it's GDP growth forecast to 6.9%, showing higher resilience to global shocks.The government has spent a lot on boosting economy during pandemic reasons and now it's the work of other sectors to contribute to uplift the falling economy.

3. US banks apprise of recession, inflation hurts consumers, shares slipping down.

The inflation rates in America has increased to higher rates due to excess money in the economy approx to $1.5  trillion.In addition, the shares of many reputed companies such as Amazon, Tesla and Meta had slumped down by 50%,75%, 65% respectively. Thus, inflation will remain a critical factor driving equity performance with higher interest rates.

4. The Covid Pandemic is still going on, to reiterate.

Prior to arrivals from China, Japan, South Korea, Hong Kong, and Thailand, RT-PCR is mandatory. Those who test positive for Covid 19 will be placed in quarantine.

Symptomatic travellers need to be isolated. According to the Indian Health Ministry, the new variant may arrive in India in 25–30 days. In all government hospitals, mock drills. 220 crores in Jabs are managed. Wear a mask and maintain your distance from others in public.

5. Indian banks report positive results and a consecutive drop in bad loans.

Credit growth could procyclically slow down across major economies in 2022 as global growth is expected to weaken and the likelihood of a recession in 2023 increases. This could reduce bank profitability. In FY2022, the consolidated balance sheets experienced double-digit growth. Banks in the public sector saw a decrease in gross NPAs from 9.1 to 7.3%. Recovery under IBC increased from Rs. 27,311 to Rs. 47,421 crores almost double.