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Your columnist missed the opportunity to be a millionaire. But smart investing is anything but lucky speculation.

Maybe five years ago (I forget exactly when), I had opened a cryptocurrency wallet with the idea of buying a few bitcoins. No, not because I was some sort of a prescient being who knew how the bitcoin mania would unfold. I wanted to buy one or two bitcoins just to see what this whole blockchain technology, on which bitcoin is based, was all about. Do I regret not buying it? With the great benefit of hindsight, of course. With bitcoin trading at $50,000 apiece, I could have been a millionaire by now. But was it a wrong decision to not invest? I don’t believe so. Let me tell you why.

Even five years ago, bitcoin was a volatile commodity. It would report wild swings, sometimes intraday. There was little information about who created it (even today, while one Satoshi Nakamoto is supposed to have invented it, we don’t know if it is one individual or a group), there was absolutely no governmental authority behind it, and its acceptance was limited to some enthusiasts.

Bitcoin, therefore, did not meet any criteria I would use for the purpose of investment. Criteria such as good management (the people behind bitcoin were unknown!), legitimate business (bitcoin wasn’t a fiat currency like the Indian rupee or the US dollar), and steady performance (bitcoin’s daily swings were anything but steady). The only criterion it seemed to meet was that it was a growing business—that is, it was becoming more and more popular. But that criterion alone wasn’t enough for me as an investor to buy even 2 bitcoins, let alone invest what my credit card limit would allow on a month-on-month basis.

I still don’t believe bitcoin is a safe investment. If its value is in the fact that it is a digital currency, then it certainly doesn’t give me the comfort of a fiat currency. Just imagine if tomorrow morning you woke up and went to your neighbourhood grocery store with, say, 50 rupees in your pocket, and the shopkeeper told you that, “Sorry, sir, but while you were sleeping, the rupee depreciated by 20%, so now you need to pay me 60 rupees for the bread”. Could a currency whose value swings unpredictably (and often for no apparent reason) ever be a means of buying and selling? No surprises, then, that the currency of the most powerful economy in the world, the USA, continues to be the preferred currency for global trade.

Yes, Elon Musk’s and Apple’s recent purchase of bitcoins has given the cryptocurrency greater legitimacy. But it can still be shut down by different governments in their own countries. India, for example, hasn’t yet given legitimacy to cryptocurrency, although finance minister Nirmala Sitharaman has said that India will take a “calibrated” approach to crypto trading. So, why would you want to invest any significant part of your earnings into something so uncertain and unpredictable?

Agreed, it is hard to look away when some reckless speculators are making easy money, but you have to ask yourself if you are a reckless speculator or a rational investor. If you are the latter, then you need to use your head to evaluate opportunities, and at no point put your capital investment at risk. It’s better if your Rs 10,000 gave only 10% return year-on-year than putting it in an investment where the entire Rs 10,000 is at risk of getting wiped out.

(The writer is Managing Editor of TV9 Kannada, and formerly Managing Editor of ET Now and Business Today. Views expressed are personal)