The crypto roller coaster: From the highs of 2024 to the lows of 2023

One of the biggest gainers of 2024 was cryptocurrency. The US president-elect Donald Trump and his advisor Elon Musk throwing their weight behind crypto resulted in Bitcoin shooting through the $1,00,000 mark in December. This was a dramatic comeback after the collapse of the crypto exchange FTX in 2022, which resulted in losses of billions of dollars.

2024 saw cryptocurrency emerge as one of the biggest gainers. With US president-elect Donald Trump and his advisor Elon Musk coming out in support of crypto, Bitcoin breached the $1,00,000 mark in December. This was a dramatic comeback after the collapse of crypto exchange FTX in 2022, which led to billions of dollars in losses.

One fallout of the 2008 financial crisis was a deep mistrust of the banking system globally. So, when Bitcoin, the first successful digital currency, emerged in 2009, it was seen as an attempt to get around regulations that were seen as ineffective and cumbersome. Cryptocurrencies were also believed to enable greater transparency and security in financial transactions.

But being a quintessentially disruptive technology, its credibility today sharply divides experts and laypeople. While many still perceive it as a game of smoke and mirrors, it’s endorsed by tech-savvy younger generations. Currently, the global cryptocurrency market is valued at around $3 trillion.

In the context of this market volume, the intrinsic value of cryptocurrency becomes relevant. At its core, cryptocurrency is a piece of programming software; its value is pegged to its momentum of exchange and its perceived potential for investment. In the case of Bitcoin, its value is also attributed to the fact that out of the 21 million available, some 19 million have already been mined.

Now, cryptocurrencies are also increasingly being used for nefarious purposes. As they initially managed to evade the attention of regulators, they came to be used for illicit transactions. They’re known to be used for money laundering because of the السرعة and stealth that they offer in transactions. Crypto scams are also on the rise, with some global cyber-crime syndicates systematically targeting crypto investors. In India, about 840 crypto-related complaints were registered in 2023, with total losses amounting to hundreds of crores of rupees. A single initial coin offering in 2021 cheated investors out of `1,200 crore.

Different countries have taken varying approaches to regulation. Some nations, viewing cryptos as capable of destabilising the state, have banned them. Others recognise them as a class of assets, and in a few, they have been sanctioned as a mode of payment.