Is crypto all sunshine and rainbows? We started with the basics of blockchain, cryptocurrencies and bitcoin

Over the past few Fridays, we've taken you through all things crypto. We started with the basics of blockchain, cryptocurrencies and bitcoin, their evolution

Hey folks!

Over the past few Fridays, we’ve taken you through all things crypto. We started with the basics of blockchain, cryptocurrencies and bitcoin, their evolution, their use cases beyond money, the shift to DeFi and Web3, and finally, whether (and how) you can trade crypto in India.

But after all that, you’re probably wondering — “Wait, is crypto all sunshine and rainbows?”

And it’s only fair if you asked this question because none of our stories really emphasised its downsides enough. Not because we’re crypto bros, biased, or part of the crypto hype squad. We just saved the hard truths for this final chapter — on why you might want to think twice before buying crypto.

But before we dive in, a quick pause. Because this is it — the final chapter of our Finshots Cracks Crypto series. We know we promised nine weeks, but along the way, we realised some stories flowed better together than stretched apart. And now, we’ve reached the last big question: Should you even invest in crypto? After all, investing is one of its most popular use cases today. So let’s wrap this up the right way, shall we?

Now, if you’ve ever thought about buying crypto, you’ve probably felt that fear. That nagging worry that hackers could swoop in, steal your crypto and wipe out your hard-earned money.

And we don’t blame you. Incidents from Bitconnect and OneCoin to the Ronin Network exploit, the FTX collapse and the recent WazirX hack have created an atmosphere of fear. But here’s the thing. Most of these disasters weren’t because crypto itself was hackable.

Bitconnect and OneCoin were classic Ponzi schemes that lured investors with false promises. FTX was a case of financial mismanagement. And in the Ronin Network’s case, hackers didn’t break the blockchain but they just got their hands on stolen private keys.

See the pattern? The problem isn’t crypto, it’s misinformation and poor security practices. Because most cryptos are built on the blockchain technology, and the blockchain itself is built to be highly secure. It’s designed to make manipulation nearly impossible (remember consensus mechanisms from FCC#1?). That means most cryptos, including Bitcoin, can’t really be hacked, and your crypto can’t be stolen, unless you don’t understand how to protect it. And that’s exactly what scammers count on — hype, confusion and a lack of knowledge. Which is why these scams often succeed:

The gist of it all? It’s that these scams aren’t really about crypto, they’re about you. They prey on human psychology and mess with your instincts. The flash dreams of get-rich-quick schemes, push you into FOMO, and make you feel like you’ll regret it forever if you don’t act “right now”. And honestly, it’s no different from the scams you see in online trading or across the internet. But here’s the good news: avoiding them isn’t rocket science. Just know the fundamental crypto basics (there aren’t too many), learn how to keep your crypto funds safe, and never let urgency make your decisions for you. Simple.

But not everything is in your control. Some risks are bigger, messier, and can hit you even if you know crypto inside out.

Take pre-mining, for example. This is when developers mint or allocate a portion of a cryptocurrency’s supply before making it available to the public. It’s common in most cryptocurrencies, except Bitcoin. Bitcoin was designed to be mined only after it went live. But altcoins including Ethereum and Solana were pre-mined. This means that developers and early insiders had a head start and held an unfair advantage. And here’s where things get tricky. If they decide to dump their chunk of tokens later, prices can crash, leaving regular investors holding the bag.

Even Bitcoin isn’t entirely free from this issue. Sure, it wasn’t pre-mined, but Satoshi Nakamoto, the mysterious individual (or group) behind Bitcoin, still holds about 1.1 million BTC. That’s more than anyone else in the world. And the twist here is that no one knows who or or where they (Satoshi) are, or even whether they’re alive or active.

Now, imagine if one day Satoshi suddenly reappeared and dumped all their Bitcoin. That could destabilise the crypto market, no?

Another big, tricky part about cryptos, especially Bitcoin, is it’s something really, really hard to value. You see, unlike stocks, which have earnings, or gold, which has industrial use, Bitcoin doesn’t generate cash flow or produce anything tangible. It exists, well, because people believe in it. So how do you figure out what it’s truly worth? No one really knows. And when you’re