The Rise of the Cryptocrat

SEVEN YEARS AGO, Apoorv Shankar was still a college student in Delhi when he stumbled upon Bitcoin for the first time. As a 17-year-old student interested in IoT (Internet of Things) services, he would find research papers on the subject that otherwise lay behind expensive paywalls available for a few Bitcoins on the dark web. “For getting an article or a research paper that cost a lot on the general web, it was available for a couple of Bitcoins on the dark web. And Bitcoin, then, was very cheap,” he says. Shankar began to use his computer system to ‘mine’ Bitcoin. When someone ‘mines’ a Bitcoin, it means he is using his computer system to validate previous transactions on the blockchain. Miners are rewarded with Bitcoin in return.

It was 2014 then and the idea of a cryptocurrency that could function both as a new form of money for transactions and an asset class for investment was still something of a novelty. Bitcoin, which had only a few years before found price parity with the US dollar and then witnessed a big rally all through 2013, had then begun to tank in value. We all know now of the volatility of the crypto market, but back in 2014 it was still an unknown.

This, however, did not deter Shankar. What had started as a hobby was becoming a more serious pursuit. By 2016, he had established a professional mining setup and was mining not just Bitcoin but also a number of other cryptocurrencies that had just emerged, such as Ethereum, Ripple, Ravencoin and Monero. He was sold on the idea of blockchain technology and its potential to revolutionise the future. In 2018, he founded a blockchain services platform called Nikoin, and is currently the Chief Technology Officer at Safle, an identity wallet and blockchain infrastructure provider.

Shankar also held on to most of the cryptocurrencies he had been mining since 2014. “I could not cash them out because there were no cryptocurrency exchanges in India then,” he says. He soon began investing in cryptocurrencies, funnelling whatever money he made into both old and new cryptocurrencies. He continued investing even when the crypto market nosedived in the nearly three-year bull run from 2018 to the first half of 2020 over fears of a regulatory crackdown in many countries, including India. Many of Shankar’s coins were in fact those issued by new companies whose value he believed would shoot up over time. “The goal of a crypto maximalist is to stack up on Bitcoin. You can’t stop. The goal is to increase and hold it,” he says. “When I wake up today, there should be more Bitcoins (in my wallet). That is the goal.”

India has the world’s largest number of cryptocurrency owners at 10.07 crore individuals. A vast number of them entered the cryptocurrency market only this year, and according to some estimates, Indians’ investments have gone up from about $923 million in April last year to $6.6 billion in May this year

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Call it reckless investment behaviour if you will, but thanks to the huge rally in the crypto market this year, Shankar is rich at just 25 years of age. He says he is “very comfortable” right now. But he is not cashing out anytime soon because he believes their value will increase even further.

Few assets have seen the kind of appreciation in value as cryptocurrencies this year. (Few assets had seen as much of a fall, either—from $64,889 in April to as low as $29,608.60 in July this year—before roaring back in value.) The total crypto market currently stands above the $2 trillion mark. If a single Bitcoin was trading at less than $14,000 at the end of October last year, it nearly breached $67,000 on October 20th this year. Cryptocurrency is the buzz word of 2021, with everyone from Elon Musk to Bollywood celebrities talking about it. It has made millionaires of millennials.

India has not lagged behind. According to a study by the investment portal BrokerChooser, India has the world’s largest number of cryptocurrency owners at 10.07 crore individuals. A vast number of them entered the cryptocurrency market only this year, and according to some estimates, Indians’ investments have gone up from about $923 million in April last year to $6.6 billion in May this year.

“The number of people who entered the crypto market since the pandemic has just been crazy,” says Naimish Sanghvi, founder of the popular cryptocurrency media outlet Coin Crunch. “Everyone’s coming in to make a lot of money quickly.” According to him, the few who did not cash out their cryptocurrency holdings in the bear run in the last few years are all sitting on small fortunes now. “But that’s the thing, very few stood for three years like that,” he says.

Aarti (name changed on request), like many other cryptocurrency traders in India, is only in her 20s. Based in Gujarat, she has made enough money this year to begin worrying about her name and exact location appearing in the media. Having burnt her fingers in cryptocurrency trade once—she had made a vast profit in 2017 and 2018, she says, but did not sell her holdings on time—her focus now is on getting her exit right. “Sometime this year, this bull run is going to end. My guess is it will be somewhere in November or December. So I am going to stay invested till then and then cash out just in time,” she says. “Last time I lost all the money I had made. This time I am going to get it right.”

The constant worry of ‘getting it right’ means Aarti is very close to a burnout. For most of this year, she has been working insanely long hours reading market reports, raising large sums by tapping into Telegram and WhatsApp groups she is a member of, preparing pitches to creators of new coins even before they come out in the market, and then nervously watching the performance of these coins. “I am very exhausted now. And I know I can’t go on like this for more than a few months. But this is a really crucial period,” she says.

Like most traders who entered the crypto market in 2017, Aarti began by dealing in Bitcoin and alt coins such as Ethereum and Ripple. But now, she primarily deals in coins offered through ICOs (initial coin offerings), IGOs (initial game offerings), IEOs (initial exchange offerings) and INOs (initial NFT offerings). These are something of a cross between a traditional initial public stock offering (IPO) and crowdfunding, where startups raise money by issuing new virtual coins, whose value will rise or fall depending on how well the startups and their business perform. As a member of a large and informal group of traders that network on Telegram and WhatsApp and then participate in private sales of these new coins even before they become open for sale, Aarti likens the role of groups such as hers to those of institutional and angel investors who invest in startups before they go on sale through an IPO. Ninety nine per cent of what she purchases, she sells rapidly, she says, so she can purchase some other coin. The risks, she admits, are high with such an approach, but so are the rewards.

“Investing in traditional coins like Bitcoin and Ethereum is fine for the long run. But they are not going to see rapid jumps in value very quickly like these coins,” she says. “These are coins that have not seen a great rally till now, or have recently been issued, whose technology or use case is going to be very good. If these do well, their value can jump 10 times, 20 times, even 30 times, in a very short period.”

In comparison, Akash Rajpal, a 47-year-old healthcare professional, takes a more long-term approach to cryptocurrency investment. “I just put it in and forget all about it,” he says.

Few assets have seen the kind of appreciation in value as cryptocurrencies this year. Few assets had seen as much of a fall either before roaring back. The total crypto market currently stands above $2 trillion. If a single bitcoin was trading at less than $14,000 at the end of October last year, it nearly breached $67,000 on October 20th this year

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Rajpal first learnt about Bitcoin in 2012, when he was pursuing an educational programme at Singularity University in the US. “It was trading at $3 then,” he says. “I never expected it to be so popular but I was very interested in the underlying blockchain concept,” he says. However, he began investing in Bitcoin and other cryptocurrencies only much later, once an Indian exchange platform came up.

Rajpal has a fixed investment plan every year and he invests about 10 per cent of it in cryptocurrencies. Unlike impulsive investors, he has followed this pattern religiously, even when the crypto market nosedived in earlier years. “I believe you should invest only what you are willing to lose. Crypto carries huge risks, but also rewards,” he says, adding that entering the crypto market to make a quick buck can be foolhardy because one can get caught in its volatility and quickly lose all of one’s money.

Rajpal is also increasingly hedging his bets on the current NFT boom. His wife Neha, who dabbles in stocks and helps him out with his crypto investments by studying technical charts on the performance of various cryptocurrencies, is also a professional playback singer. She has begun to sell audio-visual pieces based on her songs as NFTs on the Indian NFT platform established by WazirX. And looking at this new opportunity in the crypto market, the couple has started investing more money to create NFTs around Neha’s songs.

“My coins are now 30 to 50 times the value when I bought them,” Rajpal says. He would not mind a crash in the crypto market right now, he says, because this will allow him to buy more coins. “The way I look at it, I’m buying what I feel will give huge returns in the next 10 to 15 years. Imagine the guys who bought Bitcoin when it was going for $3 dollars 10 years ago. Those who held on to it are multimillionaires now,” he says.

Holding on to cryptocurrencies, or ‘hodling’ in crypto-speak, is a strategy that appeals to Priya Ratnam, a Bengaluru-based crypto investor who holds about 70 per cent of her investments, locked in for 10 or more years. These are cryptocurrencies she is betting will see huge appreciation in value over the years. The rest she sells once they reach anywhere between 10 and 30 times their value, and in cryptocurrency-based projects that are yet to go live, which she will stay with for about a year or two. About 30 per cent of all her investments are in Bitcoin, another 10 per cent in NFT, and the rest in alt coins.

Earlier, Ratnam—who heads an IT services company that works on blockchain technologies and is also the chief marketing officer of a venture capital firm that invests in blockchain-based startups—would cash out some of her investments with a view to diversifying her crypto portfolio. Having lost money in the past doing this, however, she now increasingly invests some of the money in traditional assets, such as gold or real estate.

Crypto, she says, has transformed her life. “It has given me everything—my dream house, my dream car,” she says. Describing her crypto-wealth as good enough to last 10 generations of her family, she says, she might retire in another three or four years to focus on starting a family. “I could retire even now, but you know the human tendency is to do more, earn more.” She does have one tip for those dabbling in the crypto market. “You can’t be emotional with crypto. You can’t be greedy,” she says.

About The Author

Lhendup G Bhutia

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