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:

1. Rugpull: Scammers create hype around a new crypto project or mint a fresh coin to raise funds. Once they gain your trust and pocket enough money, they disappear, leaving you with nothing.
2. Honeypot: Similar to a rugpull, but with a twist. Here, you can buy the crypto, but you can’t sell it. Only select wallets controlled by the scammer can cash out, leaving you stuck with worthless tokens.
3. Phishing scams: Scammers send fake emails or messages with malicious links to steal your personal details, especially your crypto wallet’s private key. And as we always say: Not your keys, not your crypto.
4. Man-in-the-middle attacks: If you log in to your crypto account on a public WiFi network, a hacker/scammer can intercept your sensitive data like passwords and wallet keys and drain your funds.

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 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 investing in something without a clear intrinsic value, that’s a risk worth thinking about.

One more thing about any cryptocurrency is the 51% attack risk, something we’ve touched on before. If a single entity controlled over half of a crypto network’s mining power, they could manipulate transactions – approve some, block others, or even pull off double spending (using the same crypto twice). While pulling this off is highly unlikely today because of the sheer cost and difficulty, it’s still a tiny possibility worth knowing about.

Then there’s the massive energy consumption problem. If Bitcoin were a country, its electricity use in 2021 would have ranked 27th globally. That’s a mind-boggling amount of power just to mine digital coins. So if you’re someone who values sustainability, investing in crypto in general might not entirely align with your ideas.

Sure, some newer altcoins like Ethereum are more energy-efficient. Ethereum shifted from Proof of Work (PoW), which requires high-powered computers to validate transactions, to Proof of Stake (PoS), where miners need to stake or deposit a certain amount of the relevant cryptocurrency to mine a new one or validate transactions. If they try to cheat the system, they lose some of their stake (crypto). But that doesn’t make crypto entirely green. The only way Bitcoin or altcoins could ever be sustainable is if we transition entirely to renewable energy. And that still feels like a long shot.

Also, here’s another thing. What happens if there’s a massive power outage? It could shut down the Bitcoin network, or even other crypto networks. Now, this has never happened before, and it’s probably an unlikely scenario, but it’s still a risk worth considering.

And finally, we’ve talked about how governments worldwide have different takes on crypto (in the previous chapter). Some want to embrace it, while others are pushing for an outright ban. This regulatory uncertainty, combined with high taxation in countries like India, makes crypto an even bigger challenge.

So, with so many downsides, what does the future of crypto even look like, you ask?

Well, so far, we’ve mostly looked at it as an investment. But that’s just scratching the surface. The real magic lies in what its underlying technology can do — things that could reshape banking, AI and even governance as we know it.

Take smart contracts, for instance, which are self-executing agreements without middlemen. Right now, a money transfer means that a bank has to verify and process the transaction. But with smart contracts, this could all happen automatically, in real time. That means faster transactions and something called atomic settlements, where money moves instantly, without needing banks as intermediaries.

Also, think about this. When you deposit money in your account, it just sits there unless you actively move it into a fixed deposit or an interest earning savings account. But what if even for just a few minutes or hours, your money could automatically generate interest? Imagine a system where your idle cash is lent out to someone who needs it, without a bank taking a cut. That’s the kind of future blockchain could power.

Or imagine how AI models work today. Right now, it’s dominated by big tech. They control the data, train their models in secret, and decide how it all works. But what if AI was decentralised just like crypto? Instead of being locked inside a few corporations, computing power and storage could be spread across thousands of independent computers. That’s the idea behind Decentralised AI (deAI). It could mean more transparency, better privacy and less control in the hands of monopolies.

So, while crypto today is mostly seen as an investment (a way to make or lose money), was that really the plan? Probably not. Satoshi Nakamoto didn’t create Bitcoin just to be another asset to trade. It was meant to be a currency. Decentralised, borderless and free from control. And its true potential lies in what it can do in the future. Maybe that vision is still a long way off. Maybe it’ll take decades to become reality. But if crypto ever moves beyond speculation, that’s when the real revolution begins.

And that, dear reader, is a wrap! The long and short of the crypto-verse, broken down, debated and dissected. We hope you enjoyed reading this series as much as we enjoyed writing it 🙂

And if you’ve stuck with us through every chapter, here’s one last ask before you go. Remember to share this series (on WhatsApp, LinkedIn or X) with your friends, family, loved ones, acquaintances, crypto bros and even those who run the moment they hear the word Bitcoin. 

Cheers!!!

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