Should investors continue investing in cryptocurrencies after the massive hack? What is the way forward?

Ambitious investors with a high appetite for risk tend to opt for cryptocurrencies for quick profits and sometimes huge gains in the long run. Sadly, every now and then, a fraud here and another hack there rocks the boat to such an extent that cryptocurrencies as an investment instrument get a bad reputation and are considered a hot issue, particularly for retail investors.

Last month, WazirX, a major cryptocurrency exchange in India, suffered a massive security breach that resulted in the loss of over $230 million, representing 45 percent of customer funds.

The stolen tokens reportedly included $100 million worth of Shiba Inu and $52 million worth of Ether.

Interestingly, this is not the first time that such a massive loss has occurred in the cryptocurrency sector. From FTX in the US and Quadriga in Canada to the Uttarakhand digital currency scam, there have been a number of frauds in the recent past that have undermined investor confidence in cryptocurrencies as an asset class.

But what one might wonder is whether it is rational to invest in cryptocurrencies when such massive scams can rock the sector and leave a major cryptocurrency exchange beleaguered with a loss of gigantic proportions.

There was no explicit positive development in Budget 2024 that could please crypto investors as long as the 1 percent TDS on crypto transactions continues.

Is there still hope?

For optimists, there are numerous reasons to remain optimistic. One of them is Republican presidential candidate Donald Trump, who began accepting cryptocurrency donations in May and recently stated at the Bitcoin Conference in Nashville, Tennessee, that if cryptocurrencies are going to define the future, “I want them mined, minted and manufactured in the U.S. If bitcoin is going to go to the moon… I want America to be the nation that leads the way,” he said.

Meanwhile, in India, crypto industry players are more excited than unhappy. For instance, Shivam Thakral, CEO of BuyUcoin, says: “Bitcoin is currently experiencing a wave of positive momentum amid increased trading activity driven by former President Trump’s announcement to establish Bitcoin as a US strategic asset at Bitcoin 2024 in Nashville. The global cryptocurrency market is reflecting this enthusiasm, with a market capitalization of $2.47 trillion. This surge in interest underscores the growing confidence among investors and the broader cryptocurrency community.”

In short, one can view a hack or scam as some sort of accident and move on, although it can also be seen as a symptom of an unregulated scheme of things where the risk outweighs the rewards.