My friend Ganesh was recalling his 1983 World Cup experience. India had just finished batting in the final at Lord’s and were all out for 183 against the West Indies. The outlook looked bleak. Ganesh, however, was an optimist. He placed a ₹100 bet (about ₹1,200 today) on India to win at odds of 100 to 1, implying a payout of ₹10,000 (about ₹1,20,000 today). The bet was placed with a bookie. Betting was illegal then, as it still is now. When India pulled off one of the greatest upsets in sporting history, the bookie refused to honour the bet. With the wager itself being illegal, Ganesh had no legal recourse. His winning ticket was worthless.
Crypto carries a similar risk, driven primarily by weak enforceability. Even if prices move sharply in your favour, you can still lose everything. Assets can be stolen when exchanges fail, as seen in cases such as FTX and WazirX. They can also become irretrievable through self-custody errors—when passwords are forgotten or access devices are lost—as in widely reported cases such as Stefan Thomas, who forgot the password to a hard drive holding Bitcoin worth about USD 800 million, or James Howells, who accidentally discarded a device containing Bitcoin worth about USD 1 billion. These risks are compounded in the unregulated “wild west” crypto markets, where price discovery can be distorted by large holders (“whales”) and sudden stablecoin issuance such as Tether, rather than by fundamentals. In the absence of a regulated delivery-versus-payment mechanism, investors attempting to sell crypto assets online often face elevated fraud risk. Winnings, if any, face hostile tax treatment and the risk of sudden regulatory intervention like in the adjacent gaming sector.
Despite these risks, investors are drawn to Bitcoin and other digital assets because of the apparently high returns. At times, those returns have appeared extraordinary, even amid extreme volatility. Bitcoin’s price history includes one-year periods when it lost nearly 75% of its value (year ended 9 November 2022), as well as periods when it multiplied more than 130 times in a single year (year ended 26 July 2011).
Many investors compare these headline returns with traditional investments such as the Nifty 50 or the S&P 500, without recognising how difficult it is for ordinary investors to actually realise them. Much of Bitcoin’s eye-catching gains came from a specific phase of discovery and monetisation, as it moved from obscurity to global awareness—a phase that may not be repeated. The data already reflects this shift: average annual returns over the last five years are roughly one-third of those seen in the preceding five-year period.
Even if future returns are occasionally high, they are unlikely to compensate for the risks going forward. As Bitcoin’s returns compress toward levels closer to traditional investments, its risks do not diminish in tandem. Operational risk, custody failures, legal irreversibility, and the possibility of total loss remain structural features of crypto investing. Once returns normalise, the investment justification weakens. Crypto does not behave like equities or gold when returns moderate: downside risks remain open ended, while the upside increasingly resembles that of conventional assets. Unlike gold, with centuries of near universal acceptance across cultures and geographies, crypto derives its value entirely from belief and network participation, making it fragile.
If crypto belongs anywhere, it is within discretionary investments—often referred to as “mad money”. This is capital that is not required to meet financial goals and can afford very high risks, including the risk of going to zero.
Truth be told, the estimated 10 crore retail crypto investors drawn in by get-rich-quick narratives would do well to remember Ganesh’s story: a winning bet is meaningless without enforceability or recourse. Going by current data trends, crypto is unlikely to deliver outsized returns and may simply redistribute money from late entrants to early ones. For investors with real financial goals, crypto belongs at most in the realm of speculation—not as a substitute for regulated investments such as mutual funds.
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
(A slightly different version of this column first appeared in the Business Standard on 12 January, 2026)