Everybody wants a pie of cryptocurrency. But among the 100 odd such currencies in the market, which one should you invest in? And part-2-should-you-invest-in-this-cryptocurrency-6406531.html">how much money to invest in cryptocurrencies? These are some of the most frequency questions that Rishabh Parakh, a chartered accountant and founder of NRP Capitals (formerly known as Money Plant Consultancy) gets from his clients these days.

In today’s podcast of Simply Save, Moneycontrol’s personal finance podcast, Parakh takes us through the basics of cryptocurrency and investments. Parakh says that since cryptocurrencies are new and evolving creatures on the investment street, you should not invest in them without trying to understand them. For instance, why is part-1-heres-how-the-cryptocurrency-works-6400621.html">Bitcoin so volatile? From its price of $63,224 per Bitcoin on April 16, its price fell to $50,734 on April 25. On May 10, it rose to $58,102 but by May 23 it fell to $37,491. One of the main reasons why Parakh says that Bitcoin- or any cryptocurrency- is so volatile is that the crypto markets are open 24/7. And throughout the year. Plus it is a global market. That’s how long in a year Bitcoin- or any cryptocurrency for that matter- is traded. The extent to which cryptocurrencies are traded itself makes its price movements fluctuate wildly. 

Should everyone invest in cryptocurrencies? No, says Parakh. He urges potential investors to first read up, on not just cryptocurrencies, but what it aims to solve and the technology it aims to use. Invest not more than two to five percent of your overall portfolio. And invest, he adds, only that amount that you do not mind losing out, entirely. One big risk that all cryptocurrency investors in India face, is in which way the regulations may go in future. As of now, the fate of cryptocurrencies is uncertain and they are not considered illegal, though the central government has held reservations. But if they are banned or termed illegal, and investors are forced to sell them overnight, it helps if your exposure to them is limited.

Listen up, folks!