Crypto’s risks are structural, its returns are not

My friend Ganesh was recalling his 1983 World Cup experience.

- HARSH ROONGTA

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 that of Stefan Thomas, who forgot the password to a hard drive holding Bitcoins worth about $800 million, or James Howells, who accidentally discarded a device containing Bitcoins worth about $1 billion.