Crypto boom or risk trap? Experts explain what young investors need to know

Business Standard Smart Investor Arena 2026: Experts urged young investors to understand crypto's risks, technology and use cases before putting money into it

Young investors should understand how cryptocurrencies work, what gives them value and how much they can afford to lose before investing, according to experts speaking at the Business Standard Smart Investor Arena 2026. Following online tips or chasing tokens on the promise of quick gains can expose inexperienced investors to risks they may not fully understand, they said.

 

Speaking at a session titled The Gen Z Portfolio: Does Crypto Still Deserve a Seat at the Table?, SB Seker, head of Asia-Pacific at Binance, and Vimal Sagar Tiwari, co-founder of CoinSwitch, urged young people to prioritise education and independent research over speculation.

 

 

“First of all, whenever you try to invest in any asset class, the basic is to try to understand its fundamentals,” Tiwari said. He advised beginners to start by understanding Bitcoin, including how it derives its value, before exploring other cryptocurrencies.

 

Start small and understand what you are buying

Tiwari said cryptocurrencies remain a relatively young asset class and can experience sharp price movements. Investors should recognise that prices can fall as well as rise, and should not commit money they may need in the near term.

 

“If you want to try crypto, I would say try a very small amount, the amount which you are okay to lose as well,” he said, suggesting that beginners could start with ₹100 or ₹500 to understand how the asset works.

 

Seker advised investors not to base decisions solely on the opinions of friends or family. Instead, they should study the technology behind digital assets, including blockchain networks, wallets and how transactions are verified.

 

He said understanding these systems could help investors assess the risks of individual projects and judge whether their potential rewards justify those risks.

 

What gives a cryptocurrency its value?

Unlike shares, which investors can assess using a company's earnings, balance sheet and cash flows, cryptocurrencies can be harder to value. Their investment case may depend on factors such as their use cases, network activity, scarcity and investor demand.

 

Tiwari compared Bitcoin's role to that of digital gold, pointing to its limited supply and the ability to record transactions on its blockchain without a central intermediary changing those records.

 

He also compared Ethereum to an operating system on which developers can build applications. Its potential value, he said, is linked partly to the products and services being developed on the network.

 

Seker said investors need to form their own investment thesis by studying a token's white paper, use case and potential market. If they cannot establish why an asset might have economic value, they should reconsider investing in it.

 

“If you don't have confidence in something, you don't allocate towards it,” he said.

 

Tokenisation and stablecoins are trends to watch

 

Seker identified tokenisation and stablecoins as important developments in digital finance. Tokenisation involves representing assets digitally on a blockchain, while stablecoins are designed to maintain a relatively stable value, often by tracking a conventional currency.

 

He said tokenised assets could offer investors access to certain instruments through digital platforms, including fractional purchases and trading outside traditional market hours. However, these potential benefits do not remove the need to understand the instrument, its underlying rights and the risks involved.

 

On quantum computing, both speakers acknowledged that advances in the technology could pose a future challenge to blockchain cryptography. Tiwari said developers were working on potential upgrades, but investors should not assume that every risk will automatically be resolved.

 

Crypto should fit an investor's risk appetite

Seker said investors should assess their financial circumstances, goals and willingness to take risks before deciding whether to allocate money to digital assets. They should also examine whether a token's use case is viable and whether it can compete with newer alternatives.

 

On regulation, he said rules often develop in response to technological innovation. Tiwari said investors in India should watch how the legal and regulatory framework evolves, including the role of the central bank's digital currency.