While investing in children is the responsibility of parents, teaching them the role of money in life and understanding what a person needs to do to create wealth is also important.
Should You Introduce Your Child to the World of Cryptocurrencies? It may sound ironic. As Professor Padmanabha Ramanujam of IFIM Law School says, in all likelihood it should be your child who is best equipped to introduce you to the world. Cryptocurrencies If not, this is probably the best time to introduce your child to cryptocurrencies. But why and how?
Parents, however, invest money in options like stocks, fixed deposits, mutual funds, properties, small savings plans like PPF, SSY, etc. to ensure the financial future of their children. While investing in children is the responsibility of parents, it is also important to make them understand the role money plays in life and what a person needs to do to generate and grow wealth.
Nischal Shetty, CEO and Founder of WazirX, says investing in cryptocurrencies can serve the same purpose as traditional investing options and likely with better returns if you can understand the risks involved and navigate wisely. For this, it is also important to understand the crypto ecosystem.
Parents or eligible individuals invest in long-term investment options such as stocks, FDs, etc. because they offer their children years of fruitful returns and are long-term oriented. The same goes for Crypto, while kids don’t have accounts, parents, or guardians. You can invest in the world of cryptocurrencies on behalf of your children. In fact, as the industry evolves, it is becoming important for parents to instill knowledge about cryptocurrencies and blockchain in their children. This will go even further towards building on financial freedom by giving you a head start in diversifying your investment portfolio and being part of the future of the financial journey, ”Shetty told FE Online.
Shetty went on to say that investing in cryptocurrencies is definitely not critical today, but managing finances must be considered carefully and with due diligence as cryptocurrencies are a high risk investment.
“Also, with a large number of young customers in anticipation of various financial uncertainties seeking credit to increase profits, understanding the world of cryptocurrencies at an early age with the right education and awareness is a wise move.” at the same time preparing the children for future situations and looking around the industry, ”he said.
To start your child crypto learning journey, blockchain and aspiring tech evangelist Sharat Chandra says the best way to introduce kids to crypto is to give them a crypto wallet instead of a “piggy bank”. It would be easier for them to refer to crypto tokens as a new form of “digital money”. Parents can explain the different types of digital tokens in the simplest of terms and correlate them with appropriate examples.
“Once children have a good understanding of these tokens, they can collect cryptocurrencies themselves. Collecting tokens can be a step in teaching children the power of compounding and will teach children good financial behavior as well.” Chandra told FE Online.
Professor Ramanujam suggests that you should introduce cryptocurrencies to your child as an alternative currency in electronic form. Additionally, they are analogous to stocks or shares of a company that you can invest / trade in. Tell your child that they don’t need to take their head off the screen to start investing / trading in cryptocurrencies. There are extensive mobile applications with which one can electronically dive into the world of cryptocurrencies without much effort.
What if your child is curious why there should be an alternative payment system when traditional currencies have already been moved electronically?
Follow her through the pages of history engraved with the dangers of the 2008 global economic crisis, bank scams like PNB, Yes Bank and possibly demonetization. May she know the dangers of the draconian control that financial institutions exercise over conventional currencies. Don’t forget to tell her that the first cryptocurrency ieBitcoin was a consequence of the Great Recession of 2008. That the fact that one Bitcoin is now worth almost half a crore of rupees says a lot about the big change in the market confidence of the general public in the alternative financial system.
Given the extreme volatility and other risks such as the lack of crypto laws and regulations, it is also important that your child understands the security concerns.
“It would be unwise to skip the part where there are equally scammers spreading their advertised altcoins and deceiving uninformed citizens who are blindly investing in the hope of betting on the next bitcoin. In this regard, given the volatility of cryptocurrencies, it is important to emphasize that one should only invest to the extent that one feels comfortable losing, ”said Professor Ramanujam.
