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Bitcoin SIP: From the Desk of a Lawyer Who Believes in Hodling

I was always curious about what Bitcoin is and how it works. When I read about it, I was blown by its attributes. Bitcoin is the answer to all the problems being faced by people due to the traditional and conventional banking system. 

Bitcoin is limited in supply and hence scarce and thus extremely valuable, has a network effect, is completely decentralized, confiscation proof, inflation proof, permissionless, trustless, open source, censorship resistant, instant, etc. I could not but comprehend how can such a thing even exist, which is so ingenious in its make and certainly a disruptor. 

The above characteristics of Bitcoin sparked an immense interest in me to begin accumulating this marvel. 

It was around September 2017. I had been tracking Bitcoin for some time now. I saw its price increasing by the day. Greed took over me. So I registered on an exchange and bought bitcoins, not for accumulation, but for trading. 

As days passed by, the bitcoin price saw a phenomenal increase. From $3k, the price rose to $20k towards end of December 2017. I succumbed to the greed and did not sell my coins. 

Then in 2018 bitcoin price saw a sharp decline going back to where I started from. 

I was cursing myself for not having sold when the price rose above my entry price. And thus I had no option but to hold or more aptly as it is called, ‘hodl’. 

During the bear market, I again revisited what I had read on bitcoin before I entered. I delved deeper and deeper. I realised that the ‘hodling’ which I was doing was not in conformity with the true spirit of holding bitcoin. My holding was for speculative purposes and not because I believed in this gem and its success in future, which I am now convinced, is quite certain. 

I realized that the price rise from 3k to 20k was only one of the hype cycles in bitcoin’s history of 9 to 10 years. It had seen such hype cycles many times in its short history. 

On seeing the bigger picture, I realized that 20k is absolutely nothing for the fair value of 1 bitcoin. The potential of Bitcoin, given its special and unmatchable characteristics, has no limits. The upside is limitless. 

This is when I realized the true essence of hodling bitcoin. Not for speculation but for its limitless potential. I decided to accumulate more bitcoins for this potential. 

But I have no trading experience. I hardly understand the trading jargons. I do not know when it is the right time to enter the market for buying. 

This had become very stressful until I stumbled upon a statement I received from a mutual fund house in whose fund I am invested in through their ‘Systematic Investment Plan’ or SIP.

This struck an idea in me. Instead of breaking my head when to enter the market, why not I set up my own Bitcoin SIP and accumulate this gem month after month. 

Thus I decided to cancel my SIP in one mutual fund and instead route those funds for buying bitcoin the SIP way. 

I thus diversified my portfolio to include a Bitcoin SIP. 

Having learnt about the basics of bitcoin and how it is destined to become a global currency someday after it comes out of the stages of being a collectible and a store of value at present, I am not at all worried that bitcoin will be ‘dead’, as apprehended by vested interests, who, having been shaken by the potential of bitcoin, somehow want to deter the masses from participating in bitcoin by spreading FUD. It has in fact seen such ‘deaths’ many times in its history only to bounce back stronger than before. So I am clear on that, that if I invest a portion of my money in bitcoin in a systematic way over a period of time, I will only see a price appreciation. 

I set up my bitcoin SIP by fixing the fixed quantity which I would buy, regardless of bitcoin’s price, on a particular date of each month, month after month. 

For instance, I would buy say Rs. 5000/- worth of btc on the 5th of every month, for a year. Then on completion of the year, I would upward revise my investment amount to say Rs. 7000/- and so on. 

The evident advantage of investing like this is cost averaging and the fact that I do not have to sit in front of the computer tracking the bitcoin price for a suitable entry. Given my work, this makes it the best approach to invest in bitcoin without worrying about the entry price. The fanatic ups and downs in bitcoin price no more haunt me. 

Whatever may be the price on the monthly date fixed by me for buying, I just buy by placing a market order. Not even a limit order. 

When in a particular month the bitcoin price on my fixed date of purchase is low, I get more units and likewise when its price is high, I get lesser units. But overtime it averages out. I end up getting more units ultimately. This is much better than buying a lump sum at one instance. 

The other obvious advantage is that there is no person who is in control of the underlying asset, which is the case in mutual funds in which the value of the fund is determined by how the assets are managed by a fund manager of that mutual fund. 

In the case of bitcoin, it is completely decentralized. No one person controls it. So nobody determines the price. It’s the market forces of demand and supply coupled with other factors which have a bearing on bitcoin’s price. So I am not at the mercy of any fund manager in the case of bitcoin SIP. 

Also the underlying assets in case of a mutual fund are stocks of companies. Now who knows how these companies function. It is not unknown how so many Indian companies have gone insolvent or on the verge of it which adversely affects the portfolio exposure and thus the consequent price of a mutual fund unit. In a bitcoin SIP I do not have to worry about that. 

Coming to the downsides of investing in bitcoin through a self set up bitcoin SIP – there is nobody, like a fund manager in case of a MF, who will do the investing on your behalf. You have to do it by yourself. Every month you will have to login to the exchange where you have an account and purchase the predetermined amount of bitcoin. 

Read the list of Indian exchanges that offer Trading for Cryptocurrencies using INR. 

Another con is the hostile attitude of banks and government. We know the banks have withdrawn support to exchanges pursuant to a RBI circular which is under challenge. So depositing fiat into the exchange is another hassle, despite the P2P mechanisms set up by the exchanges as a stop gap arrangement. 

And another biggest looming fear is the exchanges shutting down. We have already seen three reputed and many other exchanges shut shops due to lack of clarity on the regulatory front. I do not know how I will be able to then continue my bitcoin SIP when the remaining exchanges also close their businesses. 

But I am not hopeless. I am not going to worry when the above happens. Till the time there are Indian exchanges working, I will continue with my bitcoin SIP. 

Now we all know that bitcoin is designed to give the power back in the hands of the people. So if you get a power you will also have consequent responsibility. That will be of securing your coins. I have personally purchased a hardware wallet where I transfer my coins after their purchase on exchanges. Since I am not trading I do not see any reason why I should keep my coins on any exchange. The threat of exchanges being hacked is another problem. To stave off all that and to have a good night’s sleep, it is always better that you invest in a good hardware wallet and take control of your private keys. 

To conclude, bitcoin is the most significant thing which has happened in my life and I certainly see a bright future for myself given my investments in bitcoin SIP. I am certain that it will work like insurance for me. 


About the Author: Yusuf Rampurawala is a civil lawyer practicing in the Bombay High Court at its Mumbai bench. His forte is in real estate and succession/inheritance matters. As a lawyer he understands the significance of the fundamental right of ‘Right to Life and Liberty’ which is guaranteed by our Constitution under Article 21 to each citizen. The Right to Life and Liberty is a celebrated right which is widely recognised by the Indian Courts in a plethora of their judgments as the touchstone of human existence who can only flourish and prosper in an environment of freedom and liberty, subject of course to reasonable restrictions imposed by the Government. Bitcoin is reminiscent of Article 21 as it is truly liberating. And therefore he is a staunch believer and enthusiast of Bitcoin. 

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