These are fluid times and hence, I would say, these thoughts are for the present situation and are certainly amenable to change as we go forward.
Anyone can start a new crypto currency, the only criteria are
1)Mining (issuing of incremental units) should become more and more difficult as time goes by, so that finally there would be only a finite number (or something approaching a finite number) of units in circulation.
2) Large number of people should accept it as a currency for their transactions.
3) There should exist a robust system of book-keeping, in this case we have blockchain which indeed sufficies.
As all the above are not under the control of any regulatory authority, obviously everything works on faith. Today there are 4 to 5 thousand crypto currencies vying with each other to become the preferred one. Bitcoin supposedly the first seems well placed to lead the pack. There are others too, which may become popular in the future.
The larger question is, why do we need a crypto at all? The answer is simple.
All governments, to pander to their citizens, or out of economic necessity, indulge in deficit financing. To take care of the deficit, they routinely employ policies which are akin to printing a huge number of bill notes. This results in inflation, reducing the value of the currencies. For 'savers' this is a great dis-insentive, as the value of their savings diminishes over time.
The second reason is that all fiat currencies are subject to 'geo-political' risks like disasters, wars, pandemics or for that matter a despotic leader occupying an important post.
This certainly brings out a case for a universally accepted crypto currency.
The million dollar (or Bitcoin) question is, how in the world do we ensure the robustness of the crypto system, which can be assured to be absolutely beyond manipulation, and in the event of such a manipulation, what is the resource available?
Votaries of the crypto tell us manipulation is not possible because of block-chain. Unfortunately looking at the instances of systems being hacked, including those which are supposed to be behind impenetrable firewalls, I have no doubt that someone, with malafide intentions will surely be able to create havoc at some time or the other in the future. Then prayer would be the only recourse, as there is no legal remedy available, at least for the present.
Should we invest in cryptos?
Answer is simple, if you love a roller-coaster for it's sheer thrill, go for it, but please fasten yourself securely. In case you want to participate in a rodeo, be ready for a possible breaking of some bones.
