How To Buy Cryptocurrency In India
If you’re new to the world of crypto, figuring out how to buy Bitcoin, Dogecoin, Ethereum and other cryptocurrencies can be confusing at first.
Thankfully, it’s pretty simple to learn the ropes. You can start investing in cryptocurrency by following these easy steps.
remember: investing in cryptocurrency is purely speculative, and your capital is at risk. You might lose some or all of your money.
Further, cryptocurrency trading is largely unregulated in India, and if something goes wrong – for example, a company goes out of business – you will have no recourse to compensation.
What is cryptocurrency?
Cryptocurrency is a digital payment system that doesn’t rely on banks to verify transactions. It’s a peer-to-peer system that can enable anyone anywhere to send and receive payments. Instead of being physical money carried around and exchanged in the real world, cryptocurrency payments exist purely as digital entries to an online database describing specific transactions. When you transfer cryptocurrency funds, the transactions are recorded in a public ledger. Cryptocurrency is stored in digital wallets.
Cryptocurrency received its name because it uses encryption to verify transactions. This means advanced coding is involved in storing and transmitting cryptocurrency data between wallets and public ledgers. The aim of encryption is to provide security and safety.
The first cryptocurrency was Bitcoin, which was founded in 2009 and remains the best known today. Much of the interest in cryptocurrencies is to trade for profit, with speculators at times driving prices skyward.
How do you get cryptocurrency?
Most cryptocurrencies are created via a process commonly referred to as crypto mining. With crypto mining, high-powered GPU systems are used to decrypt the cryptographic hash to create a new block. Each type of cryptocurrency has a finite number of blocks that can be mined. Over time, it becomes increasingly more complex and difficult to mine coins from an established cryptocurrency. For example, in 2010, a regular user with a GPU-powered system might have been able to mine Bitcoin. However, computing requirements are significantly more complex today, making crypto-mining increasingly complicated.
A popular way to help bring interest and value to a new cryptocurrency is with an Initial Coin Offering (ICO). With an ICO, the group launching a cryptocurrency offers potential investors a given amount of the new cryptocurrency in exchange for a fixed rate of either fiat currency or another cryptocurrency, typically Bitcoin or Ethereum.
Cryptocurrency in India
Until the 2022 Union Budget announcement, the fate of cryptocurrency in India was largely undecided.
In the Budget, the Indian Finance Minister’s announcement on levying a 30% tax on gains on the transfer of virtual digital assets, which includes cryptocurrency, was initially seen as an endorsement of cryptocurrencies. It set off the debate on whether or not the tax on cryptocurrency indicates the government has recognized it as a legitimate form of currency.
How To Buy Cryptocurrency In India
Buying cryptocurrency in India can be done through several exchanges, but it’s important to keep in mind that the Indian government has not yet created a clear regulatory framework for cryptocurrencies. Therefore, it’s crucial to choose a reputable exchange that has a good track record of security and reliability.
Here are the steps to buy cryptocurrency in India:
- Choose an exchange: There are several exchanges available in India, including WazirX, CoinDCX, Zebpay, and Bitbns. Research and compare the fees, supported cryptocurrencies, security measures, and user reviews before selecting an exchange.
- Create an account: Once you’ve chosen an exchange, sign up for an account by providing your name, email address, and phone number. You may also need to complete a Know Your Customer (KYC) process, which involves providing personal identification documents such as a passport or Aadhaar card
- Add funds: After completing the KYC process, add funds to your exchange account through a bank transfer, credit card, or debit card. Some exchanges may have a minimum deposit amount.
- Buy cryptocurrency: Once your funds are in your exchange account, you can buy the cryptocurrency of your choice. Most exchanges have a trading platform where you can place orders to buy or sell cryptocurrencies.
- Store your cryptocurrency: It’s recommended to store your cryptocurrency in a secure wallet that you control, rather than leaving it on the exchange. You can choose from hardware wallets, software wallets, or paper wallets.
- Monitor the market: Cryptocurrency prices can be volatile, so it’s important to monitor the market and make informed decisions about when to buy or sell. Many exchanges have tools and charts to help you track the price movements of different cryptocurrencies.
- Pay taxes: In India, cryptocurrency is not yet regulated, but it’s still important to pay taxes on any gains from cryptocurrency trading. Consult a tax professional for guidance on how to report cryptocurrency gains on your tax returns.
You may be wondering how to buy cryptocurrency safely. There are typically three steps involved. These are:
Step 1: Choosing a platform
The first step is deciding which platform to use. Generally, you can choose between a traditional broker or a dedicated cryptocurrency exchange:
- Traditional brokers. These are online brokers who offer ways to buy and sell cryptocurrency, as well as other financial assets like stocks, bonds, and ETFs. These platforms tend to offer lower trading costs but fewer crypto features.
- Cryptocurrency exchanges. There are many cryptocurrency exchanges to choose from, each offering different cryptocurrencies, wallet storage, interest-bearing account options, and more. Many exchanges charge asset-based fees.
Step 2: Funding your account
Once you have chosen your platform, the next step is to fund your account so you can begin trading. Most crypto exchanges allow users to purchase crypto using fiat (i.e., government-issued) currencies such as the US Dollar, the British Pound, or the Euro using their debit or credit cards – although this varies by platform.
Crypto purchases with credit cards are considered risky, and some exchanges don’t support them. Some credit card companies don’t allow crypto transactions either. This is because cryptocurrencies are highly volatile, and it is not advisable to risk going into debt — or potentially paying high credit card transaction fees — for certain assets.
Step 3: Placing an order
You can place an order via your broker’s or exchange’s web or mobile platform. If you are planning to buy cryptocurrencies, you can do so by selecting “buy,” choosing the order type, entering the number of cryptocurrencies you want to purchase, and confirming the order. The same process applies to “sell” orders.
There are also other ways to invest in crypto. These include payment services like PayPal, Cash App, and Venmo, which allow users to buy, sell, or hold cryptocurrencies. In addition, there are the following investment vehicles:
- Bitcoin trusts: You can buy shares of Bitcoin trusts with a regular brokerage account. These vehicles give retail investors exposure to crypto through the stock market.
- Bitcoin mutual funds: There are Bitcoin ETFs and Bitcoin mutual funds to choose from.
- Blockchain stocks or ETFs: You can also indirectly invest in crypto through blockchain companies that specialize in the technology behind crypto and crypto transactions. Alternatively, you can buy stocks or ETFs of companies that use blockchain technology.
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