How To Invest In Bitcoin And Cryptocurrency In India, Here's Some Expert Advice

Emerging as a popular investment vehicle in the past few years, cryptocurrency has thrown open a world of opportunities for all types of investors.

Year 2020 has been an eventful year as Bitcoin emerged as the best performing asset class globally. This turned investor¡¯s eyes towards Bitcoin yet again, especially in the last few weeks when Bitcoin hit its all-time high price of $21,000 again. And now Bitcoin has breached past $30,000 value!

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There are certain remarkable features of cryptocurrency that are the reason for its widespread appeal. The first one is, of course, its decentralized nature, free from which also makes it a transparent system of money. The cryptographic, as well as security features of the blockchain technology, ensure that it is secure and irreversible, a very crucial feature for currencies. In fact, some claims about the immutability of Bitcoins go as far as saying that there is a greater possibility of a person being hit by an asteroid than the security of Bitcoin being compromised.

The banking ban imposed by RBI in 2018 was, in practice, only a partial ban and by no means had it rendered the trading of cryptocurrency illegal in the country. This is because investors were free to engage in crypto-to-crypto trade, and even exchange BTC in INR with each other but not directly with or through their banks. The removal of the ban has, however, given a fresh lease of life to the industry. With banks now allowed to partner with crypto exchanges, the market is more attractive than ever.

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It is fairly simple to understand the basics of cryptocurrency trading, for it is very similar to how trading takes place on a stock market. Just like shares are bought and sold at varying prices with the hope of earning a profit, bitcoins and altcoins are traded on crypto exchanges such as CoinDCX. The only differentiating factor here is that trading of crypto assets takes place in exchange for other cryptos and fiat currencies such as INR. The first step, of course, is to choose the right platform to start trading on.

Invest in Bitcoin in India

Trading may seem like tricky business, but it is easier than you¡¯d imagine. In fact, with a versatile platform like CoinDCX, even a first-time user can set up an account and learn the basics of trading in a breeze. The first step after signing up is to verify your credentials in a quick KYC procedure and follow up with linking your bank to your trading account. The introductory trade is made with the cryptocurrency that you buy using funds from your bank. Further, you are free to carry out crypto-to-crypto transactions using trading pairs, or even convert your digital currency back to fiat currency using crypto-INR pairs.

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It is important to understand the concept of trading pairs to be able to transact profitably in cryptocurrency. Let¡¯s consider the example of BTC/LTC, and assume that you have cash and BTC in your wallet and want to obtain LTC. Of course, one obvious method would be to directly buy Litecoin using INR. Now imagine that the value of BTC in INR goes up 10% but that of LTC stays the same. In this case, if you buy LTC using BTC, you buy 10% more than what you¡¯d buy using INR.

Thus, your buying power went up by using trading pairs instead of using a direct rupee trade. This very simply example explains how you can maintain different currencies in your portfolio by swapping one for the other, without ever using cash.

Do keep an eye out for the transaction fees that the exchange charges. CoinDCX, for instance, charges a transaction fee of 0.1% of the transaction value. When you place a buy or sell order, it is lodged in the order book of the exchange. If it is a market order, the exchange will match it with the average price and fulfill it immediately. For traders, which are willing to earn a passive income, or earn without trading, platforms provide staking and lending services where you can deposit your tokens for a time period and earn interest or returns on your deposits.

The difference between the two is in Lend, your tokens are locked during the time your interest return is being calculated whereas in Stake, your funds are not locked. The structure is very similar to Fixed Deposits however, the returns are significantly high.

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Keep up with latest crypto, Bitcoin trends

Adding to this, it is extremely crucial to keep yourself informed and updated about the right knowledge and trends about the crypto industry. Knowledge about the fundamentals will help you understand the underlying principles of the crypto markets and updating yourself with recent trends will help you to make the best out of the upcoming opportunities.

To learn the basics and deeper understanding of all the fundamental concepts about cryptocurrencies and blockchain, users should check out authentic and trusted crypto and blockchain academy online, as well as reference blogs as well as videos for all types of learners, from beginners to experts.

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Nevertheless, the current scenario is complicated: while Indians are keen on exploring this alternate currency universe. 2020 has amplified this keenness multifold. Alongside this, we also have companies discovering more and more real-world applications of blockchain and its power to change the world, such as with the smart contracts enabled by Ethereum. New coins are launched while some old ones die out, some early investors make big profits while some traders suffer losses.

It is, therefore, important to bear in mind that money will be both gained and lost while trading in the market. It is equally important to keep up to speed with the prevailing crypto laws of the land. Crypto being a new area, the laws surrounding it keep changing and evolving. This can lead to the creation of new opportunities that the early adopters can benefit from.

About the author: Sumit Gupta is the co-founder and CEO of CoinDCX. Opinion expressed here is author's alone.