Taxation

How to Invest in Cryptocurrency in India 2024?

calendar10 Jun, 2024
timeReading Time: 7 Minutes
Invest in cryptocurrency

In the past ten years, cryptocurrencies have gone from a mysterious asset to a hugely popular investment, only to plummet sharply as interest rates rose. Digital money protected by computer networks and cryptography is known as cryptocurrency. These currencies allow for transactions to be completed while preserving the semi-anonymity of buyers and sellers. It’s not a challenging task to invest in cryptocurrency if the basics are taken into consideration.

Conventional central organisations, such as banks or governments, do not regulate them. Investing in cryptocurrency in India become very popular nowadays. A percentage of investors’ capital is allocated to cryptocurrencies to generate significant and quick returns. Indians, particularly the youth, invest in Cryptocurrency in India due to the enormous returns in the past.

Let’s read it out:

What is Cryptocurrency?

Cryptocurrency, also known as crypto-currency or crypto, is any virtual or digital money that employs encryption to safeguard transactions. It uses a decentralised mechanism to record transactions and issue new units instead of a central authority issuing or controlling them.

A digital payment method called cryptocurrency doesn’t depend on banks to validate transactions. Peer-to-peer technology makes it possible for anyone to give and receive money. Unlike real money, which is carried and transferred in the physical world, cryptocurrency payments are made only with digital inputs to an online database tracking individual transactions.

Every Bitcoin transaction that entails the transfer of funds is recorded in a public ledger. Crypto wallets are used to store cryptocurrency. Cryptocurrency’s name comes from its use of encryption to confirm transactions. It indicates that storing and transmitting Bitcoin data between wallets and public ledgers requires sophisticated coding.

Encryption makes things safe and secure. It’s essential to comprehend the types of cryptocurrencies available at the time of considering whether to make a wise move and invest in cryptocurrency or not.

How does Cryptocurrency Work?

Blockchain, a distributed and known public ledger that stores all transactions and is updated by currency holders, is the foundation upon which cryptocurrencies operate. Units of cryptocurrency are made through a procedure known as mining, which uses computer power to solve challenging mathematical problems that yield coins. Users can store and spend the currencies they purchase from brokers in cryptographic wallets.

If you own cryptocurrency, you don’t possess anything material. What you have is a key that lets you transfer data or a unit of measurement from one to another without the help of a reliable outsider.

Even though Bitcoin has been available since 2009, there are still many untapped financial applications for cryptocurrencies and blockchain technology, with more expected. Technology may be used to trade financial assets such as stocks, bonds, and other securities.

Consider These 6 Points to Invest in Cryptocurrency in India

In recent years, cryptocurrencies have gained considerable interest and appeal. Compared to traditional currencies, these digital currencies have a number of advantages, including better security and privacy, lower transaction costs, and decentralised control. Nevertheless, cryptocurrency investing can be complex, volatile, and hazardous.

Here are some points that will help you to invest in cryptocurrency in India wisely:

  • Do your Research

Before making any Bitcoin investments, it is imperative to thoroughly investigate and comprehend the technology, market trends, and associated dangers. Learn about the many cryptocurrencies, their features, and their growth potential. Additionally, stay current on news and advancements in the Bitcoin space.

  • Choose a Reliable Exchange

Cryptocurrency exchanges are online marketplaces where cryptocurrencies are bought, sold, and traded. Choosing a trustworthy exchange is essential to the success of your investments.

Choose an exchange with a solid and stable track record, a lot of trading activity, and excellent security protocols. Some popular cryptocurrency exchanges include Binance, Coinbase, and Kraken. Be thoughtful if you want to invest in cryptocurrency in India.

  • Diversify your Portfolio

Investing fundamentally relies on diversification. Diversifying your cryptocurrency investments can reduce risk and help you make fewer losses. However, diversification needs to be used carefully. Invest in cryptocurrencies with a stable base, a vibrant community, and a track record of growth.

If you want to invest in cryptocurrency in India, you just can’t miss this point.

  • Keep a Long-term Perspective

Cryptocurrencies have characteristics of short-term price swings and extreme volatility. Nonetheless, it is imperative to maintain a long-term perspective when making cryptocurrency investments. Since the cryptocurrency business is still in its infancy, there is much room for future expansion. If there are short-term price fluctuations, have patience and don’t freak out.

  • Understand the Risks Involved

There are risks connected with investing in cryptocurrency. The market is quite erratic, and price changes can happen quickly. Additionally, because cryptocurrencies are not subject to centralised regulation, they are susceptible to security flaws like hacking and fraud.

Consequently, it’s imperative never to put your life savings into cryptocurrency and only to invest money you can afford to lose. It’s one of the significant points to consider in order to invest in cryptocurrency in India successfully.

  • Keep your Investments Secure

Maintaining and preserving the security of your cryptocurrency holdings is essential to shield your money from fraud, theft, and other security threats.

Store your cryptocurrency in a reliable and secure wallet, and always keep your private keys private. Ensure your wallet and exchange accounts enable two-factor authentication and safeguard your recovery phrases and passwords.

Top 10 Cryptos in 2024

Several cryptos have gained prominence in recent times. Popular top 10 cryptos in 2024 are mentioned below-

CoinMarket CapitalizationCurrent Price
Bitcoin (BTC)$1.3 Trillion$66.089
Ethereum (ETH)$359 Billion$2995
Binance Coin (BNB)$85 Billion$580
Solana (SOL)$72 Billion$162
Ripple (XRP)$28 Billion$0.51
Dogecoin (DOGE)$22 Billion$0.15
Tron (TRX)$10 Billion$0.12
Polkadot (DOT)$9.9 Billion$6.9
Cosmos (ATOM)$3.2 Billion$8.43
Maker (MKR)$2.5 Billion$2769
Top 10 cryptos in 2024

Types of Cryptocurrencies in Which You Can Invest

Cryptocurrency refers to a digital or virtual form of currency in current trends that utilize cryptography to encrypt and authenticate transactions as well as manage the creation of new units. Although there are dozens of distinct kinds of cryptocurrencies, the following are some of the more well-known and frequently used ones:

  • Bitcoin (BTC): Bitcoin is the original cryptocurrency. It was created in 2009 beneath the pseudonym Satoshi Nakamoto by an unidentified individual or a single person. Since Bitcoin is decentralised, no financial institution or government controls it.
  • Ethereum (ETH): With Ethereum, developers may create decentralised apps (DApps) by utilising innovative contracts on a decentralised platform. The coin that makes transactions on the Ethereum network more accessible is called ether.
  • Ripple (XRP): A digital currency, ripple, is intended for international transactions. Its goal is to give people and financial organisations a quick and safe way to move money.
  • Bitcoin Cash (BCH): This cryptocurrency was developed in 2017 as a fork of the original Bitcoin. Compared to Bitcoin, it is intended to provide speedier and less expensive transactions.
  • Litecoin (LTC): The cryptocurrency Litecoin was developed in 2011 by ex-Google engineer Charlie Lee. It is intended to be less expensive and faster than Bitcoin.
  • Cardano (ADA): Cardano is a decentralised platform for executing decentralised apps and smart contracts. It is renowned for minimal transaction fees and excellent scalability.
  • Polkadot (DOT): Polkadot is a multi-chain network that facilitates inter-chain coordination and communication. It is intended to give decentralised apps scalability, interoperability, and security.
  • Binance Coin (BNB): Binance Coin is the native cryptocurrency of the Binance exchange. It is used to cover the cost of various exchange services and trading and transaction fees.
  • Dogecoin (DOGE): A cryptocurrency called Dogecoin was established as a joke in 2013. Since then, it has developed a cult following and is renowned for its enjoyable and welcoming environment.

These are but a handful of the many varieties of cryptocurrencies that exist. Every cryptocurrency has unique characteristics, benefits, and disadvantages, so prospective buyers should do their homework before investing.

Types of Cryptocurrency Exchanges in India

Let’s now decipher the several exchange kinds that exist in the Indian cryptocurrency market:

1. CEXs, or Centralised Exchanges

Consider them the cryptocurrency equivalent of traditional stock markets. They serve as middlemen between buyers and sellers, providing quick transactions, high liquidity, and frequently extra services like wallet storage.

But keep in mind that increased convenience also means increased scrutiny. Because CEXs are centralised and typically subject to regulation, they may be more susceptible to hacking.

You will be directly familiar with CEXs if you have used applications like Binance or Bybit.

2. Decentralised Exchanges (DEXs)

This is when crypto purists give a nod of approval. DEXs provide a safer and more private trading environment since they function without a central authority.

Blockchain technology enables direct peer-to-peer transactions. Compared to CEXs, they can be less user-friendly and offer less liquidity, but they also provide more anonymity and security. If you live the “no middleman” lifestyle, DEXs could become your new best friends.

3. Hybrid Exchanges

Finally, the finest of both worlds is available to us. The goal of hybrid exchanges is to combine the security and anonymity of DEXs with the liquidity and ease of use of CEXs.

Despite being less well-known and relatively new, they are gaining popularity as they aim to provide a fair and impartial approach to cryptocurrency trading.

The hybrid promise combines the privacy of a DEX with the speed and ease of a CEX.

How to Buy Cryptocurrency from an Exchange?

Take these actions to purchase cryptocurrency from an exchange:

  • Look into and Select a Trustworthy Exchange: Seek out trustworthy, well-established Bitcoin exchanges with a solid track record. Examine their costs, security protocols, and cryptocurrency offerings.
  • Establish an Account: Register on the selected exchange by entering your email address, setting a password, and carrying out the required verification steps (identification verification, for example).
  • Secure Your Account: Turn on two-factor authentication (2FA) to give your account an additional security measure. It will lessen the possibility of illegal access to your money.
  • Deposit Funds: To deposit money into your exchange account, use your preferred payment method, such as a credit/debit card, bank transfer, or cryptocurrency transfer from another wallet.
  • Choose the Cryptocurrency: After depositing your money, choose the cryptocurrency you wish to purchase. Examine and comprehend the cryptocurrency’s principles, applications, and growth prospects.
  • Place an Order: There are two main categories: market and limit orders. A limit order lets you specify the exact price you wish to purchase the cryptocurrency, whereas a market order purchases it at the going rate. Select the order type that best meets your needs.
  • Review and Confirm: Before completing the purchase, examine your order information, including the quantity of bitcoin you’re purchasing and the total cost, including any transaction fees.
  • Store Your Cryptocurrency: For extra security, consider moving your cryptocurrency to a safe digital wallet after the transaction is over. Hardware wallets are particularly advised for long-term storage.

Stay informed about the most recent events and advancements in the Bitcoin space. Because prices are subject to extreme fluctuations, knowing will enable you to make wiser investing choices.

Is Crypto in India Legal or Not?

In India, cryptocurrencies function in a murky legal landscape. Not only are cryptocurrencies unregulated by any central body, but there are also no particular laws, norms, or policies governing how issues should be resolved. As a result, cryptocurrency trading carries a risk for the investor.

When Nirmala Sitharaman was India’s finance minister, she suggested taxing digital assets, and the discussion surrounding the legitimacy of cryptocurrencies grew more heated. There hasn’t been an official statement on the legal standing of cryptocurrencies like Bitcoin in India to accompany this action, which many see as a step towards their recognition.

Critical remarks by the governor of the Reserve Bank of India (RBI) and other government representatives, such as the finance minister, imply that although cryptocurrencies are not unlawful, they are still not regulated. A 30% tax on cryptocurrency gains and a 1% tax deducted at source (TDS) were established in the Union Budget 2022, suggesting the government’s intention to tax and implicitly recognise these digital assets. Understanding the taxation rules of cryptocurrency is of utmost importance.

The Bottom Line

One of the main issues facing cryptocurrency investors is resisting the temptation to buy into the hype. Analysts are still warning investors about the unpredictable and volatile character of cryptocurrencies. As with any other investment, you should do your homework if you have decided to invest in the cryptocurrency market.

To better assess whether this kind of investment opportunity is right for you, consider your reasons for being interested in this specific investment vehicle and enhance your knowledge of blockchain technology and cryptocurrencies.

Frequently Asked Questions

  1. What are cryptocurrencies?

    Virtual or digital currencies secured by cryptography are known as cryptocurrencies. You can hold cryptocurrency as an investment or use it to make online payments without using an intermediary like a bank.

  2. How does cryptocurrency work?

    Cryptocurrencies are different types of digital money typically built on blockchain technology. Thanks to blockchain technology, most cryptocurrencies may function as “trustless” means of transaction. It indicates that the transactions on a cryptocurrency's blockchain are not supervised by a single, centralised body.

  3. How should a beginner invest in cryptocurrency?

    If you're new and you plan to invest in cryptocurrency, think about doing the following:
    Make a tiny initial investment. Given the extreme volatility of cryptocurrency markets, start with a sum of money you can afford to lose.
    Do careful research: Discover the various cryptocurrencies, their applications, technological advancements, and room for expansion.
    Spread out your investment: Divide your investment among many cryptocurrencies to lower risk.
    Remain educated: Make wise selections and stay current on market trends and cryptocurrency news.
    Use trustworthy exchanges: For your transactions, pick trustworthy and well-known Bitcoin exchanges or platforms.
    Use robust security measures: Safeguard your accounts.

  4. How to Choose the Best Crypto to Invest in?

    As with any investment, it's critical to consider your objectives, investing horizon, and risk tolerance when selecting the best cryptocurrency. Furthermore, you should conduct thorough research to confirm the legitimacy and security of any cryptocurrency project you are considering.

    When assessing a cryptocurrency, investors should generally take the following into account:
    Market capitalisation
    Liquidity
    Security
    Use case

  5. How to Invest in cryptocurrency?

    You can purchase cryptocurrencies through cryptocurrency exchanges like CoinDCX, WazirX, or Coinswitch.

  6. What is cryptocurrency mining?

    Producing new currency on a blockchain, like Bitcoin, is known as crypto mining. The computers running these decentralised blockchain networks tackle challenging mathematical puzzles to earn bitcoins. These powerful computers vie with one another to find solutions to the issues, hoping to win the bitcoins that are up for grabs.

  7. Which is the best cryptocurrency trading app in India?

    Strong options trading capabilities designed specifically for Indian traders set Bybit apart.

  8. Who is the best broker for crypto trading in India?

    Because of its many features and widespread liquidity, Binance is often recognised as the best broker for cryptocurrency trading.

  9. What is the best cryptocurrency trading time in India?

    When the European and North American markets overlap, 5:30 PM to 8:30 PM IST is the best time to trade in India.

  10. In India, is cryptocurrency exchange legal?

    CoinDCX is recognised as a legitimate and utterly compliant cryptocurrency exchange in India.

  11. Which is India's largest cryptocurrency exchange?

    Regarding users and trading volume, Binance is India's most popular cryptocurrency exchange.

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