Investing your money in something as volatile as cryptocurrency can be risky but if done well, understanding every concept clearly, it can be equally rewarding as well. The biggest cryptocurrency that exists at the moment is Bitcoin whose value reached $ 1 in 2011, 2 years after it was introduced to the world. Today, the value of one Bitcoin is $ 47,000 which tells you how profiting investment in Bitcoin or other cryptocurrencies might be. However, since this whole area is new unlike stock market or mutual fund or real estate, we have a lot of confusion on how to invest in cryptocurrency. In this complete guide, we will clear your confusion by telling you how to start cryptocurrency or bitcoin trading in India.
But before we go any further, we would like to introduce you to our Beginners guide : What is cryptocurrency? How does it work? Is it safe to invest in?
We’d suggest you to read this blog to grasp the entire concept of cryptocurrencies before you start the trading.
How to decide which cryptocurrency?
Now that you’ve understood the entire concept of how cryptocurrency works and how risky and rewarding both it is, it is time to know how can you invest your funds in cryptocurrency if you’re an Indian citizen.
First of all, you need to decide which cryptocurrency to invest in because there is a massive number of cryptocurrency circulating in the market out of which Bitcoin, Ethereum and Bodhi are some popular examples. The experts suggest that other than the current value of these coins, you should also look at the Market Cap and the volume of a particular cryptocurrency before investing in it. The greater they are, the better it is for you to invest in them.
To figure out the Market value, Market Cap and volume of each cryptocurrency, we advice you to go to www.coinmarketcap.com where you can compare all these values and make your mind on investing in cryptocurrency. You can get real time data on this website and it basically filters out and ranks the cryptocurrencies for you to help you make out your mind.
How to buy cryptocurrency after making the decision?
Now after deciding which cryptocurrency would suit your requirements best, you have two options to choose from when it comes to deciding the best and the easiest method for you to purchase cryptocurrency – A) Exchange and B) Peer to peer model.
Exchange is easily the most convenient way to purchase cryptocurrencies. It lets you buy cryptocurrency of your choice without involving any other person unlike P2P model. All you need to do here is sign up, verify your documents under KYC program which may even take up to one week depending on the exchange you choose, add funds (using different modes of payments) and then using that fund, buy your desired amount of cryptocurrency.
In India, WazirX is the highest rated exchange at the moment. It was launched in 2018 and is backed by a global exchange like Binance. It gives people 120 Cryptocurrency options to choose from at the lowest trading fee in India. There are other exchanges like Bitbns, CoinDCX and ZebPay as well which provide the same service of buying and trading cryptocurrency in India.
Peer to peer model
Peer to peer model involves buying cryptocurrency from someone who already owns it. Here all you have to do is to find a person who has, for say Bitcoins or any coin you are interested in buying and then buy it from the person itself. The sellers set their own rates to sell the cryptocurrency and upon agreement, you can purchase the cryptocurrency of your desired amount. The best platform to access people for P2P model purchase is www.localbitcoins.com but here you only get to buy bitcoins and not any other cryptocurrency. Although the platform is very secure, scam free and gives you lots of methods of payments at a meagre 0.5% service charge on every transaction.
Apart from Local Bitcoins, one can also check Binance, LocalCoinSwap , Remitano, Paxful and WazirX to access P2P model purchase.
How to store cryptocurrency?
The best thing about buying cryptocurrency, particularly bitcoin is that it can be divided into million fragments and you can purchase your fraction instead of buying it for a whole. For example, if you have only $ 450 to invest in bitcoin, you can buy 1/100th part of the bitcoin if the value of one bitcoin at your time of purchase is $ 45,000. Same procedure is followed in the purchase of other cryptocurrencies as well.
Now when you buy a cryptocurrency, you won’t instantly sell it unless you’re buying it for a short term. You need to store it somewhere safe so that you can use it in future. Since it is a virtual currency, there are lots of digital wallets made for you to store your cryptocurrency in them.
The most convenient way to store cryptocurrency is to use the wallet the exchange offers you. In case of short-term investments, it might be easier and simpler to hold your coins on the exchange you purchased them through. Some exchanges let you borrow some cryptocurrency for trading purpose if you store the cryptocurrency you already bought on their exchange into their wallet as collateral. However, exchange wallets are not immune to cyber hacking and there have been incidents when customers have lost bitcoins from their wallets which is why it is important to choose the safest along with the most convenient exchange to buy and store your cryptocurrency into their wallet.
The alternative to exchange wallets are the other wallets such as paper wallets, hardware wallets or software wallets which give you the same service of storing your cryptocurrency but considered as a more secure option if you want to store your bitcoin for a longer period. Although among these three, software wallets are a bit susceptible to cyber attacks since they are connected to internet and are more user friendly. Software wallets allow storing your cryptocurrency in a mobile wallet which is extremely convenient.
How to sell cryptocurrency?
You can sell your cryptocurrency using the same two methods you had bought them by. One is to go on your local exchange, sell the cryptocurrency and receive the money in your currency and the other one is to sell using Peer to peer method where sellers set their own price and the whole deal is made upon agreements.