The cryptocurrency movement has reached India as well, with an increasing number of Indians looking to invest in digital currencies like Bitcoin and Ethereum.
While these are exciting opportunities to make money, it’s also important to do your research and be aware of the risks involved before taking the plunge. If you’re thinking about investing in cryptocurrency in India, here are some things you should consider first.
What is cryptocurrency?
Before you consider investing, it’s important to understand what cryptocurrency is. (Think Bitcoin.) It’s a digital or virtual currency that uses cryptography for security. It is not tied to a bank or government and allows users to spend money anonymously.
The money supply is pre-determined when the network launches and no more cryptocurrency will be created, thus making cryptocurrency a deflationary currency. This means that units of currency will become more valuable over time because there’s a finite amount of it available — unlike fiat currencies where central banks can issue an unlimited amount of dollars or euros, etc.
The price of cryptocurrency is determined by supply and demand. If more people want to buy a cryptocurrency than sell it, then its price will rise. On the other hand, if more people want to sell it than buy it, then its price will fall. To reiterate: supply and demand are important factors that affect a cryptocurrency’s market value. Not all cryptocurrencies are created equal.
Risk in cryptocurrency?
With its high volatility, cryptocurrency is a risky investment. It’s prone to wild price swings and is still new enough that it’s hard for most investors to trust. This makes it more complicated than an index fund or traditional investment, where you could buy a share of something tangible like gold, real estate, or even technology stocks.
With cryptocurrencies such as Bitcoin (BTC), Litecoin (LTC), and Ethereum (ETH), there’s no underlying product being invested in at all. That means you’re investing entirely based on value predictions about where those currencies will be worth down the road.
What are exchanges?
Exchanges are online platforms where you can buy, sell and trade cryptocurrencies. Before investing, you should research which exchanges exist and decide which one is right for you.
Some exchanges allow you to trade fiat currencies such as dollars or pounds for cryptocurrencies such as Bitcoin or Ether; others allow you to exchange one cryptocurrency for another. In order to use an exchange, you must have an account with that particular platform.
How to invest in cryptocurrency
In order to invest in cryptocurrency, you need a wallet that supports it. You can then exchange it for a fiat currency (like INR) through cryptocurrency exchanges like Zebpay, Koinex, and Unocoin.
Once you’ve bought your desired amount of cryptocurrency from these exchanges, it is recommended that you move your funds to cold storage wallets like Ledger Nano S or Trezor where they are more secure.
This will help keep your money safe from any potential hacks! If you are investing through apps like Binance, IDEX, or Changelly, then there’s no need for you to move your coins around since all transactions are handled by them.
If you’re looking for a new way to get into cryptocurrency, we recommend starting with Coinbase. This app makes it easy for those new to cryptocurrency investing by letting you buy and sell Bitcoin with ease.
The whole process is similar to online banking and only takes a few minutes once you have all your details ready! If you plan on storing your coins for longer periods of time, make sure that you move them into a cold storage wallet (like Ledger Nano S or Trezor) as soon as possible.
You can also look at Binance and IDEX which let you trade cryptocurrencies without moving them around from their base exchange wallet. Alternatively, if trading is more your thing, take a look at Changelly where you can buy altcoins using just a credit card!
Where do I start?
If you want to invest in cryptocurrency, but don’t know where to start, there are lots of articles and resources out there that can help. If you just want a broad overview of what’s available, sites like CryptoCompare have great information.
For more direct investment options, Coin Market Cap is probably your best bet. There’s a lot of moving parts with cryptocurrencies so it helps to know who and where you should go for answers.