How To Start Investing In Bitcoin In India?
With the increasing demand for bitcoin, there has been a surge in its prices too. Bitcoin has emerged as a new asset class offering good returns for retail investors upon their investment. A decade back, nobody would even think of buying bitcoin due to the difficulty involved in the investment. But today, the situation has taken a complete shift, and buying bitcoins has become very easy.
What Is A Bitcoin?
Bitcoin is a cryptocurrency and also a digital payment system. Unlike the usual currency, it does not have a physical form and is fully managed electronically. It is the world’s first decentralized digital currency, and no government or financial institution owns or controls bitcoin.
The price of bitcoin in India after converting 1 BTC to INR currently comes out to Rs. 40 lakhs.
How to Invest in Bitcoin in India?
There are mainly three ways of buying and selling bitcoins, which are:
1. Crypto Exchange
Much like a stock exchange where stocks are bought and sold, crypto exchange is a platform for buying and selling digital currencies like bitcoins, ethereum, ripple, etc. These crypto exchanges are self-regulated and operate 24*7 throughout the year. For these transactions, the exchange charges a small fee.
2. Person To Person Transactions
Unlike the other transactions, in person-to-person (P2P) transactions, the crypto exchanges merely work as facilitators. They help in finding a seller for the purchase and help in closing the transactions. For P2P transactions, there is no transaction fee involved. Though, it might be very difficult to find a seller matching the demand. And, hence P2P transactions require more time for completion.
3. Bitcoin Mining
Bitcoin mining is a way of earning bitcoin. Bitcoin mining does not take place in all systems; these require special systems operated just for mining tasks. The miner has to add a successful transaction block to the blockchain network. For this, the miners get rewarded with new bitcoins. Bitcoin mining is a very complex activity as it requires a high degree of difficulty with regard to task completion and a special system. Hence, it cannot be done by everyone.
What Is The Minimum Amount Required To Start Investing In Bitcoin?
The price of Bitcoin in India can vary according to market conditions and often may not be affordable to everyone, but a person can simply buy a part of the bitcoin. Coinswitch Kuber, a crypto minimum amount required to start the bitcoin investment is around Rs. 100 in India.
The Procedure To Buy Bitcoin in India
For buying bitcoin through an exchange, the investor has to create an account and complete the KYC (Know Your Customer) process, for which they have to get their Aadhar and PAN cards verified. The verification process takes around 2-3 days, after which they can start investing.
How To Store Bitcoins?
Bitcoins can be stored in two ways. Firstly, they can be stored in a USB-type device in physical form. Secondly, they can also be stored in bitcoin wallets. These wallets are made when an investor creates an account. The bitcoin wallet can be used to store and sell bitcoin.
Tax On Bitcoin Returns
The returns obtained through any investment are taxable. Therefore, the returns on Bitcoin are also taxable. The tax for short-term investments is up to 30%, and for long-term investments is up to 20%.
How To Select A Bitcoin Exchange To Invest In?
Before investing in bitcoin, the investor needs to be sure of the exchange through which they can store and trade bitcoins. Since their hard-earned money is at stake, various factors need to be considered while choosing the best suitable crypto exchange. Here are a few things to consider:
The platform provided by the exchange must be simple, fast, and convenient to use on all devices. It should be user-friendly so that trade can take place anywhere at any time. The platform must also allow for online withdrawal and deposit of money.
2. Enables Bitcoin Trading Pairs
Since bitcoin is available for trading on almost all platforms, one must also look for other cryptos as well so that they can invest in other cryptocurrencies or trade pairs as well.
3. Secure and safe
This is the most crucial factor to be considered since the exchange must have the highest security protocol to prevent hacking or theft.
4. Transaction Fees
These are the fees that the exchange charges for the bitcoin investment. Hence, the investor needs to choose a platform that provides these facilities at a reasonable charge.
Bitcoin investment is not very difficult, but it can be pretty risky due to constant fluctuations in prices. One can start with a small amount to understand the crypto market before increasing their investment amount.
Disclaimer: Anything expressed here directly or indirectly is not investment advice. We ask you to do your own research before investing.