We as a human being has evolved so much in terms of the money we use, who would have thought the cowry shell used as money in China during the early 1200 BCE would turn into a digital currency with a market value of US $70 billion, and featuring the face of a Shiba Inu Dog in 2021.
Elon Musk has already said that “Paper money is going away!”, With the recent rise of cryptocurrencies like Ethereum and Dogecoin, his words seem now as Thanos would have said inevitable. Dogecoin, a joke currency has already increased 22000% in the past year and people have been going totally gaga over it, calling it the “Musk-Effect”.
Now, before we introduce you to this guide we want to clear the frequently asked question and the biggest speculation over Cryptocurrencies in India.
Are cryptocurrencies in India, Legal?
No, it is not illegal. In 2018, RBI issued a circular stating cryptocurrency can’t be used to buy anything in India.
Further, the Finance Ministry released a statement on cryptocurrencies where They said that they are taking measures to eradicate the use of crypto in financing illegal activities: a great step towards a healthy crypto ecosystem.
[Source: Economic Times]
It nowhere mentioned that buying, selling or holding cryptocurrencies were prohibited. You cannot buy or sell anything with cryptos in India, but you definitely can invest in it. But, of course, at your own risk!
STEPS TO INVEST IN CRYPTOCURRENCIES
1. Know What Cryptocurrency is:
Cryptocurrency is a type of digital currency that uses computerized files as money. These files are secured by a method called cryptography(the science of hiding something in codes). It is based on blockchain technology which ensures the decentralization of control. Because of decentralization, cryptocurrencies cannot be controlled by any machine, person, or government.
Now the question arises,
Why should anyone invest in Cryptocurrencies?
There are so many reasons why you should invest, it is the security crypto holds, the reliability and the long term value it possesses. Most Cryptocurrencies have limited supplies, they are capped by mathematical algorithms, they are not like other fiat money which can be controlled by any political body or banks, cryptos simply cannot be diluted by anyone or at any time.
In fact, the property that it cannot be influenced by any inflationary events, bank failures, frauds or other disaster scenarios makes it one of the most reliable currency present in the market often referred to as digital gold.
2. Know your Currency
The first thing you should do is research. Try to know the cryptocurrency you are thinking to invest in. Read about the performance and probable usage of the crypto. What makes that crypto stand out in front of others. In the crypto market, a swing of 20–25% is considered a normal trend, you should know what was the all-time highs and lows, the news and speculation regarding the crypto. Speculation is one thing, that drives the market most. Bitcoin dropped by 10%, just after a tweet from Elon Musk regarding Bitcoin mining-related environmental concern.
Things to know about Currency.
1. Price Swings.
2. Market Trends
3. Future usage.
4. Safety and Security.
5. News and Speculation.
3. Know the Risk Involved.
The crypto market is one of the most volatile money markets right now.
On average, a fixed deposit at an Indian bank will give you a return of 5% yearly, whereas investing in the Top 50 publicly-traded company would have brought you at least 15–20% return.
On the other hand, crypto’s face a daily swing of -20% to +20% every day, if you’d have invested in the Top 10 cryptocurrencies based on their market cap, they would have brought you a return of at least 400% since 2020.
4. Decide the type of Investment
Decide what kind of investment you are planning, are you seeing your crypto holding as a long term investment, or you are planning to do intraday trading.
A strong strategy is very important and necessary for your holding if you want to earn more. Crypto’s volatility is a major positive and a great negative at the same time. You can see yourself lose 40% of your investment on a Friday night, and by Saturday morning, your returns might come back in the green zone with 30% returns, Crypto volatility is a scary factor for many people and could make you execute rash decisions, producing negative results at the end.
Your strategy for your crypto investment should be clear, investing your life savings is definitely not recommended, but then there are people who bought Ethereum worth Rs. 10,000 in 2020, and its value is worth more than Rs. 3,00,000 in May 2021.
5. Download Application
Now, the last execution part. After your proper analysis, planning and strategy. Choose a Crypto Exchange Platform, based on its features and transaction charges.
Things that will be required in starting your Crypto account.
A. Aadhaar Card Number
B. PAN Card Number
C. Selfie Picture with your Aadhaar Card
D. Bank Account Details
E. Voilà! You are done with your Crypto Exchange account creation.
Note: The requirements may vary for each application and the online KYC process could take up to 4–6 hours.