More people than ever are trying to invest in Bitcoin to potentially produce returns that outperform the market as a result of the recent exponential rise of the cryptocurrency industry. Read on to learn how to invest in bitcoin!
Currently, the price of Bitcoin is soaring. Since the beginning of 2021, it has had a sharp appreciation as a result of favorable developments. Nevertheless, many nations, like India, still do not recognise it as a legal tender. But investors are looking to invest in bitcoins as a kind of investment. This blog will discuss how one can invest in Bitcoin.
What is Bitcoin?
The earliest and most well-known cryptocurrency or digital currency in the world is called Bitcoin. It can be used as a store of value as well as a medium of exchange (money) (investment vehicle). Because no single entity owns the network, Bitcoin is a decentralised digital currency that cannot be manipulated or controlled by any person or organisation.
Why Should One Invest in Bitcoin?
A whole new asset class was created with the introduction of Bitcoin, the first fully operational and digitally native cryptocurrency ever. Cryptocurrencies like Bitcoin have made a name for themselves as a sound asset class in the decade since its launch. But what are the benefits for investors? Why is everyone trying to acquire a piece of this rare digitally encoded currency? Here’s why:
- High returns & top-performing asset
Bitcoin accounts for over 69% of the market for cryptocurrencies, one of the asset classes with the quickest rate of growth. The price of Bitcoin is quite erratic; on an hourly basis, it may move significantly up or down from the average price of the currency.
However, risk-averse investors and traders hoping for quick and substantial returns on their investments will benefit from this market volatility.
As an example, if you look at the price history of Bitcoins, you will see that in just ten years, its worth has increased from nothing to around 30 lakhs. It makes sense that more investors would want to own a portion of this asset.
- Alternative hedge to inflation
Inflation is the term used to describe the gradual rise in prices of goods and services across the whole economy. Money’s purchasing power is reduced. At first, Bitcoin was intended to be a deflationary asset. The finite supply and Bitcoin’s halving serve as deflationary triggers.
In the past, people invested in gold as an asset to guard against inflation. More individuals now consider Bitcoin to be an alternative asset than in the previous couple of years. To shield their finances from inflation, even institutional investors are changing their wealth to Bitcoin.
How Can We Invest In Bitcoins In India
Consider the following scenarios if you wanted to buy or sell Bitcoins in India:
1. Using a Crypto Exchange
A cryptocurrency exchange enables you to purchase and sell virtual currencies like Bitcoins, Ethereum, and others. Cryptocurrency exchanges, unlike the stock market, operate around the clock throughout the year and are self-regulatory.
Bitcoin fractional shares can also be purchased and sold through an exchange. The majority of exchanges in India have minimum capital requirements ranging from $100 to $500. For enabling these transactions, these exchangers might charge a modest fee.
2. P2P Exchange
Let’s say you don’t want to use a corporate platform or pay a transaction fee to complete your transactions. If so, you can select the P2P (person-to-person) method of payment. The cryptocurrency exchanges and platforms here just serve as intermediaries.
They assist you in completing the transaction by locating a vendor who is eager to accommodate your purchase. Although this approach appears more straightforward, it is uncommon to find a seller that matches their deal. Additionally, P2P transactions could take longer to execute.
3. Bitcoin Mining
Bitcoin can be obtained by mining. A block of transactions must be successfully added to the blockchain network for the miner to get the reward of new bitcoins, which are paid out every 10 minutes.
One miner adds a transaction to the blockchain once every ten minutes, earning bitcoin in the process. Mining is an activity that is not for everyone because it includes a high degree of intricacy and calls for specialised equipment.
Cryptocurrency exchanges are the simplest way to invest in bitcoins.
The simplest option for any individual investor to add a small amount of Bitcoin to their portfolio is to purchase them through an exchange. For their users, many exchanges in India enable Bitcoin transactions.
Simply register with the exchange of your choosing and finish the KYC procedure is all that is required. Your documentation, including PAN and Aadhaar card, will be verified as part of this procedure. To prevent the misuse of these currencies, the majority of exchanges have strong KYC policies in place.
Once you have created an account, you can deposit INR to your wallet and use that sum to order Bitcoin. Bitcoin can be purchased in India for as little as ₹100.
The legality of Bitcoins in India
The legality of Bitcoins and other cryptocurrencies in India is a subject of some debate. The Reserve Bank of India (RBI) put limitations on commercial banks’ ability to facilitate Bitcoin transactions in the nation in 2018. The industry was given a serious shock by this.
However, the supreme court disapproved of this RBI order in 2020. As a result, the cryptocurrency exchanges received a much-needed reprieve and were able to resume operations. One thing to keep in mind is that holding or using bitcoins for transactions was never forbidden in India.
How Can You Choose a Good Exchange?
A perfect cryptocurrency exchange will be user-friendly, adaptable, and straightforward, even though many platforms are very complex. Ensure ease of use while selecting your platform. the platform’s development team’s credentials should be verified. Above all, stay away from sites that do not have a KYC in place because they might not be particularly secure.
Although picking a safe and easy-to-use platform is essential to the security of your investment, you must also conduct research before making a crypto investment.
Conclusion – How Can We Invest In Bitcoins In India?
Although buying or selling Bitcoins is allowed in India, there aren’t many investors. Investors remain skeptical of the risks involved, and the government’s and RBI’s warning has only made matters worse for Indian Bitcoin exchanges.
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