How Indians Can Invest In Bitcoin

Bitcoin is a decentralised digital currency that can be bought, sold, and traded without using intermediaries like banks. It is built on blockchain technology, a distributed digital ledger. Bitcoin is widely regarded as the first cryptocurrency, having been launched in 2009 by the mysterious Satoshi Nakamoto.

In this article, we will explore the process of investing in Bitcoin from India, including the legal status, where to buy Bitcoin, and the minimum investment amount.

How to buy Bitcoin in India legally

Overview

Bitcoin is a decentralised digital currency that can be bought, traded, and exchanged without an intermediary like a bank. It is built on blockchain technology, a distributed digital ledger. Bitcoin was launched in 2009 and is widely regarded as the first cryptocurrency.

• Submit essential documents: Investors need to submit important documents such as an Aadhaar Card and PAN Card.
• Complete the KYC process: After submitting the documents, investors should complete the Know Your Customer (KYC) process.
• Place an order on a cryptocurrency exchange: To buy Bitcoins in India, investors are required to place an order on a cryptocurrency exchange.
• Transfer the amount: After placing the order, investors can transfer the amount from their bank accounts to the crypto exchange. Various payment methods can be used, including bank transfers, NEFT, RTGS, debit or credit cards, and other digital payment methods.
• Store Bitcoins in a cryptocurrency wallet: Investors can then store their purchased Bitcoins in the cryptocurrency wallets provided by the crypto exchange.

Where to buy Bitcoin in India

When it comes to purchasing Bitcoin in India, investors can consider using platforms like Coinbase, Coindesk, ZebPay, or WazirX. These digital exchanges allow investors to purchase Bitcoins at the current market price and often have downloadable mobile applications.

Things to consider before buying Bitcoins in India

• Gain insight into the global and Indian crypto capital markets and conduct comprehensive research.
• Track the movement of prices of digital coins and the share of Bitcoin in the market via different online platforms.
• Remember that Bitcoin is a relatively new instrument in the Indian market, so it is highly volatile. The RBI has not made it legal, so there is always a risk of losing capital.

Payment options for buying Bitcoin in India

There are several payment options for buying Bitcoin in India. These include:

• Debit/Credit Card — This is the easiest option for new users. You can buy Bitcoin with a debit or credit card on platforms like Binance.
• Google Pay/Apple Pay — You can also use Google Pay or Apple Pay to buy Bitcoin on Binance.
• Third-Party Payment Channels — There are multiple third-party payment channels available, such as RTGS, NEFT, and other digital payment methods used for routine transactions.
• Bank Transfer — You can transfer funds from your bank account to the crypto exchange to purchase Bitcoin.
• UPI — Unified Payments Interface (UPI) is a popular payment method in India that allows users to transfer funds easily.
• Cryptocurrency Wallets — You can also use other cryptocurrencies such as Ether (ETH), Polkadot's DOT, or Cardano (ADA) to purchase Bitcoin.

It is important to note that each platform may have different payment options available, and some may charge higher transaction fees for specific funding options. Therefore, it is essential to review the available payment methods and associated fees before choosing an exchange to buy Bitcoin in India.

Bitcoin storage options

As bitcoin is a digital asset, it can be challenging to store it safely. There are various options for storing bitcoin, each with its own advantages and disadvantages. Here are some of the most common storage options:

• Cold wallets: Cold wallets, or offline wallets, store your private wallet keys offline on a clean, newly-installed air-gapped computer. Cold wallets are considered one of the safest options for storing bitcoin as they are not connected to the internet and are therefore not vulnerable to online threats such as hacking or malware. Cold wallets can be in the form of hardware wallets, paper wallets, or even just a piece of paper with your private keys written on it.
• Hot wallets: Hot wallets, or online wallets, are connected to the internet and allow you to access and spend your bitcoin easily. Examples include mobile wallets, desktop wallets, and web-based wallets. While hot wallets are convenient, they are also more vulnerable to hacking and theft.
• Hardware wallets: Hardware wallets are physical devices, similar to a USB drive, that store your private keys. They are designed to be resistant to physical and digital attacks and are considered one of the safest options for storing bitcoin. However, they can be expensive and may not be as convenient to carry around as a hot wallet.
• Paper wallets: Paper wallets are physical copies or print-outs of your public and private keys. While they are a cold storage option, they are considered risky and outdated as they are susceptible to theft or damage.
• Multi-signature wallets: Multi-signature wallets require multiple private keys from different devices or individuals to access the bitcoin. This adds an extra layer of security and is useful for businesses, family offices, and decentralized organizations.
• Blockchain wallet: A blockchain wallet is used to store Bitcoins. Alongside storing currency, a blockchain crypto wallet stores keys for enabling transactions, encrypting, and signing information, all of which ensure the safety of funds.

It is important to note that no storage method is completely secure, and there is always a risk of losing your bitcoin due to theft, computer failure, loss of access keys, or other reasons. It is recommended to use a combination of hot and cold wallets, with the majority of your funds stored in a cold wallet for added security. Additionally, it is crucial to backup your wallet and private keys regularly and enable two-factor authentication (2FA) for added protection.

Bitcoin's legal status in India

India's stance on cryptocurrencies has been a subject of debate since their introduction. Cryptocurrencies are not regulated by any central authority in India as a payment medium, and there are no rules, regulations, or guidelines for settling disputes while dealing with them. As a result, trading in cryptocurrency is done at investors' risk.

The Reserve Bank of India (RBI) has not made Bitcoin legal, and there is no specific ban on it in India. It is unregulated, but the government has imposed taxes on virtual assets. In the Union Budget of 2022, the government imposed a 30% tax and a 1% TDS on gains from virtual digital assets or cryptocurrencies.

The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, was introduced in the Lok Sabha by the government to regulate the thriving cryptocurrency market in India. The bill seeks a favourable structure for creating the official digital currency issued by the RBI. It also prohibits all other private cryptocurrencies, with certain exceptions, to boost cryptocurrency's underlying technology. The bill is still in process and might take a while to be open for consultation.

The Indian government is working on a framework to regulate crypto in India and address the associated risks and concerns. Individuals can trade and hold digital assets, but these are not recognised as legal tender, precluding their use for everyday transactions within the country.

Bitcoin investment minimums in India

India currently does not have a defined minimum amount required to buy Bitcoin. However, investors can buy small units of Bitcoin if they do not want to purchase an entire cryptocurrency. In India, investors can buy Bitcoin in Indian Rupees with a minimum capital of Rs.100. This limit may vary between different crypto exchanges.

There are several ways to buy Bitcoin in India. One of the easiest ways is to use a centralized exchange such as Binance, which offers many options for buying several cryptocurrencies, including Bitcoin, with low fees and high security. To use Binance, you will need to create an account and verify your identification. You can then navigate to the "Buy Crypto" link and choose from the available options to buy Bitcoin in your country. You can purchase Bitcoin with a debit or credit card, Google Pay, Apple Pay, or via third-party payment channels.

Other digital platforms that allow investors to purchase Bitcoin at the current market price include Coindesk, ZebPay, or Coinbase. These platforms also offer downloadable mobile applications compatible with Android and iOS devices, allowing investors to link their bank accounts to their smartphones for instant transactions and transfers.

Before investing in Bitcoin in India, it is important to note that it is not considered legal tender in the country. Additionally, the Reserve Bank of India (RBI) has not made it legal, and there are no rules, regulations, or guidelines for settling disputes when dealing with cryptocurrency. Therefore, trading in cryptocurrency is done at the investor's risk.

Frequently asked questions