Cryptocurrency Investment In India: Getting Started

Investing in cryptocurrency is a hot topic in India, with millions of investors embracing it. However, it's important to remember that cryptocurrency trading is largely unregulated in the country, and it's considered a risky and volatile investment choice. Before investing, individuals should educate themselves on this asset class and understand the risks involved. If you're new to the crypto world and want to know how to invest in cryptocurrency in India, here are some key steps to get you started:

1. Choose a Broker or Crypto Exchange: Select a reputable cryptocurrency exchange that operates in India, such as Mudrex, WazirX, CoinDCX, or ZebPay. These platforms offer various crypto coins, including Bitcoin, Ethereum, and Dogecoin.

2. Create and Verify Your Account: Sign up and complete the Know Your Customer (KYC) verification process to ensure the security of your transactions. You may need to submit documents like your Aadhaar Card and PAN card.

3. Deposit Funds: Add money to your exchange wallet using payment methods such as NEFT, IMPS, net banking, or debit/credit cards.

4. Place Your Cryptocurrency Order: Decide which cryptocurrency you want to purchase and place your order. You can buy a fraction of a crypto coin if you don't want to invest in an entire coin.

5. Select a Storage Method: Choose between a hot wallet (connected to the internet) or a cold wallet (offline) to store your cryptocurrencies securely.

6. Secure Your Crypto Wallet: Use a VPN and data encryption to ensure the security and anonymity of your online transactions.

7. Hold or Sell: Remember that cryptocurrencies are a long-term investment. You can hold them or sell them on the same crypto exchange when you're ready to cash out.

Choose a broker or crypto exchange

When choosing a broker or crypto exchange in India, it is important to remember that cryptocurrency trading is largely unregulated in the country. Therefore, it is crucial to conduct thorough research and proceed with caution. Here are some detailed guidelines to help you select a suitable broker or crypto exchange:

Understand the Differences

Firstly, it is important to understand the difference between a broker and a crypto exchange. A broker acts as an intermediary, facilitating the purchase and sale of cryptocurrencies. They often provide an easy-to-use platform and may offer additional services such as leveraging, which allows traders to borrow funds to increase their position. However, brokers typically charge fees and commissions for their services. On the other hand, a crypto exchange is a platform that brings buyers and sellers together to trade cryptocurrencies directly. Exchanges often have lower fees but tend to have more complex interfaces that may be intimidating for beginners.

Research and Compare Options

Before selecting a broker or exchange, it is essential to research and compare multiple options. Here are some key factors to consider:

• Reputation and Security: Opt for well-known and reputable platforms that prioritize security. Look for features such as two-factor authentication, cold storage of funds, insurance against theft, and bug bounty programs.
• Trading Options and Fees: Evaluate the range of trading options available, such as margin trading, staking, and futures trading. Compare the fee structures, including deposit, trading, and withdrawal charges, as these can significantly impact your profits.
• User Interface and Experience: Choose a platform that offers a user-friendly interface, especially if you are a beginner. Consider the ease of use, responsiveness, and overall user experience.
• Cryptocurrency Selection: Decide on the cryptocurrencies you wish to invest in and ensure that the platform offers those options. Some exchanges provide a wide range of cryptocurrencies, while others specialize in a few select coins.
• Additional Features: Some platforms offer extra features like staking, margin trading, crypto savings accounts, or educational resources. Consider whether these align with your investment strategy and needs.
• Liquidity: Opt for exchanges with high liquidity, as this ensures faster trade execution and is particularly important during volatile market conditions.
• Customer Support: Look for responsive and reliable customer support to assist you with any issues or queries you may have.

Popular Options in India

• WazirX: WazirX is one of India's largest exchanges, offering a user-friendly interface and a wide selection of trading pairs. It has a flat fee of 0.2% on all transactions and a generous referral program.
• CoinDCX: CoinDCX is known for its easy-to-use interface and low fees of 0.2% on spot trades. It also offers a referral program and responsive customer support.
• Unocoin: Unocoin is India's oldest crypto exchange, offering low fees of 0.5% on most transactions and high security, with 95% of funds stored offline. It provides 'cryptocurrency baskets' based on your risk tolerance.
• ZebPay: ZebPay is a mobile-only exchange founded in India, now headquartered in Singapore. It supports 150+ crypto assets and offers low fees, with no charges on deposits, withdrawals, and crypto-to-crypto trades. ZebPay also supports lending and borrowing features.
• Mudrex: Mudrex is a top-rated crypto investing app in India, offering a simple and fast investment process. It provides strong security features and a wide variety of coins to trade. Mudrex also offers "Coin Sets," which are expert-curated, theme-based crypto baskets for diversified investing.

Remember to conduct your own due diligence and carefully review the features, fees, security measures, and user experiences of each platform before making a decision.

Create and verify your account

Once you have chosen a cryptocurrency broker or exchange, you can create and verify your account. This is a crucial step to prevent fraud and meet regulatory requirements. The process is simple and can be completed in a few minutes. Here is a step-by-step guide:

Step 1: Sign Up

To begin, visit the website of your chosen cryptocurrency exchange, such as WazirX, and click on the "Sign Up" button. You will be asked to enter your personal details, including your first name, last name, date of birth, nationality, and email address. Create a strong password by mixing uppercase letters, numbers, and symbols. You may also be asked to enter a referral code, agree to the terms of use, and verify that you are not a robot.

Step 2: Verify Your Email

After creating your account, check your email inbox for a confirmation email. Click on the link in the email to verify your email address. If you don't receive the email, you can request to resend the confirmation email or OTP (One-Time Password).

Step 3: Verify Your Phone Number

Enter your phone number and wait for a code to be sent to your device. Enter the code to verify your phone number.

Step 4: Provide Personal Information

You will be redirected to a page where you need to enter your personal information, such as your full name, date of birth, and address. Ensure that the information matches the documents you will submit for identification.

Step 5: ID Verification

Choose your issuing country or region and select the type of ID you will be submitting. Typically, a driver's license, passport, or government-issued ID card is accepted. Take a clear photo of the selected document and submit it.

Step 6: Face Verification

Some platforms may require a selfie to prove that your appearance matches the documents submitted. Click on the "Start" button, and take a clear selfie.

After submitting all the required information and documents, the platform will review and verify your account. You will be notified via email once your account has been successfully verified. This process may take a few minutes to a few days, depending on the platform.

It is important to note that the specific steps and requirements may vary slightly between different cryptocurrency exchanges or brokers. Always review and follow the instructions provided by your chosen platform to ensure a smooth account creation and verification process.

Deposit cash to invest

Depositing Cash to Invest in Cryptocurrency in India

Depositing cash to invest in cryptocurrency in India can be done through a crypto exchange or a third-party broker. Here is a step-by-step guide on how to deposit cash for investing in cryptocurrency:

• Choose a Crypto Exchange or Broker: Select a reputable and secure crypto exchange or broker that operates in India, such as WazirX, CoinDCX, ZebPay, or Mudrex. These platforms allow you to buy and sell cryptocurrencies.
• Create and Verify Your Account: Sign up for an account on your chosen platform. You may need to provide personal information and complete a Know Your Customer (KYC) process, and verify your identity by submitting documents like your Aadhaar Card and PAN card.
• Deposit Cash into Your Account: To buy cryptocurrency, you need to deposit funds into your account. You can do this by linking your bank account or using a debit card. Some platforms may also support other payment methods such as RTGS, NEFT, or credit cards.
• Place Your Cryptocurrency Order: Once you have deposited funds into your account, you can place your first cryptocurrency order. Decide which cryptocurrency you want to purchase, such as Bitcoin or Ethereum, and enter the amount you wish to buy.
• Understand the Fees and Taxes: When depositing and investing cash in cryptocurrency, be mindful of the fees and taxes involved. Crypto exchanges and brokers may charge transaction fees for deposits, trades, and withdrawals. Additionally, any profits from crypto transactions in India are subject to income tax, including a 30% tax on profits and a 1% Tax Deducted at Source (TDS).

By following these steps, you can deposit cash to invest in cryptocurrency in India. Remember to do your research, understand the risks, and stay informed about market trends and regulations.

Place your cryptocurrency order

Once you have chosen a crypto exchange, you will need to fund your account before you can start investing in Bitcoin or any other cryptocurrency. Depending on the exchange, you can fund your account through bank transfers, net banking, Mobikwik, a cryptocurrency wallet, or UPI.

For example, CoinDCX doesn't charge a fee if you use UPI and bank transfers, but it does charge 0.5% on net banking. On the other hand, the trading fee on WazirX depends on your trading volume in INR pairs over the last 30 days and your current WRX holdings.

Electronic transfers from a bank account tend to make more sense than other methods because fees reduce the amount of money you can invest.

Once your account is funded, you can place your first order to buy cryptocurrency. Depending on the platform you're using, you may be able to purchase it by tapping a button, or you may have to enter the cryptocurrency's ticker symbol. You will then have to input the amount you want to invest.

When the transaction is complete, you will own a portion of the cryptocurrency. For example, buying a single Bitcoin now requires a significant upfront investment. If you invested less, you would get a percentage of a Bitcoin.

Select a storage method

There are two main types of crypto wallets: hot wallets and cold wallets. Hot wallets are connected to the internet and allow users to send and receive tokens, facilitating basic transactions. However, they are more prone to cyberattacks and thefts. Cold wallets, on the other hand, are offline and considered more secure. They store the user's address and private keys and can be in the form of hardware wallets or paper wallets.

Hot Wallets:

• Web wallets: These are online services that can be accessed through web browsers. Examples include Coinbase and MetaChain.
• Desktop wallets: This software is installed on a laptop or desktop and provides full control over the wallet and key. Examples include Exodus, Bitcoin Core, and Armory.
• Mobile wallets: These work like desktop wallets but are downloaded as apps on mobile devices. Examples include Mycelium and Bitcoin Wallet.

Cold Wallets:

• Hardware wallets: These are physical devices, such as USB drives, that store users' public and private keys. Examples include Trezor and Ledger Nano S.
• Paper wallets: These are physical documents that contain keys and QR codes to facilitate crypto transactions.

When selecting a storage method, it is important to consider the level of security, convenience, and accessibility that best suits your needs. It is also recommended to store only a small portion of your crypto holdings in hot wallets, keeping the rest in cold storage. Additionally, ensure that you regularly update security measures such as two-factor authentication to protect your crypto assets.

Frequently asked questions