Ethereum Investment In India: A Beginner's Guide

With the recent surge in cryptocurrency prices, investors in India are keen to invest in Ethereum. However, acquiring and storing cryptocurrencies in India can be complicated due to the legal grey area surrounding them. This makes it challenging to ensure official resellers. Despite these challenges, there are several ways to buy Ethereum in India, including via cryptocurrency exchanges such as Koinex and BitBay, or through platforms like Changelly/Shapeshift, Ether Rush, BuyUCoin, and EthexIndia.

Best Ethereum Exchanges in India

Ethereum is the second-largest cryptocurrency by market capitalisation, and it's possible to buy it in India. Here are some of the best exchanges to use:

WazirX

WazirX is India's largest cryptocurrency exchange, founded in 2018. It allows users to trade in hundreds of coins, including Ethereum, and buy crypto with INR. It has a web and mobile app and a low trading fee, which can be reduced by 50% if you own WRX or the WazirX coin.

CoinDCX

CoinDCX is one of India's leading crypto exchanges, also founded in 2018. It offers a simple user interface, a wide range of crypto assets, and reasonable trading fees. It takes around 10 minutes to sign up and purchase Ethereum.

CoinSwitch

CoinSwitch is another popular exchange for buying and selling cryptocurrencies in India. It's very secure and has a mobile app for Android and iOS. It offers a wide selection of cryptos and various payment methods. However, it may not be ideal for advanced traders.

Mudrex

Mudrex is an Indian government-recognised platform with 100% insured deposits stored in encrypted wallets. It has zero fees on crypto deposits and adheres to Indian and European regulatory standards.

BuyUcoin

BuyUcoin is a secure crypto exchange that allows users to buy Ethereum with INR. It offers robust security measures, a user-friendly interface, and 24/7 customer support.

How to Buy Ethereum in India

Ethereum is the second-largest cryptocurrency in the world by market cap. It is also the second-largest blockchain platform by market capital, wallet and daily volume of transactions. In India, it is possible to buy Ethereum through a cryptocurrency exchange or via a P2P (peer-to-peer) trade.

Step 1: Choose a Crypto Exchange

There are several crypto exchanges in India that allow users to buy and sell Ethereum. These include:

• WazirX
• CoinDCX
• CoinSwitch
• Mudrex
• BuyUcoin

Step 2: Sign Up and Complete KYC

To get started with any of the above platforms, you will need to sign up and complete the KYC (know-your-customer) process. This usually involves providing your Aadhaar, PAN, and bank details.

Step 3: Fund Your Account

Once your account is set up, you can deposit money from your bank account to your crypto wallet. Different platforms support different payment methods, including bank transfers, wire transfers, debit and credit cards, net banking, NEFT, and UPI.

Step 4: Buy Ethereum

After your account is funded, you can buy Ethereum. The minimum investment amount varies by platform. With WazirX, CoinDCX, and BuyUcoin, you can start investing with as little as 100 INR. On CoinSwitch, you can invest as little as 100 INR per month through a Systematic Investment Plan (SIP).

Step 5: Store Your Ethereum

Once you have purchased Ethereum, you can store it in a digital wallet. Some platforms, like WazirX, offer in-built crypto wallets. Alternatively, you can transfer your Ethereum to a third-party hot or cold wallet.

Ethereum's Volatility

Ethereum is a volatile investment option. Its price can vary substantially over short periods, making it a risky asset to hold. Ethereum's volatility is largely due to its young age, market liquidity, and the unregulated nature of decentralised finance.

Ethereum's price history illustrates its extreme volatility. In May 2021, it reached a high of $3,911 per coin, only to lose almost half its value in a month. In July 2024, it hit a record high of $3,893.39 but adjusted downwards soon after. Ethereum's price can be influenced by various factors, including technological upgrades, regulatory shifts, market competition, and investor confidence.

Technological upgrades, such as the Cancun-Deneb (Dencun) upgrade in March 2024, can positively impact the price. This upgrade introduced the features of danksharding and proto-danksharding, improving the network's capacity and reducing transaction fees, leading to increased demand and a potential price surge.

However, Ethereum's price can also be negatively affected by regulatory shifts. Bans or restrictions on crypto trading can reduce demand and prices. For example, the Dencun upgrade was expected to boost Ethereum's price, but it declined by around 4%.

The unregulated nature and decentralised architecture of Ethereum and its independence from centralised financial systems can also contribute to market fluctuations.

To manage the risks associated with Ethereum's volatility, investors should consider their risk tolerance and ensure their investment portfolios are diverse and stable. It is recommended that investors only allocate a portion of their investments to Ethereum and other cryptocurrencies due to the high level of risk involved.

How to Store Your Ethereum

Once you've purchased Ethereum, you'll need to store your cryptocurrency. While some platforms will store it for you, others allow you to store your investments to reduce the likelihood of losing your crypto to a hack. However, it's worth noting that most major exchanges insure their clients' holdings and often store most of their assets offline to prevent massive theft. Historically, exchanges that have been hacked have reimbursed any losses.

If you want peace of mind, you can choose to move your Ethereum to a third-party wallet. There are two types:

• Hot Wallet: This is connected to the internet and can be accessed from a computer or smartphone. They are usually provided by cryptocurrency exchange platforms at no additional cost, but you can also use your own. However, they are at a higher risk of security breaches because they are connected to the internet.
• Cold Wallet: Cold wallets are external devices that are completely disconnected from the internet. They are safer and more expensive than hot wallets, ranging from INR 1,500 to INR 39,000, with even more costly versions available. While less convenient, they may be a better option if you own a significant amount of Ethereum or other cryptocurrencies.

Is Ethereum a Good Investment?

Ethereum is the second-largest cryptocurrency in the world in terms of market capitalisation. It is also one of the most talked-about crypto coins and is a favourite of many crypto investors.

Ethereum's Performance

Ethereum has had some impressive returns in the past. For example, if you invested $1,000 in Ethereum in August 2015, your investment would have been worth $2.23 million almost six years later.

However, it has also had some significant crashes. For instance, in May 2021, the value of Ethereum was almost $3,911 per coin, but this dropped to less than $1,981 just a month later.

As of July 2024, Ethereum was trading at $3,181, with a market capitalisation of $380.51 billion. Its all-time high was $4,891 three years ago.

Ethereum's Future

Many experts believe that Ethereum has a stable future and will continue to grow in the coming years. It is widely recognised outside the crypto community for its advanced features and innovative blockchain solutions.

Ethereum has a unique model compared to other cryptocurrencies. It functions as an open-source blockchain with smart contract functionality, primarily applied in decentralised finance (DeFi). Ethereum is also used for non-fungible tokens (NFTs) and decentralised apps or Dapps.

Several compelling factors have positioned Ethereum at the forefront of the cryptocurrency landscape, including its comprehensive market strategy, unique model, scalability solutions, and leadership in various decentralised applications.

According to Cryptonewsz, by the end of 2024, Ethereum will be worth $4,000. By 2025, it is expected to reach a maximum level of $4,097, with an average of $3,108. By 2030, it is predicted that it may reach a maximum of $20,643.

Things to Consider Before Investing in Ethereum

Before investing in Ethereum, it is important to consider your risk tolerance and the diversity and stability of your investment portfolio. Cryptocurrencies are extremely volatile and vulnerable to price fluctuations.

It is also essential to do your research and ensure your finances are in good shape before investing in volatile assets like Ethereum. Ideally, you should have a large emergency fund, minimal debt, and diversified investments so that only a portion of your portfolio is in cryptocurrencies.

Additionally, when choosing a crypto exchange, make sure it offers a crypto wallet to store your investments, or you will need to get one of your own.

Where to Buy Ethereum in India

• CoinDCX
• CoinSwitch
• Mudrex
• WazirX
• BuyUcoin

Frequently asked questions