Investing In Bitcoin India: How Much Is Enough?

Bitcoin is the oldest and largest cryptocurrency in the world, in terms of market capitalisation. It is also the first digital currency to leverage peer-to-peer technology to facilitate real-time payments. While it is not considered legal tender in India, investing in Bitcoin is legal in the country. In this article, we will discuss how much one should invest in Bitcoin in India.

How to buy Bitcoin in India

Bitcoin is the most coveted cryptocurrency in the world and the top cryptocurrency in India, with 75% ownership. Here is a step-by-step guide to buying Bitcoin in India.

Step 1: Find a Reputed Cryptocurrency Exchange

Firstly, you need to find a cryptocurrency exchange operating in India, such as ZebPay, Binance, CoinDCX, CoinSwitch, Mudrex, or WazirX. These platforms are recognised as some of the safest and most transparent crypto exchanges in India.

Step 2: Complete Your KYC

Before you start trading in Bitcoins, you need to complete a basic Know Your Customer (KYC) check. This involves submitting your Aadhaar card, Pan Card, and other documents.

Step 3: Place an Order and Transfer Funds

Once you have completed your KYC, you can place an order to buy Bitcoin on the exchange. After placing the order, you can transfer the amount from your bank account to the crypto exchange to purchase Bitcoin. You can also use other payment methods such as NEFT, RTGS, debit and credit cards, or digital wallets like Paytm, Google Pay, and PhonePe.

Step 4: Store Your Bitcoin Securely

After purchasing your Bitcoin, you need to store it securely in a crypto wallet. You can use the crypto wallet provided by the exchange or choose a third-party cold wallet.

Step 5: Monitor the Market and Stay Informed

Before investing in Bitcoin, it is essential to acquire knowledge about the crypto market. You can track Bitcoin's share in the market, monitor price movements, and subscribe to crypto newsletters to stay informed.

Step 6: Consider the Risks and Regulations

While buying and selling Bitcoin is legal in India, there are no specific rules, regulations, or guidelines in place for resolving issues related to Bitcoin. Therefore, it is essential to be aware of the risks involved and only invest an amount you are comfortable losing.

By following these steps, you can safely and securely purchase Bitcoin in India. Remember to do your research, stay informed about the market, and only invest what you can afford to lose.

Bitcoin's legal status in India

India's stance on cryptocurrencies has been ambiguous, with no clear legal classification. Cryptocurrencies such as Bitcoin are not recognised as legal tender in India and cannot be used for everyday transactions. However, trading and investing in crypto is not illegal.

The Reserve Bank of India (RBI), the Ministry of Finance, and the Securities and Exchange Board of India (SEBI) are the key cryptocurrency regulators in India. The government has been working on a framework to regulate crypto in India and address associated risks and concerns.

In 2021, the Cryptocurrency and Regulation of Official Digital Currency Bill was introduced in the Lok Sabha. The bill seeks to create a framework for the Reserve Bank of India (RBI) to issue an official digital currency. It also seeks to prohibit private cryptocurrencies, with certain exceptions, to boost the underlying technology. However, the bill has been delayed and its fate remains uncertain.

Despite the regulatory uncertainty, the Indian government has recognised the potential of blockchain technology, indicating a possible future where regulated crypto markets could be integrated into the country's financial framework.

In terms of taxation, the Indian government imposed a 30% tax on income from the transfer of digital assets and a 1% tax deduction at source (TDS) on transactions exceeding a specific limit. This "tax first, regulate later" approach has added to the uncertainty surrounding the long-term legal status of cryptocurrencies in India.

Bitcoin investment minimums

There is no minimum amount of Bitcoin that you need to buy to get started. However, the platform you use will likely have its own minimum investment amount. For example, Coinbase allows a minimum Bitcoin investment of $2, while eToro has a minimum deposit of $50 and a minimum trade size of $25.

It's important to note that exchange platforms charge fees for buying, selling and transferring cryptocurrencies, so investing a very small amount may not be the best option. These fees will quickly eat into your investment if you decide to go for the minimum investment.

If you're investing in cryptocurrencies for the first time, buying a small amount of Bitcoin is a good way to start. It's recommended that you don't spend money you can't afford to lose, as even Bitcoin is a relatively untested investment.

In India, an investor can buy Bitcoin in Indian Rupees with a minimum capital of Rs.100. This limit could vary between different crypto exchanges. For example, CoinSwitch offers investments from as low as INR 100 in Bitcoin.

Bitcoin wallets

Hot Wallets

Hot wallets are connected to the internet and are often free to use. They are usually in the form of an application on your phone or computer. They make it relatively easy to carry out transactions but may be more vulnerable to hackers. Examples of hot wallets include:

• Crypto.com Defi Wallet
• Zengo Wallet
• Coinbase Wallet
• Trust Wallet
• MetaMask

Cold Wallets

Cold wallets are not connected to the internet and are usually in the form of a physical device that you can connect to your computer or phone when you need to manage your funds. They tend to cost money and may be harder for other users to reach. However, if you lose the device, recovery can be very difficult. Examples of cold wallets include:

• Ledger
• Trezor

When choosing a Bitcoin wallet, it is important to consider the level of security, ease of use, and whether it supports the types of digital assets you want to store. It is also worth noting that some people use multiple types of wallets, with some for long-term safekeeping and others for active trading.

Bitcoin's price history

2009-2013

Bitcoin was launched in 2009, and its value increased dramatically in the following years.

October 2013 - June 2021

During this period, Bitcoin's value increased by almost 30,000%, an incredible rise that contributed to its growing popularity.

2017

After hitting a high of nearly $20,000 in 2017, Bitcoin's value plummeted, and it took until 2020 for it to rise to about half of its previous peak.

2020-2021

Bitcoin's value continued to rise, and it experienced another surge between March 2020 and April 2021, increasing by 1351%. It also saw an increase of 132% between July 2021 and November 2021.

March 2021

Tesla's announcement that it had acquired $1.5 billion worth of Bitcoin fuelled mass interest and contributed to a price hike.

March 14, 2024

Bitcoin reached an all-time high of $73,750, surpassing its previous records.

August 2024

Bitcoin experienced a dramatic drop below $50,000 and has been trading at around $57,000 as of the first week of August.

August 18, 2024

Bitcoin's price reached $58,483.96 after another crypto exchange, FTX, filed for bankruptcy.

August 19, 2024

Bitcoin's price was $59,013, a 0.96% increase over the previous day.

Despite the volatility, Bitcoin's price history demonstrates its evolution and growth over the years, transforming it from a fringe asset to a mainstream financial instrument.

Frequently asked questions