Crypto Investment Guide For Indians: Getting Started

Investing in crypto in India is a relatively straightforward process. Cryptocurrency is a digital asset based on blockchain technology, and there are thousands of different cryptocurrencies to choose from. The first step is to choose a crypto exchange platform that is registered with the Financial Intelligence Unit India, such as CoinDCX, CoinSwitch, Mudrex, or WazirX. These platforms offer varying degrees of user-friendliness, security measures, trading fees, and support for BTC trading pairs. Once you've selected an exchange, you must fund your account through various means such as bank transfers, net banking, or UPI, depending on the platform. It's important to consider the transaction fees associated with different funding options. After funding your account, you can place your first order to buy a cryptocurrency like Bitcoin. It's important to note that buying a single Bitcoin requires a significant upfront investment, so most people purchase a percentage of a Bitcoin. Finally, you can select a safe storage option for your cryptocurrency, either using an online wallet provided by the exchange or an offline wallet for added security.

Choose a crypto exchange platform

When choosing a crypto exchange platform in India, there are several factors to consider. Here are some key points to help you make an informed decision:

• Security: The security of your crypto assets should be a top priority. Look for platforms with robust safety measures such as two-factor authentication, encryption, and cold wallet storage. Ensure they have bug bounty programs and comply with relevant regulations.
• Variety of Investment Options: Consider the range of cryptocurrencies offered by the platform. Some platforms offer a wide variety, including popular options like Bitcoin and Ethereum, while others may have a more limited selection. Choose an exchange that aligns with your investment preferences.
• Trading Features: Different exchanges offer varying trading features such as spot trading, futures trading, margin trading, and staking. If you're a beginner, look for user-friendly interfaces and educational resources. Advanced traders may prefer platforms with complex charts and analytical tools.
• Fees: Crypto exchanges charge various fees, including trading fees, deposit/withdrawal fees, and maker/taker fees. Compare the fee structures to find the most cost-effective option for your trading needs.
• Liquidity: Opt for an exchange with high liquidity to ensure smooth and timely transactions. Check the 24-hour trading volume and real-time trading data to assess the liquidity of the platform.
• User Interface: Choose a platform with an intuitive and user-friendly interface, especially if you're new to crypto trading. A good interface should be easy to navigate and facilitate efficient trading.
• Customer Support: Responsive customer support is crucial when dealing with crypto assets. Look for exchanges that offer multiple support channels, such as live chat, email, and phone support, to address any issues promptly.
• Reputation and Track Record: Research the reputation and track record of the exchange in the Indian market. Check reviews and feedback from other users to gauge their reliability and trustworthiness.
• Regulatory Compliance: Ensure the exchange complies with Indian regulations and laws, providing a secure and legal trading environment. Check for registrations with relevant authorities and their adherence to anti-money laundering (AML) policies.
• Advanced Trading Features: If you're an experienced trader, consider exchanges that offer advanced trading features such as margin trading and futures contracts. These features provide additional opportunities for more sophisticated investment strategies.

Some popular crypto exchange platforms in India include WazirX, CoinDCX, BitBNS, Mudrex, CoinSwitch, ZebPay, Unocoin, and BuyUcoin. Each platform offers unique features, so be sure to research and compare them based on the factors mentioned above before making your decision.

Set up an account and verify your identity

To set up an account on a crypto exchange in India, you can use a platform such as WazirX or Crypto.com. Here is a step-by-step guide to setting up an account and verifying your identity on WazirX, which is India's largest crypto exchange:

• Download the WazirX app from the Play Store (Android) or App Store (iOS), or sign up directly from their website.
• Open the app and tap the sign-up option.
• Enter your email address and desired password.
• Verify your email address by checking your inbox and tapping on the confirmation link.
• Set up security options, such as a one-time password (OTP) sent via SMS to your mobile number.
• Select your country of residence.
• Complete the KYC (Know Your Customer) process by entering your name, address, and date of birth. You will also need to provide a copy of your government-issued identity card, such as an Aadhaar Card or PAN card. You can take a picture of the document within the app.
• Once you have uploaded all the required credentials, WazirX will get back to you with a confirmation within a few days.
• Visit crypto.com/exchange and click the Sign-Up button.
• Follow the on-screen instructions and provide the necessary information, including your email address, date of birth, and country of residence.
• Verify your email address by checking your inbox for a confirmation link containing an OTP.
• Create a password for the exchange.
• Verify your phone number by entering your country's area code and phone number. You will receive an SMS verification code to enter.
• After completing these steps, you will be redirected to the Exchange landing page.
• To gain full access to the Exchange's features, you will need to verify your identity in the Account Verification section.

Deposit money into your account

Cryptocurrency is not a legal tender in India, but investing and making profits from it is not illegal. There are several ways to deposit money into your crypto account in India, each with its own set of procedures and requirements. Here is a detailed guide to help you through the process:

Using a Third-Party Broker or a Cryptocurrency Exchange

One common method is to use a third-party broker or a cryptocurrency exchange to trade your digital money for a fiat currency. This process typically involves depositing your cryptocurrency into the platform and requesting a withdrawal in your desired fiat currency. While it is secure, it can take around 4 to 6 days for the funds to reach your bank account. It is important to note that brokers must adhere to money laundering laws, so you can only withdraw funds to the same account you used to deposit your cryptocurrency. Additionally, exchanges may charge transaction fees for withdrawals.

Crypto-Based Debit Cards

Another option for depositing money into your crypto account is by using crypto-based debit cards. This method allows you to add your digital funds to the debit card, which will automatically convert them into a fiat currency, such as Indian rupees (INR). However, one drawback of this approach is the high transaction fees associated with it. Examples of Indian crypto-based debit cards include the Crypto.com Prepaid Debit Card and the Nexo Debit Card.

Peer-to-Peer Exchanges

Peer-to-peer exchange platforms offer a quick and anonymous way to convert your cryptocurrency into cash. This method often provides faster transactions than third-party brokers, and you may also benefit from more favourable exchange rates. Additionally, the transaction fees on peer-to-peer platforms are typically lower. When using this method, it is important to select a reputable platform and always request ID proof and proof of payment before releasing your cryptocurrency.

Steps to Deposit Crypto on an Exchange

• Log in to your official account.
• Click on "Funds" in the top right corner of the DCXtrade page.
• Click on the "Deposit" option and select the cryptocurrency you wish to deposit.
• Copy your wallet address and tag.
• On the platform from which you intend to deposit, copy the wallet address.
• Click on 'Send', and the crypto will be transferred to your CoinDCX wallet.

Important Considerations

When depositing money into your crypto account, it is crucial to be aware of the fees and charges involved. Crypto exchanges typically charge fees for their services, including deposits into digital wallets and transactions. Additionally, taxes come into play when you cash in or liquidate your crypto assets. If you hold your cryptocurrency for more than 36 months, your profits will be subject to long-term capital gains tax in India.

Place your cryptocurrency order

Once you have decided on a cryptocurrency broker or exchange, you can sign up to open an account. Depending on the platform and the amount you plan to buy, you may have to verify your identity. This is a crucial step to prevent fraud and meet regulatory requirements. You may only be able to buy or sell cryptocurrency once you complete the verification process. The platforms may ask you to submit a copy of your address proof or ID proof, and you may even be asked to upload a selfie to prove your appearance matches the documents you submit.

After you have deposited money into your crypto account by linking your bank account or paying with a debit card, you are ready to place your first cryptocurrency order. There are hundreds of cryptocurrencies, ranging from well-known names like Bitcoin and Ethereum to more obscure cryptos like Theta Fuel or Holo.

When you decide which cryptocurrency to purchase, you can enter its ticker symbol – for instance, Bitcoin is BTC – and how many coins you’d like to purchase. With most exchanges and brokers, you can purchase fractional cryptocurrency shares, allowing you to buy a sliver of high-priced tokens like Bitcoin or Ethereum that otherwise take thousands of rupees to own.

Select a storage method

Once you've bought your cryptocurrency, you'll need to select a storage method. You can choose to store your crypto on an exchange or transfer it to a wallet.

Storage on an exchange

The crypto exchange you use will likely have an integrated Bitcoin wallet or a partnership with a preferred wallet provider. Storing your crypto on an exchange is convenient and often comes with no additional fees. However, it does come with security risks, as exchanges are a prime target for hackers.

Crypto wallets

Crypto wallets are software programs or hardware devices that allow you to store your cryptocurrencies. They give you more control over your private keys and can provide greater security than exchanges. There are several types of crypto wallets:

• Hot wallets: Hot wallets are online software wallets that allow you to access your crypto via an internet-connected device, such as a smartphone or computer. They are convenient but are more susceptible to hacking attempts.
• Cold wallets: Cold wallets are offline storage solutions, such as USB drives or smart cards, that are not connected to the internet. They are considered more secure than hot wallets since they are not directly accessible to hackers. However, if you lose or misplace your cold wallet, you may lose your crypto permanently.
• Paper wallets: Paper wallets involve printing or writing your private keys on a piece of paper and storing them in a secure location. They are a simple and low-cost option but come with the risk of physical damage or loss.

When choosing a storage method, it's important to consider your priorities regarding convenience, security, and accessibility. Additionally, always research the reputation and security measures of any exchange or wallet provider before entrusting them with your crypto assets.

Frequently asked questions