cryptocurrency have found a way as an important part of the current investment situation in India.
In the hope of quick and high returns, investors are switching to cryptocurrency by allocating a portion of their capital to them. In the past, high returns have made cryptocurrency an attractive investment tool for Indians, especially young people.
With over 100 million investors, India has become the world’s largest holder of cryptocurrencies. It is amazing to know that cryptocurrency investors are bigger than the whole equity market, and at that time they have been operating for almost ten years. Since there are thousands of cryptocurrencies currently operating in India, they allow you to make huge profits.
This blog will prove to be all the guidelines for investing in cryptocurrency and will help you understand how you can invest and use different cryptocurrencies in India.
What is cryptocurrency :
Money, but virtual; This is the basic premise behind cryptocurrency. Cryptocurrencies are defined as the digital version of money that is created and held as virtual coins or tokens. Like digital payments using Indian Rupees, you can use cryptocurrencies to buy and sell items. However, the person or business must be willing to accept the cryptocurrency you are offering as opposed to the product or service you are selling.
Although cryptocurrencies may sound like digital payments, they differ in their technology and the resources they rely on. Moreover, unlike the Indian rupee, where you can withdraw cash if you wish, cryptocurrency has no physical presence. This means that there is no way to make a physical transaction using cryptocurrency.
There are thousands of cryptocurrencies on the market where investors can buy and use to trade or buy and sell items. Some examples of cryptocurrencies are Bitcoin, Ripple, Dozcoin, Etherium, Lightcoin etc.
How does cryptocurrency work?
Regular transactions rely on trusted third-party entities, such as banks or financial institutions, to process electronic payments. These transactions, though important, come with their limitations.
To overcome these limitations, an electronic payment system based on cryptography has been developed, subtracting the existence of third parties.
Almost all cryptocurrencies are created as a ‘peer-to-cash’ network, which means they cut off intermediaries like banks and regulators in the payment process. Using cryptocurrency, you can pay directly to the other party unless it is willing to accept payment in the form of cryptocurrency you hold.
These cryptocurrencies are always virtual and have no physical form. Unlike cash, there is no chance of getting real delivery of a cryptocurrency because they are created for use only through the internet.
All cryptocurrencies are created and managed using a technology called blockchain which is a digital laser. Each transaction is approved and authenticated by the owner.
Using blockchain, people or manufacturers record every transaction in a set of two parties in a cryptocurrency system. This allows for a secure, transparent and trackable system that ensures open and smooth cryptocurrency transactions for all.
Bitcoin is one of the most secure and valuable cryptocurrencies available in the market.
Types of cryptocurrency wallets
There are two main types of cryptocurrency wallets: software wallets and hardware wallets.
Software Wallets: Software wallets are based on a browser extension or desktop program that allows crypto investors to invest, send, receive and store cryptocurrencies.
These are sometimes referred to as ‘hot’ wallets because the funds are kept online without any specific private key, which makes them vulnerable to cyber attacks. Software wallets are specific to a particular currency and do not support trading in multiple currencies. Almost all crypto platforms in India operate on the policy of software wallet.
Hardware Wallet: These are external physical devices that can store cryptocurrencies for safe use anytime and anywhere. Investors who buy cryptocurrencies store them in hardware wallets that they plug into their desktops if they want to access them.
Hardware wallets are considered more secure than software wallets because they have a private key that only investors can access. You can use a hardware wallet based on a web-based interface, a company-made application, or a separate software wallet.
Strategies for investing in Bitcoin :
Investing in Bitcoin is highly speculative due to its high volatility. However, based on past price patterns, investors can evaluate and analyze Bitcoin and take positions accordingly. You can invest a large amount in the short term (considering your risk appetite) and sell if the price increases in the near future.
On the other hand, if you want to invest in the long run, you can invest relatively little and keep it for a few years. In addition, you can create a mixed strategy where you can allocate a portion of the capital for the short term, the rest for the long term and adjust the amount you have invested forward.
The final word :
Cryptocurrency is still a controversial issue in India. There are no rules and regulations around the framework, which has led to numerous cyber attacks and scams.
However, with the new age crypto platforms, investing in cryptocurrency and making a profit has become relatively easy and secure.
However, it is highly recommended that you follow the precautions and invest the amount you feel comfortable with.