Cryptocurrency: All you need to know before starting investing journey

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You can either mine a cryptocurrency or can buy it through a crypto exchange. Considering mining is a very technical and time taking process, retail investors prefer buying it through exchanges, as there are a variety of exchanges competing for their business. For example, some of the popular exchanges include WazirX, CoinDCX and Zebpay. Most of these exchanges have Android and iPhone app which lets you link your bank account for quick transfers. Experts say though many new exchanges have been opened it is safer to go with big exchanges whose owners and promoters are known.

There is a KYC requirement and you need to verify your ID providing PAN card and other details. Once you open a wallet with an exchange you can buy, sell, store, use and accept cryptocurrencies. When you sell bitcoins it is credited instantly to the account after the user sells bitcoins. You should also check the cost of trading in cryptos before deciding on the exchange.

You can purchase cryptocurrencies by depositing money in the account of the exchange. Currently, not all banks are offering services to crypto exchanges. You can either transfer through banks that have tie-up with the exchanges or you can transfer through wallets such as MobiKwik.

It is advisable to invest in big and known cryptos than falling for small and lesser-known virtual tokens. Moreover, to keep the bitcoins safe, you have to keep your username and password confidential.

Future of cryptocurrencies

Given that cryptocurrencies work on the principle of peer-to-peer transfer without any regulatory body in between, the growing popularity of cryptocurrency has become one of the major concerns for the government.

In the wake of this growing popularity, in January 2021, the government proposed ‘The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021’ to “create a facilitative framework for an official digital currency issued by the RBI” and “prohibit all private cryptocurrencies in India”. Though the Bill gave an initial impression that there would be a complete ban on private cryptocurrencies but as of now there is no clarity on the legal status of the currency.

Last year in March, the Supreme Court lifted the RBI ban on cryptocurrencies. Since then crypto exchanges have been facilitating trading in virtual tokens. However, RBI has time and again cautioned people against investing in cryptocurrencies.