How to Invest in Bitcoin in India -A Beginners Guide

Alan Joseph Alan Joseph
Mar 6, 2021 5 min read
How to Invest in Bitcoin in India -A Beginners Guide

Bitcoin is a digital coin and it is considered as one of the best investment instruments by the Millennials. Bitcoin is a virtual currency that depends on blockchain technology. It is used to make purchases but mostly it is considered an investment option.

Bitcoin has provided an amazing return over the years. It has provided a return of about 204% in 2020. The price of one bitcoin has crossed more than 29 Lakhs and it is considered as one of the favorite investment options for GenZ.

Bitcoin is the first Cryptocurrency and is believed to be found by Satoshi Nakamoto. Even though cryptocurrencies are used to make purchases it is not accepted as the mainstream payment yet.

Retail investors are investing in bitcoins after seeing huge returns. Some years ago, investing in bitcoin was considered hard and was mostly for techies. But now, with the emerging of new startups, investing in bitcoin has become easy. Venture Capitalists are funding such startups which aim at making the investment much easier.

A retail investor can invest in bitcoin through the below ways

P2P Transactions
Method to invest
Bitcoin Mining
Cryptocurrency Exchanges
KYC process

P2P Transactions

P2P transactions are Person to Person transactions. It is a transaction between 2 individuals. If you don’t prefer using an App or paying a transactional fee then you can find a person who is interested to sell his bitcoins and buy it from him. It is considered hard to find a like minded person and it is time consuming. You wouldn’t find a seller as easy as you can find one on the exchange.

Person to Person Transaction
Person to Person Transaction

Method to invest

If you would want to buy bitcoins through P2P method then you will have to consult a cryptocurrency exchange/platform. They will act as a coordinator. The exchanges will help you find a seller who is interested according to your requirements. Again, the process would take a lot of time to find the ideal person. This method is more direct.


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Bitcoin Mining

Bitcoin Mining is the way you earn bitcoins. Bitcoin Mining is considered as a profession. The main role of a bitcoin miner is to record the bitcoin transactions. Bitcoins are decentralized which means it doesn’t have a legal body to regulate it. Bitcoin Miners act as an accountant where they keep a record of the transaction as it happens.

Bitcoin Mining
Bitcoin Mining

Bitcoin miners will be paid in bitcoins once they successfully complete adding a block of transactions. Bitcoins are recorded using blockchain technology. It is said that in every 10 minutes a block is added.

In the beginning it was easier to mine the bitcoins as the demand increased, bitcoin mining has become more complex as it requires really good software and specific skills which makes it difficult for a common man.


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Cryptocurrency Exchanges

A Cryptocurrency exchange is similar to a stock exchange platform. You will be able to buy and sell bitcoins though a cryptocurrency exchange. There are a lot of mobile application in India which helps you to invest in Bitcoin.

Cryptocurrency exchanges are operational for 24 hours and you can place order anytime. It is decentralized and is not controlled by any central authorities. You can start investing in bitcoins by buying a part of it. The investment can start with a small amount of INR 500.

Cryptocurrency Exchanges
Cryptocurrency Exchanges

You should make sure that you buy bitcoins through a trusted exchange or an app. Some of the apps which helps you invest in bitcoins are Zebpay, UnoCoin, Coinsecure etc. Choosing the right platform is the hardest task. The exchanges may charge a small fee for their services. The easiest way for an individual to invest in bitcoins is through the exchange. It is the simplest way to invest.

KYC process

You will have to find the exchange of your choice and later complete the KYC (Know Your Customer) process.

You will have to verify your documents such as PAN card, Aadhar card etc. It is mainly to avoid unlawful usage of the currencies.

For the KYC process you will have to provide your details such as

  1. Your full name.

2. Address and Date of birth as it appears in your documents.

3. You will later have to upload your KYC document in a scanned format.

Once the above steps are completed you will be able to open your account. Β 

FAQ

Is Bitcoin a good investment?

Bitcoin is an extremely risky investment that may or may not pay off.

Can we Invest in Bitcoin in India?

You can Buy/Sell Fractional shares of Bitcoin via an Exchange.

Who is the richest Bitcoin owner?

According to a New research from Traders of Crypto Satoshi Nakamoto, the founder of Bitcoin, who is rumored to own around 1 million Bitcoins.

Conclusion

Cryptocurrency is one of the fastest growing asset class. Bitcoin has around 69% of the market share of Cryptocurrencies. Bitcoin was introduced as an asset to beat inflation. The number of bitcoins is limited and hence it helps in beating the inflation. A perfect cryptocurrency exchange is one which is flexible, simple and accessible. Many platforms are highly technical but at the same time there are many platforms which are easy to use.

While choosing your platform make sure it is easy to use and try staying away from platforms which does not have a KYC. It may not be secure.

Any returns you receive from bitcoin is taxable. You are taxed up to 30% for short-term gains and up to 20% for long term. Make sure you do your research before investing in bitcoin as it is highly volatile. It is always better to start with a very less amount of money.

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