How to Invest in Crypto in India

National, December 2022: Despite India’s new tax regulations regarding cryptocurrency investment, investing in crypto is still a tried and tested way to diversify one’s investment portfolio. Many investors and traders have seen significant returns on investment despite recent volatility in the markets, the savvy trader will tell you these returns are because of the volatility seen in the crypto space.

This has led many Indians to ask exactly how does one invest in crypto? This is a quick and easy guide for those looking to invest in the crypto space.

Choosing the Right Exchange

The Internet is full of guides on how to invest or trade in crypto, be it Bitcoin, Ethereum, or other altcoins. Many of these guides ignore or gloss over the most important decision you are going to make, that being your exchange. When looking to buy shiba, as an example, your choice of exchange is vital to future success in your investment. With a changing attitude of governments including India to greater regulation your chosen exchange needs to be at the forefront of assisting regulators lest they get permanently banned from operating.

In summary, a crypto exchange allows its users to buy, sell, and trade cryptocurrencies. In this regard, there are two broad types of exchange, centralized and decentralized. A centralized exchange requires users to verify themselves with Know Your Customer rules similar to those imposed by banks. Decentralized exchanges are defined by the level of anonymity they give users, however, this comes with a cost. Decentralized exchanges are not protected by any financial controls so if cryptocurrencies are stolen through a hack the user has absolutely no to

retrieve those stolen funds via legal mechanisms. Further, many governments ban decentralized exchanges due to their roles in being used to launder money, generally the proceeds of a crime.

Centralized exchanges are the favored choice for many looking to invest in crypto seeing that the extra controls may provide financial assurances in the case the exchange is hacked. These assurances are not guaranteed like in the traditional banking sector but for new investors, centralized exchanges are the preferred method of dipping one’s toes in the crypto markets. Further, these exchanges typically enjoy higher withdrawal quotas along and have customer support channels to help solve technical issues. Popular exchange pairs will also have stable prices when compared to decentralized exchanges. India has several decentralized exchanges to choose from, so potential investors need to do the required research.

Research, Research, Research

Researching the best exchange to meet your desired requirements is only the first step on your journey. If you want to have a long and fruitful journey you will need to do your research. At last count, there were over 4,000 different cryptocurrencies all with their potential upsides and downsides. Unfortunately, the crypto space has been plagued by scams, driven by unscrupulous individuals and partly because people do not do their research and jump at opportunities to get rich quickly.

Whether investing or trading in cryptos, the idea of getting rich quickly should be avoided at all costs. While returns on certain crypto investments have outperformed other asset classes the people making the money are assiduous students of the crypto market and even they will lose out on occasion.

When doing your research into what cryptocurrencies you want to invest in you will need to ask yourself several questions. These should include, is the chosen coin based on proof of work, or proof of stake? How is the blockchain, the technology that enables cryptocurrencies, set up? Do they have a tested blockchain network? Have you read the cryptocurrency’s white paper? Does it have a whitepaper detailing the cryptocurrency’s development and backing technology? Who is behind the blockchain project? Are they experienced and have a good reputation amongst other crypto investors?

As you can see investing in crypto, like investing in other asset classes or the stock market, you will have to do research. This is done to prevent being scammed and move with the markets to not lose your investment.

Conclusion

With your exchange being chosen and you feeling confident with your chosen crypto due to your research, now is the time to open your account and exchange fiat currency for those desired cryptocurrencies. While it is intimidating at first you will soon get the hang of it. The last piece of advice to give is to invest what you feel you can safely afford to lose. Don’t bet your life savings on a tip you got from a friend while watching the cricket.