The Complete Guide on How to Trade Cryptocurrencies in India

The Complete Guide on How to Trade Cryptocurrencies in India

May 24, 2022 Digital

This article explains everything there is to know about trading cryptocurrencies in India. Getting into cryptocurrency trading in India can be challenging because it is an uncharted area for many people. But, as you study, know and get advice on blockchain technology and how it is revolutionizing the financial sector, you will be able to understand its potential.

Every day, more people join the crypto universe in search of investment opportunities and profits. So if crypto trading catches your eye and you want to start immersing yourself in this topic, read on.

What Is Cryptocurrency?

Cryptocurrencies, also known as digital currencies, are a means of payment since they fulfil the same function as money. In addition, they represent a new investment option in the market as a valuable asset. These assets can be simply traded (purchase-sale), held or traded as cryptocurrency futures on the crypto exchange.

Since the creation of the first cryptocurrency (Bitcoin) in 2009 by Satoshi Nakamoto, whose true identity is unknown, cryptos and cryptocurrency trading have not stopped growing worldwide. To the point that today there are already some 17,000 different versions of cryptocurrencies operating in the market.

Digital currencies are created from a complex mathematical protocol through the blockchain. This encrypted network or accounting ledger allows for keeping a secure, decentralized, synchronized and distributed record of digital operations. Cryptocurrencies are mined or created; they are added to the blockchain network. The blockchain protocols are decentralized, and experts can review the codes. This ensures that some of the cryptocurrencies are independent and do not require the intermediation of third parties, as is the case with fiduciary money. However, lately, governments are working on creating their digital currencies, the CBCDs (Central Bank Digital Currencies).

Cryptocurrencies are classified into several types: Bitcoins, Altcoins and Tokens.

Bitcoin

It is the largest cryptocurrency in the world by market capitalization. It allows you to make electronic payments without the need for financial intermediaries such as banks or other traditional payment platforms.

Since its launch, the trading of bitcoin (BTC) and cryptocurrencies, in general, has grown a lot. BTC became a payment alternative (houses, cars or other goods) and an investment option that boosted cryptocurrency trading in India.

Altcoins

They are alternative digital currencies to bitcoin, hence their name (alternative coins). Each of these coins is also based on its blockchain technology and has different applications. Altcoins operate independently on their blockchain or distributed ledger technology (DLT) networks.

By having their technology, all Altcoins compete with each other to attract more enthusiasts who invest in them and support their development and growth. The top altcoins include Ethereum, Litecoin, Ripple (XRP), Bitcoin Cash, Binance Coin, Cardano, Solana, and more.

Tokens

Lastly, in the crypto universe and crypto trading, there are tokens. Although they are also cryptocurrencies, they do not work within the blockchain network of another cryptocurrency. In other words, the tokens do not have their blockchain. However, Ethereum does host other cryptocurrencies such as USDCoin, Chainlink, Tether (USDT), Neo (nash and gas) or Tron (BitTorrent) on its network.

Similarly, tokenization is all the rage in cryptocurrency trading and other digital assets. Tokenization is also being applied successfully in trading other non-digital assets such as commodities, fiat currencies or properties.

How to trade with Cryptocurrencies?

Cryptocurrency trading in India has been gaining popularity due to its rapid adoption among people, professionals and institutional investors. Fundamentally, cryptocurrency online trading is really where you trade.

Crypto trading encompasses the direct buying and selling of crypto through a crypto platform, online peer-to-peer (P2P) cryptocurrency trading, and futures contracts for Bitcoin and other cryptocurrencies, which you can purchase through a mutual fund that invests in cryptocurrencies.

One of the fundamental characteristics of cryptocurrency trading is obtaining returns from price fluctuations during a specific period. Traders analyze the price movements of cryptocurrencies in the market (up or down) and forecast the variation over time. The profits are proportional to the volume of the trade carried out.

In online cryptocurrency trading, price fluctuations are constant, as is high volatility. The crypto investor can take advantage of this volatility to increase the performance of his operation. Some prefer to trade short and make immediate profits; others play long term.

Investors who want to get started in crypto trading should first prepare themselves on how to trade cryptocurrency in India. This requires first studying the market, developing an effective online cryptocurrency trading strategy, and then opening an account with a crypto exchange.

Best Crypto Exchanges to Trade in India

Before starting cryptocurrency online trading on a crypto platform, the investor should know that cryptocurrency trading in India is not entirely regulated. Therefore, trades are made at the risk of the investor himself since there is no protection from the state or the nation in case of loss of money due to bankruptcy or fraud of the crypto platform used. 

Hence choosing the best Indian crypto exchange for beginners is a crucial task. Especially, if you are just starting out in the crypto space. India has several safe, liquid and reliable crypto exchanges with affordable fees. These companies offer a good user experience, and you can start trading with little money. 

The biggest and best exchanges trading cryptocurrencies in India include WazirX, Coinbase, CoinSwitch Kuber, Unocoin, CoinDCX, Zebpay and others. Each has its pros and cons, depending on the investor’s cryptocurrency online trading needs.

How to Buy/Sell Cryptocurrencies?

The purchase-sale of digital currency is the exchange of one crypto for another. The process is very simple, similar to that of FOREX or purchase – selling one currency for another (Indian rupees for dollars, for example). You are looking for a pair of cryptocurrencies to exchange or a cryptocurrency for a fiat currency.

 Traders can do cryptocurrency trading in India through the exchange of your choice. Or, as mentioned before, two traders agree on a peer-to-peer market to directly exchange two types of cryptocurrencies through their respective virtual wallets. 

For trading cryptos, it is necessary to have already opened an account in a crypto exchange or a wallet to store your funds. Opening an account on an encryption platform is also a straightforward process. You need to fill in a series of requested user personal data and then choose the cryptocurrency and buy it. 

Most exchanges accept payments in Indian rupees or cryptocurrencies to facilitate buying and selling. After buying the chosen cryptocurrency, you can transfer it to your wallet and dispose of your funds as you prefer and whenever you want.

How to keep your cryptocurrency safe?

For proper management and use of cryptocurrencies in India, it is essential to keep these digital assets stored in safe places. You cannot entrust your money to any platform, so you must also choose a secure wallet. 

Expert recommendations on how to trade cryptocurrencies in India safely state the need to adopt measures to avoid theft or scams. 

  • Don’t leave your digital currencies on exchanges. The news and statistics show the cyber thefts these platforms are exposed to daily. The recommendation is to keep the funds in hot or cold wallets, out of the reach of hackers and other criminals.
  • Protect and change your passwords from time to time. Both the access key and the recovery phase of the address (account) must be protected in safe places. Use passwords that are difficult for hackers to discover and track.
  • Set up two-step authentication (SFA). To access your account, always have this authentication method enabled. Almost all exchange platforms integrate it with Google or any other search engine.
  • Have an up-to-date backup. Remember that if you forget your password and recovery phrase, you will not be able to recover your crypto funds. Keeping them written on paper and protected in a safe place is an excellent way to prevent this from happening.
  • Spread funds across multiple portfolios. Keeping digital currencies spread across multiple physical devices or online is one option for safer crypto trading.

Conclusion

After reading this complete guide on trading cryptocurrencies in India, you will have a complete picture of this critical financial option that generates high returns. Cryptocurrency in India has become an essential financial instrument in any diversified investment portfolio.