In this article, we will explain step-by-step how to invest in cryptocurrencies in India. 

If you are starting, you need to consult an expert who can safely guide you on how to invest in cryptocurrencies in India. Various exchange platforms, brokerages and crypto funds help you manage your digital currencies.

Knowing where to invest, how to buy cryptocurrencies, where to store them and how to trade them is crucial if you hope to invest in cryptocurrencies in India for good returns in the short, medium or long term.

What is a cryptocurrency, and where can you invest?

Cryptocurrencies are a type of digital asset issued through the blockchain that guarantees their ownership and assures the holder of the integrity of the transactions carried out on the network. This particular function or feature allows you to control the creation of new units, preventing counterfeits or copies from being made. 

As digital currency does not exist in physical form, it is necessary to store it in a digital format, i.e. either a hardware wallet or a software one. In addition to keeping digital money, this software allows you to receive and send cryptocurrencies safely and cheaply. You have to be very careful with the wallet you choose and the keys to be able to access it.

Cryptocurrencies have very particular characteristics that differentiate them from traditional or fiduciary money. Digital currency transactions do not require intermediaries or depend on governments. However, a shared accounting record of each transaction in the blockchain is maintained.

So far, digital assets are not yet fully regulated in India, so they are not yet recognized as means of payment. However, some companies and people use cryptocurrencies to carry out commercial operations. However, some stores and businesses in the country accept payments with cryptos.

As cryptocurrencies are not regulated in India, there is also no financial deposit or financial guarantee fund. So if the investor loses his money due to the bankruptcy of the exchange where he invested his money, he has no guarantee of seeing it again.

To invest in cryptocurrencies in India, you must choose one or more cryptocurrencies of your choice. In addition to Bitcoin, Ethereum, Tether, Polkadot, and, there are hundreds of digital currencies to choose from. According to the criteria and investment strategy of the trader or investor.

Then, you need to choose an exchange platform or any other option that you consider safe to buy cryptocurrencies and start trading with them.

Where can you buy cryptocurrencies in India?

You can buy crypto in India despite it not being fully recognized by the government. Cryptos can be purchased on a crypto exchange. There are a few in India, but for beginner investors, it is advisable to choose a safe, easy-to-use, low-cost option. 

Some of India’s most trusted crypto platforms are WazirX, Coinbase, Unocoin, ZebPay, CoinSwitch Kuber, and CoinDCX, which provide all those advantages to the novice investor. You then need to choose the payment option you prefer to buy cryptocurrencies. 

The exchanges allow you to make bank transfers, credit/debit cards, use the UPI payment system, Mobikwik, or pay directly through a digital wallet with cryptos. Some of these platforms offer the trader the option of a peer to peer (P2P) market. Multiple sellers make offers of cryptocurrencies at a specific price. The payment method varies depending on the seller, but it is pretty flexible. In our experience, most P2P Trading happens using the UPI payment network. The fees charged by the platform vary depending on the type of cryptocurrency and the transaction amount.

How to trade cryptocurrencies in India?

To start trading and investing in cryptocurrencies in India, you need to follow a few steps. Almost all cryptocurrency exchanges have more or less the same protocol.

1. Log in to the exchange website of your choice or download the app on your phone.

2. Open an account by completing the identity requirements (KYC) requested by the platform.

3. Configure the account according to your preferences/needs.

4. Choose a cryptocurrency trading strategy. You may already have one that you use to trade other assets (stocks, bonds, commodities).

5. Choose the cryptocurrency or group of cryptos you want to buy for investment.

6. Define the quantum of funds you allocate to Trading or Buying.

7. Store cryptocurrencies.

The platform will show you the digital currencies it accepts to purchase: bitcoins, tether, native exchange tokens, stablecoins and more.

Here also note that you can buy the digital currencies directly from the exchange or through other sellers using the peer to peer option.

Where to store cryptocurrencies in India?

Cryptocurrencies, once purchased, can be stored on the exchange or in a digital wallet. When the trader or investor frequently operates in the market, he usually holds them on the exchange itself.

On the other hand, if you buy cryptocurrencies intending to store them aiming at a medium or long-term strategy, it is better to have them in a digital wallet. There are different digital wallets, some more secure, practical and accessible than others.

Digital wallets store the private keys that allow the investor to access their crypto funds. So, you can send and receive any cryptocurrency you have bought and deposited in the wallet. Some of the well-known hardware wallets are made by Trezor and Ledger.

Risks associated with investments in cryptocurrencies

One of the principal risks of investing in cryptocurrencies in India is the high volatility of this market. Before starting to trade crypto assets, it is advisable to understand the associated risks fully.

The truth is that all financial assets that are traded carry a high risk due to the use of leverage, manipulations and unethical trading techniques or market volatility.

But the cryptocurrency market has an even greater risk due to a series of factors that we mention below:

High volatility. Unexpected changes or “black swans” in market sentiment often cause sudden fluctuations in the price of a cryptocurrency. Recently, the value of cryptocurrencies has suffered sudden and intense falls and unexpected and very high gains.

Lack of regulation. By not having a legal basis to support them, cryptocurrencies largely depend almost exclusively on the market’s confidence. Although the regulation process is underway in nearly all countries, including India, there are still no laws regulating this type of investment and operation. 

Vulnerability. Cryptocurrency trading platforms where digital currencies are stored or transactions are made susceptible to cyberattacks. No exchange platform completely avoids technical failures, cyber-attacks, or human error.

Forks / interruptions. These are two other risks involved in trading cryptocurrencies. Forks, hard or soft, are changes or misalignments in network protocols, while outages are caused by design errors, hacks, and lack of capacity.

Highly speculative market. There is very sudden price jumps (gapping) up and down in a short time due to rumours, news or events and not necessarily due to supply and demand effects.

Conclusion:

Now that we have shown you in an introductory way how to invest in cryptocurrencies in India, we recommend that you follow the following tips.

1. Before investing in cryptocurrencies in India, analyze the market. Learn to read charts with price movements like a professional trader. A proper reading of charts shows us the performance for years, months and days of the cryptocurrency you plan to invest on. 

2. Seek advice from a cryptocurrency expert to help you better understand this investment area. Professional advice saves us unnecessary money losses and helps us better navigate the investment we are making.

3. Adopt a proven strategy or a combination of strategies to trade with a higher guarantee of success. Here again, the teachings of an expert are crucial to advance more quickly in this type of business.

4. Use an efficient trading style. To choose it, you must consider the technical aspects and the type of risk appetite. Now that you know how to invest in cryptocurrencies in India, you have a better judgment to start trading prudently in this promising market.