Cryptocurrency is rapidly growing as an exciting option among investors in India. The number of investors has been increasing over the years and analysis shows that it is not just the city slickers – most of its recent users come from smaller towns and cities in India. (how to buy cryptocurrency in india legally)
However, despite the growing enthusiasm, there remains a lot of ambiguity regarding the legality of cryptocurrencies in India. If you are considering investing in cryptocurrencies, you want to make sure that you are not breaking any laws or regulations. Therefore, it is important to clearly understand the legality surrounding cryptocurrencies. Here’s a quick primer for you to move on.
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How are cryptocurrencies made?
The first cryptocurrency was Bitcoin, which was created in 2009 and is still the best known. Units of a cryptocurrency are made through a process called mining. It involves the computation of complex mathematical algorithms to create a virtual coin. The mechanism is chosen to control the supply of coins over time, preventing hyperinflation. Although, each cryptocurrency has its unique model of mining, distribution, and economic principles.
The miner who solves the problem first adds the transaction details to the blockchain. The process rewards the miner with coins since it helps in verifying each transaction of the blockchain. The system is fully transparent and all transactions carried out in the blockchain are recorded.
Some newer currencies utilize a different concept of mining, which requires far less energy. Instead of computing, blocks of nodes that occupy storage space in a hard drive are leveraged. It eliminates the need for a high-end mining rig.
How do you store cryptocurrencies?
Just like a bank account or Demat account, a blockchain wallet is used to store your coins, often informally called cryptos. The wallet facilitates smooth exchanges and payments. All the transactions are secure, as they are cryptographically signed. It’s very similar to the process of sending or receiving money through PayPal or any other digital wallet used today, but you use it for cryptocurrency instead.
WazriX’s wallet is based on the same concept and is secure. Since its association with Binance, the exchange is also effortlessly integrated with global exchanges, providing a technological edge over the others. To start trading, sign-up with a cryptocurrency exchange, submit your KYC (Know Your Customer), and you’re good to go in no time!
Bitcoins in India (Are they legal)..
To cut a long story short, Bitcoins have not been declared as illegal and so to that extent they are absolutely legal in India. Of course, there have been instances of the Ministry of Finance and the RBI warning about the risks of Bitcoins but that is more logical considering that most people do not understand the nuances of Bitcoins and may get caught in a speculative bubble. Otherwise there is no restriction on Indians entering the Bitcoin market and trading in the same. The irony of an asset like Bitcoin is that more the price rallies the more traders it attracts and the more people get into the Bitcoin network, the more valuable it becomes. In that sense it works like a telecom network which automatically becomes more valuable when more people join the network.
How to go about trading Bitcoins in India..
You first need to understand how Bitcoins are created. Currently, a total of 21 million Bitcoins have been created. Considering the current market price of around $11,000 per Bitcoin, the value of Bitcoin as an asset class could be around $231 billion. That is a sizable number if you consider that the asset class was launched less than 10 years ago and that less than a month ago, the value was twice that. Bitcoins can be issued and traded in extreme fractions so the 21 million is hardly a constraint. But let us come back to the question of how to buy Bitcoins in India. Here are 5 points you need to be aware of..
You can buy Bitcoins on digital exchanges. There are popular exchanges like Coinbase and Coindesk where you can actually buy Bitcoins at the prevailing market price. On Coinbase you can buy Bitcoins using your international credit cards.
Indians can also buy Bitcoins from a website called ZebPay in India which facilitates trading in Bitcoins. You can do a transfer from your bank account into ZebPay and similarly you can also withdraw from your ZebPay back into your bank account.
ZebPay also offers a downloadable app that is compatible with IOS and Android platforms. You can link your bank account to your specific smart phone and use the IOS or Android platform to link your bank account for quick transfers and transactions.
You are required to undergo a basic KYC before you start trading in Bitcoins. Your PAN card has to be uploaded and your bank account used to withdraw and transfer funds from ZebPay must also have the same PAN mapped to it.
Trading Bitcoins is one side of the story. If you are looking to store Bitcoins then it is essential to have a Wallet. This wallet can be stored in your computer or even in your smart phone. You can also back up your wallet at an external site.
Remember, Bitcoin is a digital currency and is based on a very sophisticated shared ledger technology. Mr. Modi has digitization as one of his primary focus areas and it is likely that India may look to encourage the use of Bitcoins, albeit with the requisite checks and balances.(how to buy cryptocurrency in india legally)