Supreme court judgment of March 2020 and recent RBI clarification regarding virtual/cryptocurrency currencies clearly says that – there is no regulation stopping you from investing in Bitcoins in India.
It indicates that the government has no plans to ban the cryptocurrency again like 2017.
If you are ready to bear the investment risk and legally pay taxes on the profits earned then you can invest in Bitcoins.
You need to take the following steps to Investment in Bitcoin in India
- Identifying the Crypto Exchange
- Opening an Account & Deposit Rupee
- Buying Bitcoin on the exchange
- Storing Bitcoins Safely
Before moving to details of each step, let’s check a few Bitcoin related stats that you should know –
Bitcoin Stats to Know –
|Invented by||Satoshi Nakamoto (alias)|
|Maximum Supply||21 million|
|Bitcoins in Circulation||18.73 million (89% of the maximum supply)|
|Market capitalization as of 5th June 2021||$669 billion (41.3% of the total crypto market capitalization)|
|Maximum last 1-year price (as of 5th June 2021)||$64,863.10|
|Minimum last 1-year price (as of 5th June 2021)||$8,975.53|
Disclaimer – The article is a means to provide educational information on starting Bitcoin investment from India. And should not be treated as financial advice for investment in Bitcoin or any other cryptocurrencies. Do your own research and consult a crypto investment adviser for proper Bitcoin investment.
Know Your Investment Appetite
#1. Risk-Taking Capability
Risk-taking is your capacity to bear market fluctuations. Conceptually, this is similar to stock investment and also applies to Bitcoin investment.
If you are comfortable seeing a capital loss in the short term due to Bitcoin price swings then it means you have a risk-taking capacity than people who invest in bonds to grow money safely.
Bitcoins are risky investments with the possibility of very high returns and subject to wide price movements.
In the last year alone the Bitcoin prices have moved significantly from around $9000 to $64,000 and back to $35,000.
#2. Investment Time Period
From the historical Bitcoin price chart, you can see the fluctuations –
If you are investing in Bitcoin for a short period of time like for 4 months to 6 months time period, then you may incur losses.
Bitcoin is a high-risk, high-return asset suited if you are invested for a long-term horizon.
For example, if you would have bought Bitcoins last year somewhere around $10,000 and sold for $50,000 then only you would be profitable.
Go for a Bitcoin investment if you have a long-term investment period, usually over a year or more than that.
#3. Money to be Invested
The technology is yet to get mainstream, meaning very few merchants accept Bitcoin payments in day-to-day transactions.
Ideally, you should invest a maximum of 10% percent of your money in Bitcoins. So, in case of negative price movements your financial health wouldn’t be impacted much.
Make sure you are not borrowing and investing in Bitcoin with anticipation of quick profits or capturing the rising trend.
If you are all set, then follow the below steps to start Bitcoin investment in India.
Start Investment in Bitcoin in India
#1. Identifying the Crypto Exchange
Like NSE and BSE, we have crypto exchanges in India that let you buy Bitcoins and other cryptocurrencies using their online platform.
Crypto exchanges are not regulated by any regulatory body like RBI, SEBI or government authorities anywhere in the world.
But the exchanges are run by professionals and blockchain experts. The exchanges are backed or have associations with global brands. For example, WazirX is a subsidiary company of the largest global crypto exchange Binance.
The largest crypto exchange in India is WazirX with a daily trading volume of $100 million. You can start investing in Bitcoin using WazirX because it has –
- Super easy, hassle-free & fast online account opening
- Easy to buy and sell cryptocurrencies
- Straightforward and simple trading fees
- App and website trading option available
If you don’t like WazirX, you have other crypto exchange like –
- CoinDCX crypto exchange
- ZebPay crypto exchange
- UnoCoin crypto exchange
- Bitbns crypto exchange
Keep the below factors in mind while picking a crypto exchange –
- Should support INR deposit and have an easy account opening process
- Have straightforward and reasonable trading fees
- Should give you access to trading via apps and website
- Easy deposits and withdrawal methods
WazirX fulfills all the above requirements for new and experienced bitcoin investors.
Your Bitcoins are safe because Binance will take over all the WazirX accounts in case of any government ban on cryptos.
#2. Check Deposit & Payment Methods
In India, crypto exchanges allow deposit and withdrawal of INR using various methods –
#1. Through Bank Transfers
Deposit of INR is possible using IMPS, NEFT and RTGS mode of money transfer into your exchange account.
#2. Via Mobile Payments Apps
UPI is the mode of money transfer. Crypto exchanges support Mobikwik & Paytm wallet apps to deposit and withdraw money from your exchange account.
#3. Opening an Exchange Account
You can open a fully verified KYC compiled crypto account that has all the deposit and withdrawal facilities.
Non- KYC complied account have restriction on
- INR withdrawal from the account
- Bitcoin or other crypto transfer of withdrawal form account.
Keep your email address, mobile number and KYC documents ready to open a crypto account.
Below are the steps for opening an account on WazirX. More or less it will be similar if you are opening an account with any of the other crypto exchanges.
Step 1 – Visit WazirX Website and Sign Up for Creating Account
Click on the sign-up tab to start the WazirX account opening process.
Step 2 – Provide Your Email ID and set your Password
For security keep a combination of Capital letters, small letters, numbers and special characters that is hard to guess as your password.
Avoid using your date of birth, name or password like 123456 that can be easily cracked.
Step 3 – Complete Email Verification and Select Account Verification Mode
Provide the OTP received on your email for account verification. After which you get two options for setting your account security –
- Google Authenticator App and
- Mobile SMS service
You are free to choose one of the options.
The authenticator app from Google is safer when compared to mobile SMS because the SMS is prone to delays.
Step 4 – Choose Country and Account
Finally, you have to select the country and choose to open your account –
- with KYC or
- without KYC.
WazirX allows only deposit and trade facility for a without KYC account. You can buy bitcoin even without a KYC account.
You need a full KYC account to withdraw INR and cryptocurrencies from your account.
Enter the following details to complete the KYC process. And upload the scanned copy of your KYC documents and selfie.
- Full name as appearing on KYC document
- Date of birth
- Address as per the KYC document
#4. Deposit Rupees into Your Crypto Account
A. Through Bank
Log in to your WazirX account and click “Funds” as shown above.
You need to deposit a minimum of Rs. 100 into your account to buy Bitcoins.
Select “Rupee INR” and click on the green deposit button and enter bank details to link your bank account in the next step.
Steps to add bank account –
- Go to WazirX Account Settings
- Open tab – Payment Options
- Click – Add/ Remove Bank & UPI
- Enter Bank Account Number, IFSC Code and Account Type and save.
The screen will show the current account number of WazirX maintained with HDFC Bank’s Mumbai branch. It is safe to transfer the money to shown WazirX account number.
Rupees deposited using IMPS/ NEFT or RTGS will reflect into your account in some time.
In case of banking delays, this can go up to 72 working hours (3 days) at the maximum to reflect in your account.
Once the verification process is completed and the INR deposit has been made, you can proceed ahead to invest in Bitcoin.
B. Through UPI
You can also add funds to your Wazirx account using UPI following the steps below –
Step 1. Open the Wazirx app and tap on the Funds section in the bottom-right and click on the funds “INR section” as shown below.
Step 2. Click on the Instant deposit (UPI only) option on the Deposit INR page.
Step 3. Please fill your name in the Alias section and then enter your UPI ID.
Note – Most people get confused at this step because they don’t know what is alias in Wazirx UPI payment section. So Alias is a short synonym of the alternate name and Wazirx asks to put the account holder’s name in this is section while transferring money through UPI.
Step 4. You’ll receive an OTP on your registered mobile number. Enter the OTP and click on Authenticate.
Step 5. Your UPI ID will be verified and you will be able to complete your transaction.
#5. Buying Bitcoin on the Exchange
Follow the below steps to buy Bitcoins on WazirX.
In the exchange section select INR. This is a spot market for all the cryptocurrencies paired against INR.
Check BTC/INR pair and on the screen, you will get BTC/INR price charts, the order book details and the order entry form on the right-hand side as shown below.
You need to fill in the buy order form and click on “Buy BTC”. This will place your buy order and you will receive Bitcoins as soon as the order gets traded.
You need to wait for some time because the order will take a few minutes to get executed depending on the available sellers.
Once your order is complete, you will receive a 26 to 35 character bitcoin address. You will not receive any physical coin or an e-coin. The address is proof of your bitcoin ownership.
The address consists of the alphabet and numeric characters that begin with “3”, “1” or something like “bc1”.
For example the bitcoin address may look like.
#6. Storing Bitcoins Safely for Long Term
Keeping Bitcoins on the exchange account is better if you are trading (buying & selling Bitcoins) frequently.
But if you are holding Bitcoins as an investment for a long period then you should store Bitcoins in a separate crypto wallet.
Crypto wallets are separate from exchanges and are secure because they come with a set of public and private keys that help you store Bitcoins.
Every crypto wallet is a software program that stores public and private keys. The keys help you send & receive cryptos.
The Public and private keys are made up of long alphanumeric characters like the one shown below.
You need the keys to send and receive Bitcoins giving you full control over your Bitcoins which is not possible with the exchange account.
You can either have a hot wallet or a cold wallet.
A hot wallet – comes as apps or downloadable software and is always connected to the internet, making them prone to hacking incidents.
Hot wallets are free to download and use. Examples of hot wallets include – Exodos wallet and Coinbase wallet.
A cold wallet – comes in the form of USB sticks in a physical form and is isolated from the internet making them safe from hacking or virus attacks.
You need to buy a cold wallet from online stores. Examples of cold wallets include – Ledger Nano and Trezor wallets.
Pick Ledger Nano X cold wallet for your Bitcoin investment because –
- You can manage over 1,800+ coins including Bitcoin
- Contains a secure chip to withstand attacks
- Ledger NanoX has its own custom OS (BOLOS) to protect against malicious attacks
- Weighs 16.2g and has a 128×32 pixel screen
- You need to use buttons for operations
Blockchain technology has opened up new ways to do financial transactions without involving banks and financial services companies. The technology can be implemented in sectors such as – payment services, wallets, exchanges and financial transactions.
Being the first cryptocurrency Bitcoin has an advantage and the potential to grow many folds in value. You need to check your risk-taking capacity before you start a Bitcoin investment.
If you require any further information do let me know in the comments.