The recent Bitcoin rally has caused a stir in the market. Due to its good returns, private investors are investing more than ever in this new asset class.
A few years ago, buying / selling Bitcoin might sound like a tedious job that was only suitable for techies. Today the scenario has completely changed. Many emerging startups like CoinSwitch Kuber in the crypto space and venture capitalists are trying to fund such startups to make Bitcoin investing more effortless than ever.
What is bitcoin
Bitcoin is the world’s first and most popular cryptocurrency, or digital currency. It can be used both as a medium of exchange (money) and as a store of value (investment instrument). Bitcoin is a decentralized digital currency that cannot be controlled or changed by any person or organization, as no single entity owns the network.
Why invest in Bitcoin?
With the introduction of Bitcoin, the world’s first fully functional and digitally native cryptocurrency, a new asset class emerged. Cryptocurrencies like Bitcoin have established themselves as a good asset class since their inception a decade ago.
But what do investors get out of it? Why does everyone want to buy a piece of this rare digitally encoded currency? Here’s why:
- High returns and best performing assets
Cryptocurrencies are one of the fastest growing asset classes, and Bitcoin holds around 69% of its market share. The price of Bitcoin is very volatile, meaning that the cost can fluctuate far from the average price of the currency every hour. However, such volatility in the market is an advantage for risk-friendly investors and traders who want to achieve fast and high returns on their investments.
For example, let’s say you take a look at bitcoin price data. You will find that Bitcoin’s value has risen from zero to nearly £ 30 in just a decade. It only makes sense that more investors would want to hold some of this wealth.
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- Alternative hedge against inflation
The macroeconomic increase in the prices of goods and services over time is known as inflation. It reduces the purchasing power of money. Bitcoin was originally conceived as a deflationary asset. The limited supply and the Bitcoin halving act as catalysts against inflation.
People used to invest in gold as an asset to protect them from inflation. In the past few years, more people have viewed Bitcoin as a better alternative. Even institutional investors are converting their money into Bitcoin to protect their finances from inflation.
How do I invest in Bitcoin?
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Suppose you want to buy or sell bitcoins in India, you can do it in the following ways:
- Through a crypto exchange
A cryptocurrency exchange is a platform that allows you to buy and sell digital currencies like Bitcoins, Ethereum, etc. In contrast to the stock exchange, crypto exchanges are self-regulated and work around the clock all year round.
You can also buy / sell part of Bitcoins through an exchange. In India, most exchanges offer a minimum capital requirement of just £ 100 to £ 500. These exchanges may charge a small fee to activate these transactions.
For example, let’s say you don’t want to pay a transaction fee or use a corporate platform to make your transactions easier. In this case, you can choose P2P (person to person) purchase mode.
Here the crypto exchanges / platforms only act as intermediaries. They find a seller interested in your purchase and help you complete the transaction. While this method seems more straightforward, it is not very often that you find a salesperson who fits your business. Also, P2P transactions may take longer to complete.
Mining is the source to making Bitcoin. In this process, the miner must successfully add a transaction block to the blockchain network, for which the reward for new bitcoins is paid out every 10 minutes. Every ten minutes a miner manages to add a transaction to the blockchain and earns Bitcoin through this process. Mining comes with a high degree of complexity and requires specialized equipment, making it an activity that is not for everyone.
The Easiest Way to Invest in Bitcoins – Crypto Exchange
For any retail investor who wants to add a fraction of Bitcoin to their portfolio, buying on an exchange is the easiest way. Many exchanges in India make Bitcoin transactions easier for their users.
All you have to do is register for an exchange of your choice and complete the KYC process. During this process your documents like PAN, Aadhaar etc. will be checked. Most exchanges have a strict KYC to avoid illegal use of such currencies.
Once you are a registered user, you can add INR money to your wallet and use that amount to place an order for Bitcoin. In India, you can buy Bitcoin with a minimum capital of just £ 100.
How do I choose a good exchange?
An ideal crypto exchange is simple, flexible, and accessible to its users. While many platforms are highly technical, some platforms like CoinSwitch Kuber are designed for retail investors to simplify the technical process.
When choosing your platform, make sure it is easy to use. Check out the details of the team behind the platform. Above all, try to avoid platforms that don’t have a KYC installed as it may not be very secure.
While choosing a safe and straightforward platform is critical to the safety of your investment, you must also do your research before investing in crypto.
Disclaimer: This is not editorial content and TIL hereby disclaims any warranties, express or implied, relating to it. TIL does not warrant, endorse, or endorse any of the above, and is in no way responsible for it. The article does not constitute investment advice. Please take all necessary steps to ensure that all information and content provided is correct, updated and checked.