The Buyt Desk
The digital currency, Bitcoin, is growing at an unimaginable pace. At the time this piece was written the value of a Bitcoin stood at Rs 27, 71,183.70. What seemed like a fraud to many is now channelizing into a revolutionary global financial system.
Requirements for investing in bitcoins
When you start an investment like buying a mutual fund, opening a bank account or starting a bank fixed deposit you need to fulfil certain formalities. In the same manner, if you want to buy and sell bitcoin you need to have the following system in place-
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You require an account in a cryptocurrency exchange,
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Next, personal identification documents,
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You cannot transact in bitcoins without a secure and stable internet connection,
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Finally, you require a method to make payments. Bank transfer, debit cards, credit cards, mobile wallets, Bitcoin ATMs, and peer-to-peer exchanges are some of the valid payment methods.
For your own safety, experts recommend possessing a personal wallet in addition to the cryptocurrency exchange account.
Steps for investing in bitcoins
Now that you have understood the necessary requirements before investing in bitcoins, let us discuss how to invest in bitcoins.
Step 1
A cryptocurrency exchange is like a stockbroker that facilitates the purchase, sale, and storage of bitcoins. To invest in cryptocurrency, choose an exchange. Observe whether the exchange deals in Indian currency or not. Is it easy for you to navigate the exchange app or not? It is a good idea to select the exchange that allows you to withdraw your digital money to store in a personal wallet
Crypto exchanges work round the clock and are self-regulated. They charge a small fee to help you trade cryptocurrency. Globally Binance is a popular cryptocurrency exchange and it owns one of the well known Indian crypto exchange the Wazir X. It has gained immense success since its inception in March 2018.
Step 2
After identifying the exchange, the next step is to create your account with the exchange and link a payment method with it. Most crypto exchanges are particular about the KYC process for account opening. The exchanges may ask for different personal identification documents depending on their regional location.
After verification and authentication of the account, you can link the payment method with your exchange account. As we discussed earlier, there are a variety of viable payment ways for trading cryptocurrency like bitcoins. It is a good practice to avoid using a credit card because you never know how the value of bitcoins fluctuates.
Each crypto exchange charges a fee for depositing money in your account depending on the chosen payment method. Coinbase charges a 1.49% fee for linking your exchange account with a bank account.
Step 3
Now you are all set to start investing in bitcoins. The good news is that you can buy bitcoins for as low as Rs.100. If you are a beginner in digital currency, the low capital requirement is a boon. Many exchanges allow you to set up recurring purchases of bitcoins.
Step 4
While exchanges offer advanced features, their main focus is not the security of the Bitcoin wallet. You should store the purchased bitcoins in a personal digital wallet to which you hold a private key. Storing bitcoins in a hardware wallet is safer than an online wallet.
