With India having evolved into the world’s fifth-largest economy, Indian investors have shown a gradual yet significant and increasing interest in wealth creation and investment.
While the stock market has been the traditional and popular avenue for investors and traders, the short history of crypto investment in India has also been nothing but impressive. Classified officially as VDAs (virtual digital assets), it’s estimated that India now has more than 2 crore crypto investors, a number that’s only expected to increase in the next half a decade. That being said, the massive volatility in the crypto industry is something even seasoned investors find challenging to navigate. We did a deep dive into the Indian crypto industry to come up with this simplified but comprehensive guide.
What Is Cryptocurrency Trading?
Crypto trading is the selling and buying of different kinds of cryptocurrencies on an exchange by speculating on their price movements. Crypto traders employ different techniques, taking advantage of the market’s volatility to make a profit. Also, crypto trading is different from investing in crypto, as trading is all about employing market information to earn short-term profits, with the returns gained quarterly, monthly, and even daily.
Trading In Crypto In India
There are two distinct ways to sell and buy cryptocurrencies in India — using exchanges and using CFDs (Contracts for Differences).
CFDs
If you want to take advantage of the market volatility for speculation and fast earnings, then CFDs are the perfect platform. They allow betting on crypto price movements without actually having to hold the assets, for which you need to register with CFD trading providers and enter into contracts. The contracts make it possible for you to speculate about how the particular crypto will fare within the said time frame, ultimately registering a profit if you’re right. It goes without saying that you need to understand the fundamentals of the highly volatile crypto market to trade successfully with CFDs.
Exchanges
Making for an excellent alternative to CFDs, crypto exchanges serve a very different purpose, though. They’re platforms where you can sell, buy, or hold crypto of your choice — from Bitcoin to Ethereum.
In order to trade in crypto using an exchange in India, you need to do the following:
- Sign up on a crypto exchange: First and foremost, you need to choose an exchange and create an account, as there are multiple crypto exchange platforms in India currently. Additionally, most reliable exchanges will require you to submit a KYC (Know Your Customer) form before you can do anything.
- Adding funds: Once you’ve activated your account, you could either link it to your bank account or manually transfer funds into it.
- Picking a crypto: The next important thing you need to do is pick a crypto to trade in. While there are the more popular cryptos, such as Ethereum and Bitcoin, some smaller cryptos can also provide much more stable returns.
- Trade: After you’ve chosen a cryptocurrency you want to trade with, you place the buy order. Once that buy order is executed, you can either sell it when you feel you might get the best outcome and gains or hold it in your wallet.
- Store your crypto: Whether you’re holding crypto for the long haul or the short term, you need to have a cryptocurrency wallet for storing and accessing it, such as an anonymous crypto wallet.
Purchasing Your First Cryptocurrency
Notwithstanding which centralized platform or exchange you use, these steps for purchasing cryptocurrency are universal.
- You need to first download the said app or head to the website and go through the sign-up process, which is simple, just like any banking or financial website or app.
- Next, you need to follow the instructions for KYC verification. Most reliable platforms ask for all the required personal details, such as name, address, contact number, etc., while also requiring you to add or upload your government ID (the commonest is the Aadhar) when prompted. While it may seem invasive, this step and process is very important for helping keep frauds and scams from happening. Once you’ve supplied all the relevant information, the verification process happens, which takes a day or two.
- Finally, you can deposit funds into your account. Please note that most reliable platforms only accept bank transfers as a method for depositing funds (some might accept Google Pay too). Once the account has funds, you’re ready to buy your crypto.
The crypto market might sound complicated to trade in, but there are defined and clear-cut ways to find one’s feet in this evolving and growing industry. Keep your eyes peeled for the second part of this series where we tell you how to choose the right exchange, the right cryptocurrency, and even the right strategy for trading.