Bitcoin & Various other ways to buy cryptocurrencies in India

Different ways to buy cryptocurrencies in India

If you are interested in getting hold of cryptocurrencies, despite the risk, here's a look at how to go about it.

 As bitcoin prices skyrocket, it seems like everyone around wants to join the bandwagon, irrespective of the lack of understanding of the instrument and the risks involved. (To know more about pricing rationale, read here.).When a weekly call from your sibling or a coffee conversation with your colleague turns into a bitcoin purchase talk, you know that the interest in bitcoins is increasing. If you are interested in getting hold of cryptocurrencies, here's a look at how to go about it.

How to get there?

According to coinmarketcap.com, there are over 1,000 cryptocurrenices, the most popular of which is bitcoin. “There are four main ways to acquire cryptocurrencies—mining, receiving cryptocurrency as a gift, accepting it in exchange for goods or services you provide and buying from a brokerage platform or an exchange,” said Benson Samuel, chief technology officer and co-founder, Coinsecure.

Bitcoin mining: The bitcoin system runs on a peer-to-peer network and transactions happen directly between users without an intermediary. “Transactions are recorded in the public ledger called blockchain and verified by network nodes, which could be any individuals using a computer system with bitcoin software installed. Once users have made a transfer, the transaction will be broadcast between users and confirmed by the network. Upon verification, it will be recorded in the blockchain, and then the transfer is completed. This record-keeping process is referred to as ‘mining’ and people offering the computing power to do so are called ‘miners’,” wrote David Lee Kuo Chuen, economics professor of fintech, Singapore University of Social Sciences, in his paper Cryptocurrency: A New Investment Opportunity?. 

Since bitcoins are created as an incentive for solving the cryptography puzzle, miners are rewarded with the newly created bitcoins, apart from transaction fees. So, bitcoins are created as an incentive.  

Bitcoin as gift and payment: If you get bitcoins as a gift, you can sell them at any cryptocurrency platform. But sometimes, you can encash only at a particular exchange. To get bitcoin payment, you have to provide a bitcoin address. You will have to open an account and give bitcoin address from where you can then cash out.

Buying bitcoins from exchange platfroms: Another way is to buy it on exchange platforms. Bitcoin exchange platforms are like stock exchanges. Some exchanges allow you to buy other cryptocurrencies as well such as ethereum. In India, exchanges such as Coinsecure and Unocoin allow you to buy bitcoins. 

How do you buy? 

To purchase bitcoins you have to first register yourself. Usually, most exchanges have apps which you can download. Once registered, you have to provide your bank details and go through the know-your-customer (KYC) process. Hence, you have to provide details such as PAN and Aadhaar. You will also be asked to give your photograph and provide your signature. Once this process is complete, you can start buying and selling bitcoins. Buying bitcoin is like an e-wallet where you can load money. The difference is that you can convert the currency into cryptocurrencies and for doing it you have to load money through fund transfer channels. For the service that the exchange provides, there is a fee, and also commissions.

Fees and other charges

There is a cost involved in getting bitcoins, whether you mine them or buy from an exchange platform. “Every bitcoin transaction has a mining fee associated with it. To have a faster bitcoin transaction, individuals can add in a larger mining fee to expedite the validation process. In terms of fees to buy and sell bitcoin, each exchange and brokerage has a different fee structure. Our fees range from 0.4% to 0.6%. Some brokerages charge up to 2% in fees for buying and selling bitcoin,” said Samuel.

What you should know

While the sharp rise in bitcoin prices may look attractive, you need to careful while deciding to invest in them. To start with, do a thorough check while choosing the company from where you want to buy. No one wants to put money in something where she may get cheated. In the last couple of years, there have been multiple incidences of fake cryptocurrencies. 

Don’t expose yourself too much to cryptocurrencies if you don’t know much about it. If you are getting bitcoins or any other cryptocurrency in the form of payment, check if the company has a history of making payments in this manner and if your country has an outlet to convert this into fiat currency if required. 

Courtesy : LiveMint

Alert Bitcoin investors! RBI issues another warning, says cryptocurrencies have some risks

Alert Bitcoin investors! RBI issues another warning, says cryptocurrencies have some risks

Bitcoin breached $12000 !!! mark on Wednesday for the first time ever. The virtual currency has soared more than 1,000 percent since the start of the year. Last Wednesday, it was trading at $9,500. Nothing moves so fast in the financial world. So what is fuelling this rapid rise of bitcoin? This is something that has puzzled many bankers and financial analysts. Business magnet Warren Buffett recently called it a 'real bubble'. He is not alone to caution the investors against cryptocurrency. Garrick Hileman, a research fellow at the University of Cambridge's Judge Business School, earlier said: "What's happening right now has nothing to do with bitcoin's functionality as a currency - this is pure mania that's taken hold." Despite these cautionary words from financial experts, bitcoin continues to rise.

Now, another warning has come for the virtual currency investors. This time from the Reserve Bank of India. The Central Bank on Wednesday issued its third warning, reminding the investors of its earlier concerns. In its first warning issued on December 24, 2013, the RBI said that the creation, trading or usage of Virtual currencies or VCs as a medium for payment are not authorised by any central bank or monetary authority. "No regulatory approvals, registration or authorisation is stated to have been obtained by the entities concerned for carrying on such activities," it added.

The RBI's next warning came this year on February 1. It reiterated that the Reserve Bank has not given any licence or authorisation to any entities to operate such schemes or deal with bitcoin or any virtual currency. The bank regulator categorically said that any investor or trader dealing with virtual currencies 'will be doing so at their own risk'. Not only this, it went on to explain as to why the RBI feels that the investors could lose their money in cryptocurrency.

The RBI listed out some risks that virtual currency may pose to investors. Here are five

• The RBI says that virtual currency being in digital form are stored in digital-electronic media that are called electronic wallets. Therefore, they are prone to losses arising out of hacking, loss of password, compromise of access credentials, malware attack etc. Since they are not created by or traded through any authorised central registry or agency, the loss of the e-wallet could result in the permanent loss of the VCs held in them.
• Payments by virtual currency take place on a peer-to-peer basis without an authorised central agency which regulates such payments. As such, there is no established framework for recourse to customer problems/disputes/charge backs.
• There is no underlying or backing of any asset for virtual currency. As such, their value seems to be a matter of speculation. Huge volatility in the value of such currency -in this case bitcoin-has been noticed in the recent past. Thus, the users are exposed to potential losses on account of such volatility in value.
• So far, cryptocurrencies are being traded on exchange platforms set up in various jurisdictions whose legal status is also unclear. Hence, the traders of virtual currency on such platforms are exposed to legal as well as financial risks.
• It has been reported that usage of digital currencies are largely for illicit and illegal activities. The absence of information of counter-parties in such peer-to-peer anonymous/ pseudonymous systems could subject the users to unintentional breaches of anti-money laundering and combating the financing of terrorism laws.

Courtesy : businesstoday

Bitcoin price hikes trigger Google searches

Bitcoin saw a big dip in prices this week. According to experts, this plunge came because a set of miners called off a forking that was to happen this week

The interest in bitcoins has increased in line with the spike in its prices. In the last 1 year, price of bitcoin has increased over 800%. Its prices have also been volatile, with a big dip in prices this week itself. According to experts, this plunge came because a set of miners called off a forking that was to happen this week . However, bitcoin prices move up or down for many different reasons. Here’s a look at some of the reasons behind bitcoin price movements.

Supply and demand

Experts say the price of cryptocurrencies is unpredictable and it depends on demand and supply. “Price depends on the demand for buying and selling the cryptocurrency, matched with the supply of the cryptocurrency,” said Benson Samuel, chief technology officer and co-founder, Coinsecure. For example, no more than 21 million bitcoin can be created. “The fact that there are only a fixed number of bitcoin that will ever be created, ensures that there will never be inflation with the currency and that if there is demand and the supply is limited, the price of bitcoin will continue to go up,” said Samuel. Many ask whether the current valuation is hype. “It is difficult to categorize something as hype when bitcoin is not a return-generating asset. Its price is driven by demand, being a limited-supply good,” said Sumanth Neppalli, cryptocurrency and blockchain analyst, Zebpay, an app-enabled bitcoin exchange.

Forking called off

Another forking was expected this week, which was called off. Experts say that the plunge in bitcoin prices was due to the cancellation of an upgrade. “Perhaps frustrated by the cancellation of technology update of the original bitcoin blockchain, which was announced recently, many users are switching to bitcoin cash, which allows for bigger block sizing, giving ample capacity for everybody’s transactions, as opposed to bitcoin’s cap at 1 MB blocks,” said Daniele Bianchi, assistant professor of finance, Warwick Business School, UK. Bianchi is currently researching crypto-currencies. Bitcoin cash is a cryptocurrency that was born from forking in August this year.

Investor sentiments

Unlike in stock market, where you can determine the change in prices due to the change in the fundamentals, in cryptocurrencies it is mainly due to sentiments. “The high volatility of cryptocurrencies is driven mainly by investor sentiment rather than by a change in fundamentals. We are not arguing that there are no fundamentals, rather there has not been any meaningful interpretation using traditional fundamental analysis,” wrote David Lee Kuo Chuen, economics professor of fintech, Singapore University of Social Sciences, in his paper ‘Cryptocurrency: A New Investment Opportunity?’ carried in Journal of Alternative Finance,

Speculation and news

In the past, price movement has happened due to geopolitical issues, breaking news, technology advancements and security breaches too. “Intentional devaluation, coupled with capital controls spurred increasing demand with many Chinese investors looking for sending their money off-shore in a flight-to-safety type of dynamics,” said Bianchi. There is speculative news on the wider adoption of bitcoin, not only as a payment method but also as an investment vehicle, increasing demand, and pushing prices further.

What it means for you

There are no definite reasons yet for bitcoin price movements. Multiple factors determine price fluctuation and it is very volatile. If you are looking to invest in it, the basic rule of investment applies here too—if you don’t understand a product well, stay away from it. If you still want to invest, first educate yourself about the investment instrument and then take the next step.

Courtesy : Livemint .