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
Courtesy : LiveMint
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