Have you been fancying the idea of becoming a “Cryptopreneur” too? Work, life, and leisure – they are all rapidly shifting to digital platforms and online means. People around the world seem to be warming up to the idea of e-living and the lack of tangibility does not seem to scare or bother us too much.
Amidst these developments, cryptocurrency has emerged as the new “in-thing” and interest in the same has been at an all-time peak. Here is a handy guide for beginners who wish to explore…
What is cryptocurrency?
Cryptocurrency or “crypto” is a form of digital currency which can be used to transact goods and services online. These online transactions are secured using an online ledger with strong cryptography to ensure secure payments.
Crypto makes use of a technology called the blockchain which is considered a very secure and efficient form of decentralized technology and is a huge part of the appeal of crypto altogether. So far, Bitcoin, the creation of Japanese developer Satoshi Nakamoto, has been the most popular crypto, it was also the very first of its kind.
Why Crypto? What are the benefits?
Feeling unsure about this new-age currency? Here are some aspects of crypto that might convince you to take the plunge…
More secure payments
This is perfectly enabled by Blockchain. This decentralized technology works through a massive network of computer systems around the world. Therefore, every tiny change is recorded and verified with multiple systems in the network. Elimination of the aspect of human error makes it further reliable and safer than traditional payment methods.
Inflationary influences unlikely
Since crypto is beyond the purview of the central banks of various countries, there are few chances of it being affected by the value-degradation that happens as a result of inflation-induced by central banks in their bid to regulate money supply in their respective economies.
User autonomy
Much like the previous bulletin, this means that users can benefit from the absence of governmental or institutional interference in the form of ceilings, regulations, banking fees, and base limits when investing or dealing in crypto.
Discrete transactions
Crypto allows users to maintain utmost privacy and discretion in their payment details, unless they willingly publish the same in the public domain.
This is the future
Ever since it was created in 2009, cryptocurrency has only grown in leaps and bounds. It has very promising aspects for the future, and for anyone looking to remain relevant in terms of investments and in the long run, crypto is the way to go. Besides, it is a growing market, and given that its value will only increase, investing early on seems to be a wise choice.
So is crypto a good investment?
As per CoinMarketCap, a market research site, there are currently over 10,000 different kinds of cryptocurrencies in circulation around the world today. The total value of all cryptocurrencies on July 9, 2021, was more than $1.4 trillion — down from April high of $2.2 trillion. The total value of all bitcoins, the most popular digital currency, was pegged at about $630 billion — down from April’s high of $1.2 trillion.
This means that crypto is volatile, sure. Therefore it cannot be ascertained that it will be the currency of the future. However, it still makes for a good investment. Speculators seem to be satisfied with the prospect that its value has been, and will continue to, go up steadily in the future, and they are not concerned about its long-term acceptance as a currency.
It is worthy to note that, just like real currencies, cryptocurrencies generate no cash flow, so for you to profit, someone has to pay more for the currency than you did.
Its legal status in India
Buying cryptocurrencies is absolutely legal in India. There is no explicit law prohibiting Indians from buying/selling cryptocurrencies in the country.
From past experience and study of trends, it is also shown to be a resilient and promising investment. An article by Financial Express quotes Nischal Shetty, CEO, WazirX, calling Bitcoin a new alternative asset class. It has been around for over a decade and withstood two global recessions. “Like gold, cryptocurrencies are seen as a hedge to protect fiat portfolios, and its value as a hedge lies in its inflation-beating qualities,” he said.
Having said that, there isn’t any legal guarantee to the safety of cryptocurrency in our country, as of now. Section 26 of the RBI Act holds banks and other financial institutions in the country accountable to its customers, however, since it is beyond the purview of the central banks, the crypto game really has no rules or an overseer that could act as a buffer.
Some tips to keep in mind before you get started…
There is not much clarity on tax regulation pertaining to cryptocurrencies in the country
With the soaring value of Bitcoins, income for selling Bitcoin is taxed at 30 percent tax on cryptocurrency gains for short term investments and around 20 percent for long-term investments. However, as long as you don’t sell the Bitcoin, you don’t have to pay money simply because its value went up.
Ensuring the safety of your crypto is important to ensure it is inaccessible to anyone but those with specific access codes
Using a hardware wallet – sometimes called “cold storage” – is widely accepted as the most secure method for storing cryptocurrency. It’s backed by security experts and keeps your private keys offline.
There are also online wallets you can use including, most recently, PayPal, which are called hot wallets. Even Bitcoin wallets have faced multiple hacks in the past, which is why many people prefer to keep at least part of their investment in a cold wallet.
Read Cryptocurrency White Paper
A whitepaper is a digital version of a Draft Red Herring Prospectus (DRHP) that explains every facet of a project and its coin. Every project publishes a whitepaper on its website to provide detailed information to potential investors. It is important to read through it thoroughly.
Understanding Volatility
Critics have long emphasized the volatility of cryptocurrencies. Because it is riskier than any other investment, so you should be aware that it comes with its own set of risks.
No Governing
Currently, there are no big rules governing the bitcoin sector. The government hasn’t taken a firm stand on cryptocurrencies since it’s still a relatively young sector. However, if bitcoin becomes a competitor to government currency, a lack of taxation may cause problems.
Some helpful Apps to get you started
Cryptocurrency is uncharted waters for most people, and the apprehensions are understandable. But thankfully, there are apps that make it easier to manage your crypto account and not be overwhelmed at the thought of managing everything on your own! Here are some crypto assets and blockchain apps that you can install for your crypto-journey…
WazirX
By far the most popular app for crypto trading. It makes it possible to withdraw and deposit INR-based capital in a manner that is very easy and quick. The easy-to-use interface makes it a favorite among beginners, as well as people who are not too tech-savvy. In addition to that, it also has integrated charting tools, helping people to analyze prices, trends, and historical data.
Unocoin
This allows users to subscribe to cryptocurrencies. Other benefits are low transaction fees, live price tracker. The best feature of the app would be that it offers consolidated holding for all different cryptocurrencies, making it a one-stop solution. Further, you can also do your mobile and DTH recharges using bitcoin on this app.
CoinSwitch
This app is suitable for both beginners and advanced traders alike. Thanks to its simplicity and stability, it is quickly winning the trust of the Indian clientele. This app allows you to access aggregated liquidity of India’s main cryptocurrency exchanges to get the best deal. Its clear interface and smooth user experience make it a great option!
With that, you have a clear idea of what cryptocurrency means, and what you will be getting yourself into. Just like with any other trade, you can get better only with practice. It is important to research well, start slow and keep learning. Be cautious and wary but also remember, greater risks attract higher returns! Happy crypting!
Photo by Crypto Crow from Pexels
