Understand Everything Before Investing in Cryptocurrency in India
The crypto industry is growing by leaps and bounds with Bitcoin, Ethereum, and Dogecoin being at the center of the stage driving the crypto frenzy in many parts of the world. Cryptocurrency is booming in India even after the regulations being implemented. Investing in cryptocurrency in India is taking a new form that there was almost a 20,000% increase in crypto investments in India in the past year alone.
Investors are drawn to the industry as they see a quick way to earn profits.
The crypto market, unlike the stock market, is unregulated, and as a result, its value fluctuates daily. Given the high volatility of these digital coins, here’s what you should know before investing in the cryptocurrency market.
Cryptocurrency: A Quick Intro
Cryptocurrency is a digital payment system that doesn’t rely on banks to verify transactions. It got its name because it uses encryption to verify transactions.
How Does Cryptocurrency Work?
Cryptocurrencies are not backed by a government or other central authority. Instead, they work on a network of computers. It is exchanged peer-to-peer across the internet without the use of a mediator.
Cryptocurrencies are decentralized, which means that no government or bank controls how they are created, valued, or exchanged. Cryptography secures all crypto interactions, ensuring that only the sender and intended recipient of a message may see its contents.
Cryptocurrency is Booming in India
Despite the Indian government’s ambiguous approach to crypto-assets, the country’s cryptocurrency investments are growing. UniFarm, for example, is proposing fresh concepts like Non-Fungible Tokens (NFTs).
What are the reasons that more and more people are investing in cryptocurrency in India?
- Low internet costs, growing real estate values, and increased taxes on precious metals such as gold and silver appeared to have aided the paradigm shift toward tangible asset investing.
- Furthermore, the advent of bitcoin gave people as young as 18 years old unparalleled freedom to invest and build their portfolios.
The Emergence of Crypto Platforms in India
The high inflation rates in India, combined with the restrictive and non-streamlined investment options, created a wonderful opportunity for forward-thinking businesses to open new opportunities for investing in cryptocurrency in India.
Because of the inherent nature of crypto and blockchain technology, entrepreneurs like Mohit Madan (Co-founder at UniFarm), Sandeep Nailwal (Co-founder at Polygon), and Nischal Shetty (Founder at WazirX) have developed innovative solutions with user interfaces (UI) that are straightforward and easy-to-use. Their platforms also have minimal gas fees and nearly no annual maintenance charges (AMCs).
Crypto and DeFi platforms exploded as a result of their 24×7 availability, basic design, and potentially sky-high returns on investment for any individual.
How You Can Invest In Cryptocurrencies In India?
Since Indian Finance Minister Nirmala Sitharaman spoke about digital currencies in Parliament, there has been a surge in people’s interest about investing in cryptocurrency in India.
Here is how you can invest in cryptocurrencies in India:
Acquisition of currency:
- Careful selection of cryptocurrencies is necessary because the market for such virtual currencies is volatile and heavily influenced by market conditions because they are typically purchased for investment purposes.
- Finding a crypto exchange. Although there are many cryptocurrency exchanges, not all of them work in all countries. Different exchanges also provide a variety of cryptocurrencies, allow a variety of payment methods, and charge a variety of fees.
- Register for a trading account.
- Register your payment method.
- Then, according to your preferences, make an order to purchase the coin.
Use the cryptocurrency:
At this point, you must select whether to spend or hold the cryptocurrency in the same way that you would a stock. Purchase goods or services from local merchants who accept cryptocurrencies or use cryptocurrency to make online transactions.
The Future of Cryptocurrency in India
Virtual currency speculators believe that digital currency is the way of the future. Like Credit/Debit Cards, UPI, Internet Banking, etc., digital currency can also be used to meet our daily payment requirements. It is much faster than any other way of payment and comes at a low cost all over the world. Crypto users believe that cryptocurrency would eventually replace traditional payment systems and serve as a substitute for national fiat currency and traditional commodities such as gold.
The Indian Finance Minister indicated in his Union Budget speech 2022-23 that revenue from digital virtual assets or crypto would be taxed. This news instilled a sense of optimism among cryptocurrency investors, who feel that the effort to tax them is a clear sign of impending legalization.
The government will tax the gain on crypto transactions at a flat rate of 30% (plus a fee). Because of the nature of speculation, no deductions are permitted when calculating profit. If such a transaction results in a loss, it cannot be offset against other income and cannot be carried forward. On the other hand, current-year losses are allowed to be offset against similar transactions’ current-year profits.
A 1% tax to be deducted at source (TDS) is in place to keep track of such transactions. In the hands of the recipient, the gifting of bitcoin or any other digital currency is also taxable. All provisions have been made applicable from April 1, 2022.
The digital economy would be boosted by the introduction of Central Bank Digital Currency (CBDC). In addition, virtual currency will result in a more efficient and cost-effective currency management system. Furthermore, it is planned that the Reserve Bank of India issue a Digital Rupee beginning in 2022-23, based on blockchain and other technologies. This may assuage the RBI’s concerns about private cryptocurrencies, which have been linked to financial instability. Thus, investing in cryptocurrency in India is worth your time.
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