The blockchain-backed cryptocurrency is one of the most significant technological achievements since the internet’s inception. For investors and businesses worldwide, cryptocurrency has transformed the game of money.
Let’s understand the world of cryptocurrency in this step-by-step guide.
Simply put, cryptocurrency is a digital asset. The term comes from the fact that all of its transactions are highly encrypted, ensuring that they are safe. Unlike traditional currencies, which are regulated and controlled by a central body, it is decentralised. A cryptocurrency’s supply is limited, and it is sometimes compared to precious metals such as gold and silver.
Cryptocurrency is created by mining, a process in which powerful computers solve extremely complicated tasks in exchange for a reward for completing successful cryptocurrency transactions. In other words, cryptocurrency exchange results in more crypto coins. This explains the organic rise of cryptocurrency as more and more people joined the wave.
The Crypto market in India
According to Chainalysis research from October, India’s crypto industry expanded 641 per cent from July 2020 to June 2021, making it one of the fastest-growing cryptocurrency economies. Barring the 9-week negative return record set by cryptocurrencies, its growth has been phenomenal in India. The fact that global players like Google and Paypal are pushing for acceptance of bitcoins and other cryptocurrencies on their portal, along with other major corporate players, has boosted confidence in cryptocurrencies as the ‘future’ of money exchange.
India has been at par with the global trends when it comes to cryptocurrencies. One example could be the Dogecoin mania that spread across India in 2021. They saw record-breaking Dogecoin trade volumes and a significant increase in traffic. WazirX, which Binance owns, had its Doge/INR trading slow down the entire system. India also boasts of 2 crypto-unicorns, Coin DCX and Coinswitch Kuber, in 2021.
Also Read: Top 5 cryptocurrencies in India 2022
The Best Cryptocurrencies in India
With a market capitalisation of over $600 billion, Bitcoin is the most favoured cryptocurrency. However, many other cryptocurrencies, including Etherium (Market Cap – over $238 billion), Tether (Market Cap – over $72 billion), and Binance Coin (Market Cap – over $52 billion), to name a few, offer stable investment choices.
Other Notable Players:
XRP – (Over $20 Billion Market Cap)
Dogecoin – (Over $11 Billion Market Cap)
Cardano (ANA) – (Over #22 Billion Market Cap)
Solana (SOL) – (Over #15 Billion Market Cap)
Polkadot (DOT) – (Over $10 Billion Market Cap)
How to Invest in Cryptocurrencies
India has many crypto trading platforms, including two unicorns, and offers easy registration options for starting quick crypto investments. CoinDCX, WazirX, and Coinswitch Kuber are some of the major players in the crypto industry.
- While the interface and technology have advanced to allow easy transactions, your investment portfolio is recommended to be diversified and include multiple investable assets. Before making any investment, investors must first understand the asset class and the objective of investing in that class. In the case of cryptocurrency, markets are dynamic and quite volatile. As a result, it is prudent to devote only a modest amount of one’s capital to this potentially dangerous investment strategy. Digital tokens should make up between 5% and 10% of an investor’s portfolio, according to analysts. However, this number can vary depending on the risk appetite.
- After deciding the volume to buy, it’s time to select the right cryptocurrency to invest in. Apart from the individual research on the same, it’s recommended to follow Youtube channels like Crypto India, Cryptokanoon, and Coin Crunch India, to name a few, for current updates on cryptocurrency and the latest trends. Certain fundamentals are involved in digital tokens, and each is based on its own blockchain technology. The most important considerations are the mining process, intrinsic value, community addressed, and accessibility criteria.
- After you acquire a cryptocurrency unit, it will be placed in your “wallet.” Not a physical wallet, but a virtual one as you sign up for an exchange account. The codes for all of your coins will be stored in the wallet. There are two types of wallets: software and hardware. A software wallet is simply a programme that holds your cryptocurrency. You’ll usually obtain one when you open an account with an exchange, and you’ll need it for active trading. A hardware wallet is a gadget that stores cryptocurrency. It looks like a USB drive and is more secure than a software wallet, but unless you’re buying a large amount of cryptocurrency, it’s not necessary.
It’s too simple to hop on any bandwagon simply because someone told you it was a good investment. It is, however, in your best interests to perform your own research. When purchasing cryptocurrency, keep in mind that it has no intrinsic worth. Instead, it denotes the possession of a digital item whose price is solely decided by the public’s perception of its worth, and thus you must believe in the cryptocurrency you choose to invest in. How do you go about forming these beliefs? You can do this by conducting your own research. Put in the time to read white papers and figure out which cryptocurrencies are likely to appreciate in value in the future before making an investing decision.