Bitcoin basics for beginners & how to invest in bitcoin
All of us must have heard the name Bitcoin. In this chapter we will discuss about bitcoin basics for beginners and an overview of bitcoin in India. We may have heard about how bitcoin made several investors millionaire and billionaire in a few years. If we look at the massive return it has given after its incorporation then we will be surprised. From 2009-10 that is when bitcoin first came to its existence, it has moved from 0.09 USD to approximately 68000 USD its 2021 highs, that is a massive return in 10 to 12 years. After Bitcoin started market trading in 2013 up to 2021 Bitcoin has given a return of approximately 59000% as per the charts of Coinbase.
What is Cryptocurrency
Now let’s know some basic facts about bitcoin. Bitcoin is a decentralized digital currency. As it is not available in any physical form, it has been stored, circulated and operated on digital form only. It is fully encrypted with cryptography software so it is called Cryptocurrency.
There are various other cryptocurrencies available in the market like Ethereum, Solana, Doge coin, Matic, Binance coin etc. But Bitcoin is the first cryptocurrency and most popular also. So many people call all cryptocurrencies as bitcoin, it has become a brand name of cryptocurrency.
What is Decentralized currency
All currencies have some regulatory body like Govt. Central Banks, Reserve Bank etc. to control and regulate the transactions. But bitcoin does not have any Central regulator. So it is known as decentralized currency.
Block Chain Technology
It operates on peer to peer transaction basis through open source cryptographic software. All the transaction data is collected and publicly maintained by miners and stored on data blocks. All blocks are connected with each other and form a chain like structure. So this technology is called as Block Chain Technology.
Criticism against bitcoin
Many investors criticize bitcoin due to its highly volatile nature and don’t consider it as a safe asset for investment. Some argue that as its transactions could not be monitored by any regulator so it may encourage illegal activities like terrorism and black money. Some criticize it due to the massive power consumption it requires by miners to maintain its transactions globally which may harm the environment.
Global Crypto Exchanges
Although there are various criticisms against bitcoin since it has become an attractive investment opportunity for risk taker aggressive investors who invest in crypto currencies to generate quick and massive returns. As it is a digital currency, we require a digital wallet to hold it. There are several crypto exchanges who provide a platform to buy, sell and trade bitcoin and other cryptocurrencies and provide a digital wallet to store and hold it. All the exchanges are generally operates 24 x 7 all day round the clock. So we can buy and sell bitcoin at any time from anywhere in the world. Some global exchanges are
- Binance
- Coinbase
- Crypto.com
Legality of Bitcoin
In several countries there are various types of rules regarding crypto currency. China has banned it several times and also withdrawn it after some days. Also the majority of bitcoin miners are from China and that is a big market for bitcoin. The USA and Europe are also big markets of bitcoin. Several big crypto investors are from the USA.
Bitcoin ban in India ?
If you are worried about Bitcoin ban In India, then we must say it is not banned or it is not illegal to buy and sell crypto currency in India, but you cannot use it as a legal tender. That means you cannot use it to make any kind of payment or monetary transactions but still you can buy, sell, hold and trade it. Now the Govt is considering to regulate the transactions of crypto markets and may ban some private crypto currencies.
Some crypto investors argue that as Bitcoin, Ethereum like tokens are open source and publicly managed so the Govt will not completely ban it. And also give some time to its investors before putting any ban. In the 2022 budget, Govt. of India has applied 30% Tax on income from digital assets, which indirectly indicates to profit earned from bitcoin or crypto currencies will be taxed flat 30%, but it is a good sign for crypto investors as Govt. partly regulate it.
High Volatility of bitcoin price
In India there are several investors who invest in crypto and have made a good amount of money. Due to the huge returns bitcoin has given in the last few years, it has attracted mostly the young investors who can take risk to generate a good return within a very small time. But sometimes it also gives huge losses due to sharp fall in market price. As the crypto market is a global market linked to almost 90% of countries and runs 24×7 simultaneously at all places so any bad news in any big countries regarding bitcoin may largely affect its price movement.
Sometimes it falls more than 60% in a few days and sometimes it jumps 300% also within a few days. Due to its highly volatile nature, safe investors always avoid it. So if anyone wants to invest in crypto currency should invest that amount which they can afford to loose. As there is no underlying assets of any crypto currencies so we cannot guarantee any return or valuation of it. So beginners should invest in it like lottery ticket.
Investing in Bitcoin vs lottery
Lotteries are very popular in India and almost 12 Indian States have their lottery schemes. There are a lot of fans of lotteries in India who purchases daily lottery tickets and lose thousands of their hard earned money in it with a dream of becoming millionaire. But all of us know the success ratio in lottery and gambling is negligible. So in my view it is better to invest that money in safe growing assets like stocks, where it can grow or if you want high risk high return then you can invest some small part of your income in bitcoin or crypto rather than losing it in lottery tickets. At least here we can make some analysis and calculate the risk reward ratio rather than blindly spending money in the lotteries depending only on luck.
Indian Crypto Exchanges
There are several crypto exchanges in India also, who provide trading platforms, online wallet and all other services for bitcoin and many other crypto currencies. We have used a few of them which are very good and easy to use for beginners. They also don’t charge any extra fees.
CoinSwitch Kuber – This is a simple, secure and easy to use mobile app. You can easily buy & sell bitcoin and other crypto currencies through this app. You can add money through your UPI wallet like Gpay, PhonePe etc. and withdrawing money from it also very fast and easy. So this is our first choice. You will get Rs.50 free balance in your wallet if you open the account through our referral link. Then complete your registration, KYC and start purchasing bitcoin. For details how to do all the account opening process see our next article.
CoinDCX – This as a mobile app to invest in Bitcoin. You can use the CoinDCX Pro app if you want to login from laptop also. Use our invite link to download the app & get ₹100 Free Ethereum when you make your first investment
WazirX – It is the most known crypto exchange in India. It has very good chart features that you can use from Laptop and through mobile app also. You can use our referral link to open account.
How to buy Bitcoin – Account opening process
Anyone can open a free account within a few minutes and start trading with as low of 100 rupees only and could invest up to more than 2 lakhs also. You will also get some free balance worth Rs.50 to Rs.100 after opening account first time and completing your KYC. You can read our article to know how to open an account and how to invest in bitcoin for step by step guide.
Conclusion & Disclaimer –
Most importantly we want to give a disclaimer that this article is only for information and educational purposes only about crypto market and bitcoin basics for beginners. We are not recommending anything here and please make your own analysis before making any decision.
