I’ve had a bunch of friends approach me recently on ways to invest in bitcoin and other cryptocurrencies. In an effort to save myself from answering the same questions again and at the same time do a decent job explaining the risks and intricacies involved with what you’d think to be a simple process of buying bitcoin, I’m writing this post as a guide on “How to buy bitcoin in India”.
As you can gather from the title, due to the highly regulatory environment of bitcoin, this post is relevant only for the Indian market. I’ll make an effort to update this post as things change however most of the content here should be relevant regardless.
Table of Contents
🔗 Know What You’re Investing In
As with anything you’re investing in you should make an effort of understanding what is it you’re investing in and how it works. For bitcoin, giving the original whitepaper a read should give you a brief understanding of the ideas behind it even if you don’t understand the technical workings of it.
🔗 The Right Time
Is this the right time to buy Bitcoin and/or Ethereum? If you’re long term bullish about Bitcoin and Ethereum like me, it’s always a good time to buy using the Dollar Cost Averaging investing method.
As general rule only invest what you are willing to lose. This is still a highly speculative market and there are risks involved.
Once you’re all set to actually buy bitcoin you need to setup an account at a cryptocurrency exchange. There are various exchanges operating in India and few come and go regularly. My recommended exchange is WazirX. They have a good mobile app and offer good prices overall across all Indian exchanges.
🔗 INR Deposits
If it so happens the time you’re trying to buy bitcoin, Indian banks are blocking deposits to the exchanges, preventing card purchases of bitcoin or in general being the legacy obscure institutes in denial of being disrupted and replaced that they are, then congrats you know what the revolution feels like.
Fortunately WazirX rose to fame for a feature that works around just this problem. You can still buy bitcoin by using their P2P buy feature to first buy USDT (a U.S. dollar stable coin) and then use USDT to buy bitcoin.
You can learn more about WazirX P2P here.
Once you have enough bitcoin(s), you might be looking into ways of securely storing your bitcoin(s) outside of the exchange for long term safekeeping of your investment and gaining custody of your coin(s).
A bitcoin wallet or any cryptocurrency wallet is an app that stores the private key
that can be used to spent your bitcoin(s). If someone else has access to this private key
then they can transfer the bitcoin(s) without your approval/knowledge. Much like the password/pin
to your bank account, however with bitcoin there is no one to call and
report theft revert the transaction.
So it’s important you understand how to secure your bitcoin wallet’s private key and it’s backup (mnemonic seed) and use a good wallet from the start.
Hardware wallets are separate air-gapped devices that store the private key on a secure element from which the private key can never be extracted once correctly setup. They are good for making sure viruses and malware can’t access you’re private key even if you’re not a cyber security expect and can’t manage to keep your personal PC free from viruses.
A great starting hardware wallet is the Ledger Nano S. It works great and has good supporting applications for both the desktop and mobile.
Go through these articles to understand how to properly use a hardware wallet.
If you find hardware wallets are too complicated and have invested only in Ethereum and Ethereum based assets, then Argent is a good alternative.
Dogecoin is a meme coin. Unless you know what your doing and/or are a professional trader, stick to Bitcoin/Ethereum.
🔗 Is bitcoin illegal in India?
🔗 Which bank do you have an account with?
I’ve had a better experience with public sector banks as compared to private banks when using an account for buying bitcoin.
🔗 Do I have to pay taxes on bitcoin?
No. Not yet. Only when you sell and book a profit you have to pay capital gains on the profit. Disclaimer: I’m not a tax lawyer you should still contact your tax lawyer about this.