Cryptocurrency is digital cash. The word ‘Crypto’ means concealed or encrypted. Therefore the transactions taking place in this type of currency are highly secured. It is becoming popular because it is decentralized (i.e.) it doesn’t follow the normal centralized banking system
These currencies can be used to buy products or services. For Example: Think of buying a gift voucher for a friend. Say you buy the gift voucher of a specific brand for Rs. 10,000 and you give it to your friend for his birthday. Now he will go and redeem the gift voucher by buying a product of the specific brand.
In this example, the gift voucher is the cryptocurrency and since you are giving it to your friend, the transactions are not forming part of a centralized system and therefore it does not have to go through the normal route for exchange.
Just like how foreign currencies are purchased through Foreign exchange trading platforms via brokers, Cryptocurrency can also be purchased through cryptocurrency exchange platforms. To put it more simply, shares are bought in share markets via brokers in trading platforms. The only difference is that shares and foreign exchange platforms are regulated in India and Cryptocurrencies are unregulated.
But this raises the question ‘Are cryptocurrency legal in India?’
Yes. Cryptocurrencies are legal in India. There is no barrier to purchase or sell Cryptocurrencies in India. It is just that they are not regulated by a governing body and the government is examining options to regularize cryptocurrency.
Step1: Opening a Digital Wallet. Cryptocurrencies are also like cash and you need a wallet to store the coins. There are two types of Digital wallets. They are Hot Wallets and Cold Wallets.
Hot Wallets: Hot Wallets are online wallets. (i.e.) you can have it on your phone or computer and will be easy to make transactions faster. But since they are connected to the internet, they can also be easily hacked if you don’t have proper safeguards.
Cold Wallets: Cold wallets are offline wallets (i.e) they are not connected to the internet and are highly secured but it will be difficult to do transactions frequently.
Popular Crypto Wallets:
Step2: Open an account in Crypto Exchange Trading platforms. There are lots of platforms that provide trading in crypto. You can buy, sell and hold in these crypto platforms. Some popular exchanges are as follows:
Step 3: Link your trading platforms to Bank account, Debit, or Credit Cards. Then, you can start buying and selling of Cryptocurrencies.
Generally, Cryptocurrencies are called Crypto-assets. There are more than 4,000 Crypto-assets in circulation. Based on market capitalization as of the date of publishing this article top, 5 Cryptocurrencies are explained below.
|Crypto currency||Year of circulation||Market Capitalization*||Average price per coin*||Maximum Coins created or in circulation*|
|Bitcoin (BTC)||2009||$740 Billion||$38,000||21 million Bitcoins|
|Ethereum (ETH)||2015||$315 Billion||$2,600||115.6 million Ethereum coins|
|Binance coin (BNB)||2017||$58 Billion||$370||170 million Binance Coins|
|Tether (USDT)||2014||$58 Billion||$1||58 billion Tether Coins|
|Cardano (ADA)||2015||$54 Billion||$1.69||45 billion Cardano Coins|
*Market Capitalization and Average price coin figures are as of the date of publishing this article.