With the price of Bitcoin, Ethereum, or Dogecoin taking a nosedive with the cryptocurrency market crash, it has been a turbulent year for the market. But, amidst the dark clouds lies the silver lining as it’s also the best time for investors who want to diversify their portfolios by investing in cryptos. As someone would say, “the way to become rich is to invest money and not to save it”, this is the right time to sail in the “buy the dips, then sell high” boat. But if you are just starting with Bitcoin, this is what you need to know:

Understanding the Cryptocurrency Investment Process

Unlike paper currency which has a physical presence, cryptocurrencies are virtual currencies traded and stored online, using blockchain technology. So, if you want to earn bitcoins, you either use mining or crypto exchange. However, Bitcoin mining requires you to solve complex computational mathematical problems to earn them. So, that takes you to the easier alternative, setting your foot into the crypto field through crypto exchanges.

So, if you are a new kid on the block who’s mulling over the idea of investing in cryptocurrency in India, we are here to guide you through:

How to Invest in Cryptocurrency in India

Here’s all you need to know on how to invest in bitcoin or any other cryptocurrency in India:

1. Pick Your Cryptocurrency

There are about 5,000 cryptocurrencies to choose from and you cannot just make your choice by simply Googling the best cryptocurrency to invest in. It’s better to do thorough research than just going with the flow. A few things to check would be:

• The higher the market capitalisation of the cryptocurrency, the more it signifies the investor’s interest and desire to buy the coin. So, simply multiply the price of the coin with all the available coins to derive the value of the coin and find out the most valuable one.

• Liquidity of the coin or how many coins (volume traded) has been traded in the past 24 hours. The higher the volume traded (with a minimum of $10, 000 trading volume), the easier it would be to buy and sell that coin.

• To invest in a stable cryptocurrency with a positive reputation in the crypto markets.

• Check if the cryptocurrency has a strong fan base and community with a serious interest in that specific crypto.

Open a Crypto Exchange Account

The next important step would be to create an account with a trusted crypto exchange. These are websites that facilitate trading or exchanging different cryptocurrencies between a buyer and a seller. Make sure that:

• The exchange supports your preferred cryptocurrency.

• The exchange encourages encrypted transactions, and allows you to store your cryptocurrency in cold and is not exposed online.

• The crypto exchange offers a trading platform that is easy to use.

• The exchange charges a minimal fee per transaction (not more than 1 per cent). Also, check for the withdrawal charges.

• Now, simply set up an account with a crypto exchange.

Choose a Cryptocurrency Wallet

Next, complete your KYC with a PAN card, photo identity proof, address proof, and get a crypto wallet to store, receive and share crypto coins. It’s a secure way to store and transact your cryptocurrency and keep them safe from getting stolen or in case the crypto exchange dissolves.

You can choose to download a mobile app crypto wallet, the ones through the web or crypto exchange, get a desktop wallet or hardware wallet.

With the local crypto exchanges recording a 250 per cent and 60 per cent boost in cash deposits at CoinSwitch Kuber and WazirX respectively, Indian investors are still upbeat about this supposedly nascent fintech fad. And, if you are wondering, cryptocurrencies are legal in India, they are not illegal either. So, you can safely bet your holdings on this promising trend and make the most of it.

DISCLAIMER: Views expressed are the writer's own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.