In the Indian cryptocurrency market, Bitcoin and Ethereum are getting competitive day after day in terms of returns.
The price of Bitcoin has increased over four times and Ethereum by over ten times in the past year alone.
Such returns have attracted many retail investors to dip their toes in this unique and fascinating asset class.
Many youngsters or first-time investors are heading towards crypto to make their first investment in this latest digital asset.
However, most investors do not comprehend the Indian cryptocurrency market fully.
Here are five things you should understand about the Indian cryptocurrency market.
Investing in cryptos is not legal.
There is a typical misunderstanding that cryptocurrencies are unlawful.
In 2018, RBI forced a ban on banks from facilitating cryptocurrency transactions.
This circular made the entire crypto community in India go feisty, and they filed writ petitions to question the ban.
Presently, the scenario is very diverse in the crypto space.
Well-known investors are funding many fintech startups to build the market.
More retail investors are now curious about dipping their hands in the market.
More than 2 million users have enlisted as investors in crypto start-ups like CoinSwitch Kuber within the first half of its first year.
Recently, RBI declared that it is inspecting the need to create a central digital currency (CBDC) to regulate the market, which could be a positive move for the Indian cryptocurrency market.
Cryptocurrency transactions are taxed.
Cryptocurrencies are indeed decentralized.
They are not owned and controlled by a central administration or the government. However, that doesn’t mean you are not required to pay tax if you invest in cryptos.
Any income in India will come under the umbrella of India’s taxation provision.
For instance, every other investment, profits earned by investing in cryptocurrencies are also subject to be taxed under the head of income from capital gains.
Cryptocurrencies are not expensive.
Typically, when we say cryptocurrency, people usually associate it with Bitcoin.
You may be aware that one Bitcoin price is now a whopping~20 lakhs INR per coin.
Many investors think that they can’t afford to invest in such high valued assets and tend to stay away.
However, what most people are unaware of is that you can also buy Bitcoins in a fraction.
In India, there are crypto exchanges like CoinSwitch Kuber, which allow users to purchase with a minimum investment amount.
The value of crypto is as real as Rupees
Cryptocurrencies are digital assets and do not maintain a material form like paper money.
The ethereal nature of cryptos has led many to acknowledge that cryptos do not have actual value and are just a set of codes.
However, the reality is that no currency retains real value unless people acknowledge it.
For example, Rupee in India holds significance because it is a sovereign currency, and people think in its sovereignty.
Let’s say that the government declares Rupee to be nothingness overnight and introduces a new currency; then Rupee will no longer hold value.
Likewise, many people have placed their trust in cryptocurrencies as a means of exchange and a store of value.
Lastly, it is a decentralized system, and it’s being held together by a community.
