How to do trading in Cryptocurrencies from India?
This article won’t discuss legality of Bitcoin or other cryptocurrencies. If you want to understand more about BlockChain Technology, please read What is BlockChain Technology. You should also read “You don’t understand Bitcoin because you think money is real”.
Now after this research, how do you invest.
Step 1: Make your account on Indian exchange/portals
You should make account on at least 2-3 indian portals which allow you to buy Bitcoins using INR. You would need to complete your KYC on all of them. Be ready with your Aadhar card and Pan card for your KYC on each portal. Also download Google Authenticator app required for Two-Factor-Authentication: Android & iOS.
ZebPay: This allows you to buy Bitcoins using their App or their website.
Koinex: They don’t have an app, you have to use their website. You can trade for 8 currencies here. Now they are charging 2% deposit fee and 2.36% withdrawal fee, so I won’t recommend them.
UnoCoin: You can buy Bitcoin here. Due to high load, the profile verification can take upto 15 days.
PocketBits: Here you can trade in 11 cryptocurrencies. They claim to be fastest, and have a little higher charges.
CoinSecure: It only has Bitcoins
Step 2: Invest in your portal
Deposit the amount in the portal you like, and buy Bitcoin or any other currency you like. Since a lot of people are investing these days, the amount might take 1-3 days to get reflected in your account. You should check prices in all portals and deposit in which you like. If you want to buy BitCoin, Bitcoin Cash, or Ethereum on credit card, you can use Cex.io
Step 3: Move the currency to an International Exchange
Now transfer the currency to an international exchange. Lets say you bought Bitcoin from ZebPay. Transfer all BTC (Bitcoin) to Binance and start your trading. Don’t get confused by pricing in BTC or USD. Your goal should be take out more BTC than you put in. This list is just to get you started, there are many more portals where you can buy bitcoins and many more markets where you can do trading.
Binance: This HongKong based exchange has the lowest trading fee, so I like this one. You can trade in around 100+ currencies here. Unless you change their settings, their trading fee comes to be 0.05%. It is also recommended to buy some BNB coins, so your trading fees are not deducted from your purchase and some fraction of coins are not stuck in the wallet.
Bittrex: They have 190+ currencies that you can trade. But new account login has been stopped since 15th Dec on this portal.
Liqui: is another option for trading. They would soon launch margin trading.
CoinBase: would probably be the largest site globally (traffic wise). They have 10M+ customers. But they only let you trade in Bitcoin, Ethereum, Litecoin, Ethereum Classic, and Bitcoin Cash.
Some portals that allow you to do MARGIN TRADING.
Poloniex: is a US based exchange. If you are not new to trading, this allows you to do margin trading too. Do not try margin trading if you are new to this, you could lose all your money in couple of days.
Bitfinex: is another option you should explore.
Double check whenever you transfer cryptocurrency. Each currency has a different wallet. If you type the wrong address or you transfer some other currency in Bitcoin wallet, you would LOSE all your money. There is no way you can cancel the transaction or get back your money.
Step 4: Cashing Out
Once you have made some profit in those international exchanges, transfer your BTC to any Indian portal you have KYC with. Sell the BTC here and get your money in INR. Now you can withdraw it to your bank account.
Here are a few questions and doubts that you would have initially.
Where can you research about any coin?
CoinMarketCap: Here you can read about pricing, market capitalization, and trend of all 1400 currencies. Currently, $625B are invested in the market with daily trading volume of $40B.
Coingecko: This is another website to do your research.
Why is the price of BTC or other currencies different on Indian Portal?
You really can’t do anything about this and there is no loss for you. Both the buy and sell prices are higher, so it does not matter. Also, it might not be possible for you to earn via arbitrage opportunity, since you won’t be able to buy BTC in dollars from international exchange and sell it on Indian exchange.
You are interested in long-term investing, and not trading?
If you are investing for long term, it is suggested that you should buy a wallet and not keep your coins in any exchange. If you want to understand more about wallets, read this cryptocurrency wallet guide.
Is this income taxable?
Yes. According to ClearTax, you have to pay tax according to your tax slabs on your profits under “Income from other sources”. You should probably discuss this with your CA.
Where can you exchange your cryptocurrencies?
If you are not registered on any international exchange, and you want to exchange your currency, you can do it from Changelly.
What are ICOs?
ICO is short for Initial Coin Offering. Consider this similar to investing in IPOs. You can choose to invest in a new cryptocurrency by paying in Bitcoins and Ethereum, and these can be sold at a premium on crypto-exchanges when they are launched and if there is a demand for them. This article can help you understand better. There are numerous places where you can track about ICOs, you can start here on CoinGecko and ICO List. There would usually be some minimum amount that you need to invest in ICOs (maybe 1ETH).
What is cryptocurrency mining?
In very simple terms, mining is basically providing bookkeeping services to the coin network, and get rewarded for doing so. You can read this beginner’s guide to mining.
There are few Facebook Groups that you can join, if you have more doubts. BharataFinance is Indian Group with 14,000 members and CryptoCurrency Investing has 84,000 membersPeople are usually helpful here.
Final Note: Don’t invest money that you can’t afford to lose. It is finally a zero-sum game. If 10 people are making 10X of their investment, there would be 100 people who lost all their capital (assuming all 110 people invested same x amount). It might look very promising to invest in crypto today, but when big whales start cashing out, the market might crash faster than you can press that sell button.