How to invest in cryptocurrency? With FAQs

Published on Aug 05, 2022 02:15 PM IST
This article explains how to invest in cryptocurrency in India in 2022. So, keep reading!!
Due to several coins' notable increases in value following their initial release, cryptocurrencies have grown in popularity among investors.
Due to several coins' notable increases in value following their initial release, cryptocurrencies have grown in popularity among investors.
ByHT Brand Studio

Abstract

Approximately 145 million American citizens invest in cryptocurrencies. In India, over 75 lakh people have included crypto in their investment portfolios. Not only this, but there is also an interest developing amongst the non-crypto investors to join the troupe. This article explains how to invest in cryptocurrency in India in 2022. So, keep reading!!

What is Cryptocurrency?

Cryptocurrencies refer to virtual or digital money designed to be used over the internet. Cryptocurrency often only exists in electronic form; it has no physical presence. Here the transactions are verified, and records are maintained by a decentralized system using cryptography rather than by a centralized authority.

Due to several coins' notable increases in value following their initial release, cryptocurrencies have grown in popularity among investors. The original cryptocurrency, Bitcoin, debuting in 2008, is still the most popular, influential, and largest. Since then, Bitcoin and other cryptocurrencies, like Ethereum, have developed into viable digital substitutes for currency printed by governments.

There are multiple cryptocurrencies available in the market. However, the important question is how to invest in cryptocurrency in 2022 and what is the correct procedure for picking up coins while investing in cryptocurrency.

Examples of blue chip cryptocurrencies include Bitcoin and Ethereum.
Examples of blue chip cryptocurrencies include Bitcoin and Ethereum.

How To Choose Cryptocurrency To Invest In?

When selecting a cryptocurrency to invest in, there are numerous factors to take into account.

  • First of all, you will have to understand the market capitalisation of the cryptocurrency you choose.Bitcoin and Ethereum together account for >50% of all cryptocurrencies' combined market capitalisation
  • Then you will have to look into cryptocurrency's demand and supply factors. The number of coins that are currently in use should also be taken into account. Any digital asset's price rises as a result of rising demand and constrained supply, and Bitcoin is no exception.
  • To make a better decision, you will also have to go through the cryptocurrency's white paperthat describes the coin's specifics, including its intended use, the issues it will address, the technology it employs, etc. The white paper critically notes the use cases for the currency. It is one of the key elements that will influence its investors.
  • Investors should also look at the use cases of the cryptocurrencies that they are choosing. If the coin's use case is restricted, there is a greater chance that its value will decrease and it won't survive.

Are you still finding it difficult to choose a cryptocurrency?

If yes, you can always buy Coin Sets on Mudrex.

Coin Sets by Mudrex allows cryptocurrency investors to spread out their financial investment rather than making a single, large purchase, lowering their investment risk. It allows investors to invest in ideas in crypto that they believe will flourish in future. Moreover, these coinsets are periodically rebalanced by the in-house experts of Mudrex, which ultimately reduces your burden of managing the investments.

To invest in the coin sets by Mudrex, an investor can start with a SIP with as little as 100, and the frequency can be adjusted to daily, weekly, or monthly. You can anytime pause, change or stop your SIP. With quick investments and withdrawals, coin sets are accessible for investment without any fees.

What Are The Benefits Of Investing In Cryptocurrency?

High-Risk High-Returns

Cryptocurrencies are volatile. Any asset's propensity to go up or down quickly is referred to as volatility. Because of this, it is a high-risk, high-reward investment; you will frequently hear about cryptocurrencies rising or falling by double digits, if not triple digits, in a single day.

Therefore, while investing in cryptocurrencies could make you suffer a loss of 10–12 per cent of your cash in a single day, there is also a chance that you may gain at least as much money, if not more, if you do your homework beforehand. Diversifying your portfolio is one approach to reducing volatility, but there are other options as well. You might also limit your investments to bluechip cryptocurrencies, which are more stable if you're a risk-averse investor.

Portfolio Diversification

Traditionally, diversification offers two advantages:

  • It adds "non-correlated" assets to your portfolio so that when certain investments decline in value, others remain stable or even increase in value.
  • If one of your assets implodes, portfolio diversification should (hopefully) safeguard you from suffering catastrophic loss.

Cryptocurrency diversification prevents extreme consequences. Other cryptocurrency investments could still do well even if one coin fails. Ideally, one coin won't cause your entire cryptocurrency portfolio to lose everything.

Not only this, as a true investor, you must also diversify your portfolio between a mix of assets, including stocks, bonds, crypto, real estate, etc. Adding a small percentage of cryptocurrency to your overall portfolio can help you maintain a healthy balance.

24x7 Market

In the case of the New York Stock Exchange, stock markets are only open on business days from 9:30 am to 4:30 pm Eastern Time (NYSE). The majority of conventional financial markets are closed on evenings, weekends, and holidays.

Contrarily, crypto markets are open for business every day of the week, twenty-four hours a day. This allows investors with a flexible and independent investment process. It becomes more convenient for an investor to invest his income any time of the day.

Control over the assets

Due to the fundamentally decentralised nature of cryptocurrencies, you have complete control over who controls your assets.

Transactional Freedom, Speed & Transparency

One of its many advantages is cryptocurrency's ability to be utilised as a means of value exchange between two parties. Since it may be done without the involvement of a third party, the transaction is more open and censorship-resistant.

Banks or other payment processors can discontinue anyone's services at any time and for any cause. It's exceedingly challenging to prevent anyone from using Bitcoin or the majority of other cryptocurrencies because there is no central authority controlling them.

Most crypto payments settle in a matter of seconds or minutes. Bank wire transfers sometimes take three to five business days to complete and might be much more expensive.

Easy & Secure Transactions

Cryptocurrency transactions are secure, faster and more private than most other types of transactions. Anyone may send and receive a variety of cryptocurrencies by just using a smartphone and software, hardware wallet, or exchange wallet.

Decentralised cryptocurrencies often make for safe methods of payment since they are based on cryptography and blockchain security. Hash rate is a key factor in cryptography security. The more computer power required to breach the network, the greater the hash rate. Bitcoin has the greatest hash rate of any network, making it the most secure cryptocurrency.

Where To Invest In Cryptocurrency In India?

Investments in cryptocurrencies in India can be made in two ways:-

1. Via Exchanges - Similar to the stock market, exchanges or brokers serve as the facilitators of the cryptocurrency market. For each transaction, these exchangers charge a fee or commission. There are many cryptocurrency exchanges in India. Users can download the relevant app, register with their KYC information, and purchase bitcoin. These exchanges will not assist you in buying or selling cryptocurrency and keeping track of its value.

2. Via Coin sets of Mudrex- Coin Sets enable passive investment in a variety of cryptocurrency tokens. Coin Sets are built on prevailing web 3.0 ideas or themes like Metaverse, Decentralised finance, and more. The choice of tokens and coins in a certain Coin Set is supported by a thorough study done by crypto professionals. You may select the ideas or themes you are bullish on and start with a little investment. If you subscribe to the Coin Set, it will automatically purchase all the tokens included in it for you.

Popular Investment Themes In Cryptocurrency

Bluechip Cryptocurrency

Bluechip cryptocurrencies are well-established digital assets with substantial market capitalisations, institutional standing, solid reputation, great liquidity, and reduced volatility. The definition of "blue chip" in the context of cryptocurrency is essentially unchanged. Examples of blue chip cryptocurrencies include Bitcoin and Ethereum.

ALT Coins other than Bitcoin & Ethereum

All cryptocurrencies except Bitcoin are referred to as altcoins. The majority of altcoins are created and published by programmers who have distinct goals or purposes in mind for their currencies or tokens. The top cryptocurrencies, after Bitcoin and Ethereum, are as follows:

  • Ripple (XRP)
  • Cardano (ADA)
  • Polkadot (DOT)
  • Stellar (XLM)
  • Dogecoin (DOGE)
  • Chainlink (LINK)
  • Uniswap (UNI)

Meta Verse

Metaverse Coins refer to those tokens which are operating in the Metaverse space using virtual reality, AI, and blockchain technology. Massive changes are being adopted by huge corporations to step into the metaverse space. The top seven metaverse tokens to watch this year are listed below for investors.

  • Decentraland (MANA)
  • Axie Infinity (AXS)
  • The Sandbox (SAND)
  • Enjin Coin (ENJ)
  • Gala (GALA)

Web 3.0

Web 3.0 tokens are those digital coins which focus on building a decentralised internet. These are some of the top Web 3.0 cryptocurrencies:

  • Helium
  • Chainlink
  • Filecoin (FIL)
  • Theta (THETA)

What Are The Risks Of Crypto Investment?

Investors rush into crypto without considering the associated risks with it. You should be mindful of some things before making your crypto investments.

1. Volatility

Cryptocurrency's distinguishing characteristic is its extreme volatility. Despite the possibility of significant profits, volatility can also negatively impact your portfolio.

2. Scams

The crypto space is filled with scammers trying to cheat you of your money; beware of them. Avoid transferring your cryptocurrencies to any unauthorised person.

3. No Compensation Scheme

Unlike bitcoin investments, which sometimes lack protection from protective programmes like the Financial Services Compensation Scheme, UK bank deposits are virtually always insured by such programmes. There is no assurance that you will get your money back if a bitcoin exchange fails. There is also no one to contact if you lose your password.

Conclusion

The whole community will discover a new source of investment even if titans like Bitcoin and Ethereum lose favour. You may ignore the widespread frenzy or join the group of those who grasped the opportunity and purchased digital coins. Please pay attention to the market activities of big investors. This will serve as a fantastic cue for you to take action.

Disclaimer: This article is a paid publication and does not have journalistic/ editorial involvement of Hindustan Times. Hindustan Times does not endorse/ subscribe to the contents of the article/advertisement and/or views expressed herein.

The reader is further advised that Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.

Hindustan Times shall not in any manner, be responsible and/or liable in any manner whatsoever for all that is stated in the article and/or also with regard to the views, opinions, announcements, declarations, affirmations etc., stated/featured in same. The decision to read hereinafter is purely a matter of choice and shall be construed as an express undertaking/guarantee in favour of Hindustan Times of being absolved from any/ all potential legal action, or enforceable claims. The content may be for information and awareness purposes and does not constitute a financial advice.

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Tuesday, August 16, 2022
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