Cryptocurrency; the hottest buzzword currently doing the rounds. We have all heard it, we all know what it is, but do we really know it that well? The world of cryptocurrency is vast and dynamic, so getting a good understanding of it can be a long and slightly confusing process, especially for a newbie. Other than deciding which digital currency to invest in, essential decisions like how much to invest, how to store these digital assets and how to go about transacting have to be made too. A very simple and popular way of buying, selling, and staking digital assets is through a cryptocurrency or digital currency exchange. Let’s look at an example, if you want to buy cryptocurrency in India, you must open an account on an exchange portal that is suitable to you, buy a digital wallet for storing your currency and then start transacting. In this article, we will walk you step by step through this process, to simplify and make your investing journey fun.

What Is Cryptocurrency?

Dealing with cryptocurrency, begins with understanding what it is and how it works. A cryptocurrency is a medium of exchange that is digital, encrypted and decentralized. The cryptographic proof of this currency comes in the form of transactions that are verified and recorded on a blockchain. A blockchain is an open, distributed ledger that holds and records these encrypted transactions. In practice, it’s like a checkbook that’s distributed across countless computers all around the world. Transactions are recorded in “blocks” that are then linked together on a “chain” of previous cryptocurrency transactions.  There are various currencies circulating in India, namely Bitcoin, Etheruem, Tether, etc. Before choosing the cryptocurrency you want to invest in, do a thorough analysis of their:

  • Market value
  • Past trends,
  • Upcoming trends and
  • Predictions

This will minimize the risk factor. For example, 1 ethereum to INR is approximately ₹ 2,79,954. This value keeps fluctuating depending on various factors like world economy, supply and demand, exchange rates, current events, etc. Do your research and know the value of these currencies before making your decision.

How To Exchange Cryptocurrency?

Now that we have an idea of what cryptocurrency is, the next step is understanding how crypto exchanges function. Cryptocurrency exchanges are based on virtual peer-to-peer networks that help you buy, sell, and exchange cryptocurrency by providing digital wallets that ensure your transactions are secure and legal.  Once you are done with the technical formalities of signing up and making an account on an exchange platform, you will need to choose the currency to invest in. Do a proper analysis of the various aspects of a crypto exchange as well as the cryptocurrency you want to invest in, take your time and don’t rush through this process. A few things to keep in mind while choosing an exchange are;

1. Security

Cryptocurrency is not backed by a central institution and hence your holdings aren’t protected in the same way that money in the bank or traditional investments are. Whether you plan to keep your crypto holdings in an exchange long term or only have it there for a short while before moving it into your own wallet, the exchange’s security should be top priority. For example, look into how much of its assets the exchange keeps offline, in hard storage, which is much harder to attack virtually. Look for any issues that might have cropped up earlier and how they were resolved. Take your time and consider every aspect such as the past information, transparency, user reviews, security measures, investing policies, fine print etc.

2. Fees

Most exchanges charge a fee based on the size and frequency of your transactions. The fee can have an impact on your daily transactions so choose an exchange that does not charge exorbitant for their services. Exchange fees may be fixed but they are mostly a percentage of your trades, depending on whether you are buying or selling or simply on which currency you choose to trade in. Make sure you understand exactly how and when an exchange plans to charge you for your crypto transactions before handing over your cash.

3. Storage

Choosing an exchange that allows you to keep your holdings within your online account can be a good decision, especially as a beginner. Later on as you become more of an expert in the field, you may choose to keep your crypto in your own wallet. Experts warn against exchanges that only allow you to store on their platform as it is not very transparent or trustworthy.

 

To sum it up, it is recommended that you start small, stick to trusted exchanges, keep yourself up to date on the trends, be cautious, do your research and consult experts before making any decisions.