Bitcoin in India can be bought, sold, and mined. If you are wondering “how?”, here’s a quick guide. The world’s most popular cryptocurrency, trading Bitcoin in India is deemed legal since there is no legislative law restricting it in the country. Even the Reserve Bank of India (RBI), in a recent order, has stated that banks cannot deny services to their customers who are dealing in cryptocurrencies. With the appropriate resources, you can buy and sell Bitcoins in India. That said, only 21 million Bitcoins exist, of which around 19 million are already in circulation (data: as per February 2021). That leaves a little over 2 million Bitcoins waiting to surface in the public market. Let’s take a look at how to buy Bitcoins in India as well as how to mine and sell them.
What is Bitcoin?
For those unaware, Bitcoin is a virtual or digital currency that uses peer-to-peer technology and is not controlled by any government agency like the RBI in India and Federal Reserve in the US. That’s why, unlike government-regulated currencies, cryptocurrency doesn’t involve any central authority or banks. The transactions and issuing of Bitcoins are managed collectively by the network of computers. “Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin, and everyone can take part,” states Bitcoin.org. Bitcoin was created 12 years ago and the identity of its founder or founders is still a mystery.
You can’t physically hold a Bitcoin, but can use it to buy products and services. It is stored in a ‘digital wallet’ app on a smartphone or computer. Every single transaction is recorded in a public list called the blockchain. That said, Bitcoin is not widely accepted yet and some countries have banned it altogether. Still, there has been a growing demand for cryptocurrency. Almost 90 percent of the available Bitcoins (21 million) have been discovered so far, while the remaining are said to be mined by the year 2140. The Bitcoin mining system is such that it becomes harder to mine as you approach the 21-million mark.
Is Bitcoin legal in India?
Bitcoin could be banned in India if the Modi government passes the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.
Trading in Bitcoin or any other cryptocurrencies is currently legal in India. However, its future hangs in the balance. While Union Finance Minister Nirmala Sitharaman in March said that there won’t be a total ban on the use of cryptocurrencies in the country, the Centre has plans to introduce ‘Cryptocurrency and Regulation of Official Digital Currency Bill, 2021′. The bill is said to contain provisions completely banning the use of all cryptocurrencies, per a report by the Hindu. Until then, it’s safe to buy and sell Bitcoins in India.
How to buy Bitcoin in India
You can get Bitcoin in India mainly through buying and mining. To buy it, you can use several online exchanges such as WazirX, Coinbase, and CoinDCX. While choosing the best online exchange is another task, here are a few things you should keep in mind while buying the cryptocurrency
- It’s best to go with an exchange that allows you to withdraw cryptocurrency in INR to your personal online wallet for safekeeping
- Make sure that the internet connection is secure. Also, don’t forget to use safe internet practices like two-factor authentication and unique and strong passwords.
- KYC aka Know Your Customer verification is a must, at least in India. For that, you can use a PAN card and valid address proof
- Now, add the bank account that is linked to your PAN card. Verification will take around 2-3 days
After the verification is complete, you can start trading Bitcoin in India. Money from your bank accounts can be transferred using NEFT, RTGS, and debit and credit cards. Currently, the value of one Bitcoin is around 27 lakh; however, you don’t have to buy a whole coin to begin investing. You can buy Bitcoin in parts, i.e. small investments for as low as Rs 500. That way, you will own a small percentage of the cryptocurrency.
How to mine Bitcoin
If you want to mine Bitcoin, you can do so by solving a complex mathematical equation and updating the cryptocurrency ledger called Blockchain. It can only be done on a high-power computer. However, it’s not as easy as it sounds. The equation that you get for Bitcoin mining is so complicated that it’s taxing even for an incredibly powerful PC. The popularity of the virtual currency and the leap in computing power has made it even more difficult to mine Bitcoin over the last few years. As more people try to mine crypto, the equation has become more complex, taking more time to solve.
To mine Bitcoin, the miner has to be the first to solve the equation and verify 1MB worth of Bitcoin transaction, known as ‘block’, on the Blockchain. Additionally, your mining computer determines which of the other pending transactions will be grouped together in the next block. The block you have created is then sent to the whole network so that other computers can validate it. Each computer validates your solution and updates its copy of the transaction ledger with the transaction you chose to include in the next block. After this, the system generates a few amounts of Bitcoins and rewards them to you for your effort.
How to sell Bitcoin in India
You can sell Bitcoin in India through the same platform that you used to purchase the cryptocurrency or peer-to-peer (P2P) exchanges like LocalBitcoins. The latter allows you to sell the currency directly to the user, without a third party or intermediary. It also gives more control to the seller over who buys your cryptocurrencies and who you buy from, the pricing, and settlement time. On the other hand, the traditional online exchange organises the transaction on your behalf with the utmost confidentiality.
A small percentage of the crypto sale charge is levied on the seller. The price of the currency will depend on the market composition and demand. A Bitcoin can either be sold instantly or in parts. Additionally, exchanges generally have daily and monthly withdrawal limits, which means cash from a large-scale transaction may not be immediately available to the trader.