Everything you need to know about cryptocurrency in 2024

If you were told that there would come a time when money was more than just paper it would be completely virtual, we probably wouldn’t have believed them.

But time has proved that money is valuable even in its virtual form and one of them is the trending cryptocurrency.

So what is cryptocurrency?

Cryptocurrency is a digital or virtual currency that is secured by cryptography making it nearly impossible to double-spend or counterfeit.

They are based on blockchain technology in a decentralized network and stored in the form of a distributed ledger.

Cryptocurrencies aren’t generally issued by any central authority making them theoretically immune to government interference or manipulation.

So, anyone can transact using cryptocurrency without the involvement of banks or a third party in between.

History of cryptocurrency

In 1983, a cryptographer named David Chaum developed a cryptographic system and called it the eCash.

12 years later he developed another system called DigiCash which used cryptography and made economic transactions confidential.

After the 2008 crisis, a person named Satoshi Nakamoto whose identity still remains a mystery developed the first cryptocurrency and called it Bitcoin in 2009.

The reason for the creation of bitcoins was to create a new way of payment that could be transacted internationally that was decentralized and had no financial institution behind it.

Is cryptocurrency operational in India?

When cryptocurrencies started blowing up in 2017, tech-savvy retail investors were relishing them.

But there was also a majority of people who used cryptocurrency as a way of funneling illicit activities

That is why the government came out with a statement in 2018 saying that they don’t consider cryptocurrencies as legal tender or coins.

And will take any measures necessary to stop the use of these crypto-assets in financing illegal activities.

The important thing to note here is that the government never said that they were against cryptocurrencies, they were against their use in illegal activities.

Seeing the consistent growth of cryptocurrencies and studying the advancements that were made by crypto-regulated countries such as Singapore, the USA, and other countries, caused the Indian government to rethink its decision.

This resulted in the Supreme Court of India retracting RBI’s circular that was issued back in 2018 so banks such as ICICI, HDFC, and State Bank of India could resume their transactions with cryptocurrency.

According to industry experts, there are over 10 million cryptocurrency investors in India with over 100 billion in holdings but no official data is available.

However, as Indian banks are increasingly wary of dealing with crypto exchanges RBI tells banks to reconsider ties.

Should you invest in cryptocurrencies?

Currently, the new market trend is investing in cryptocurrencies and if you are someone who likes investing in stock markets then you may consider investing in bitcoins.

Bitcoins are the most valuable cryptocurrency throughout the world and it has many advantages such as:

1. High returns

Even though cryptocurrencies have been in the market for a short period of time, they’ve been proven to be more effective than other investments.

Cryptocurrencies have been known to show high rewards in a relatively short amount of time. Investing in cryptocurrencies is risky, yes, but so is investing in stock markets.

2. It’s an independent alternative

It’s no coincidence that Bitcoins emerged in the market after the market crash in 2008.

Cryptocurrencies are much better investment options than any bonds or stocks you may hold in case the market crashes. Cryptocurrencies offer you independence like no other.

Imagine your money is safe in a bank in bonds or FDS and suddenly one day you wake up to the news of your bank filing for bankruptcy.

Even if your money is yours in situations like these there’s close to nothing that you can do. People have lost their life savings due to banks and other such investments.

With cryptocurrencies, you don’t have to rely on banks or institutions to transfer or hold your money. Your money is yours and you get to decide.

3. Offers simplicity

For many people investing in funds, stocks, bonds, and policies is time-consuming, complicated, and bothersome.

Instead of that Cryptocurrencies are simple and easy.

You don’t have to sign lengthy papers or visit banks and institutions a thousand times, this will save you time and money.

4. Buy low and sell high

Always invest when the market is low and sell when the market is at the top.

This is the best way to get your return on investment.

The prices for Cryptocurrencies are at a lower rate currently making it the perfect opportunity to invest.

5. You have access to more information now

Since cryptocurrencies are new in the market, there is much more information that’s available and accessible now than there was 5 years back.

There are many websites that are beaming with information so you can do your thorough research before investing your money in cryptocurrency.

For instance, you can visit Twelve Data, a website that besides financial market information and stock price APIs, offers in-depth data and analysis on cryptocurrency.

What are the various disadvantages of investing in cryptocurrency?

There are advantages and disadvantages to everything. Some of the disadvantages of investing in cryptocurrencies are as follows :

1. Cryptocurrency can be used for illegal transactions

Cryptocurrencies are private and since their security is high, the chances of them being used illegally are also higher. Cryptocurrencies are hard for the government to track and keep tabs on the data.

Bitcoins have been used in the illegal transfer of funds in the past.

2. Data losses can result in financial loss

One of the biggest disadvantages of having everything online is that you have to rely on technology to retrieve it.

These devices are virtually impossible to open and can only be opened through a digital key.

Now imagine losing this private wallet key. There’s no way you could hack into it which means that money is then lost virtually forever.

3. Decentralized and yet operated by some organizations

Even though cryptocurrencies are known to be decentralized, some cryptocurrencies could still be owned by their makers resulting in them being susceptible to manipulation.

4. Harmful effects of mining on the environment

Mining cryptocurrencies require a lot of computational power and electricity input making it highly energy-intensive.

Mining bitcoins or cryptocurrencies require a ton of energy as they can’t be made on regular computers.

5. Susceptible to hacks

Even though cryptocurrencies are secure, exchanges aren’t. Most exchanges store the wallet data of their user’s ID properly.

This data if stolen by hackers will give you access to your accounts.

Once hackers can access your account transferring money from one account to the other is easy.

Like any investment scheme, you’ll find advantages and disadvantages to anything.

When thinking of which method to best invest in, think of your desired results, long-term and short-term goals, and how to best achieve them.

Types of cryptocurrencies

Ever since their invention in 2009, cryptocurrencies have come a long way.

Many investors consider Bitcoin to be the first cryptocurrency out there and since then there are many new cryptocurrencies have come to the market and are ideal for investment.

Listed below are our top 4 cryptocurrencies for you to invest in.

1. Bitcoin

Bitcoins use peer-to-peer technology and operate with no central authority or banks.

Bitcoins aren’t owned by one single individual and everyone can take part in it and invest. The current rate for bitcoins is 1 Bitcoin = 40,70, 428₹ Indian rupees.

A bitcoin system is a collection of nodes also known as miners who run bitcoin codes that store its blockchain.

Theoretically speaking, blockchains are a collection of blocks and each block is a collection of transactions.

Cheating the Bitcoin system is difficult as all the blockchains have the same list of transactions and blocks and can transparently see these new blocks being filled.

Bitcoins use peer-to-peer technology which facilitates instant payments.

There are about 21 million bitcoins that can be mined in total and as of January 30, 2021, there were approximately 18,614,806 bitcoins in existence and about 2,385,193 bitcoins that are left to be mined.

2. Ethereum or ETH

Ethereum is a non-hierarchical, permissionless network of computers that achieve and generate consensus on an ever-growing sequence of batches or blocks of transactions which are referred to as a blockchain.

Currently 1 Ethereum = 2,90,754.13₹ in India.

After bitcoins, Ethereum is the largest cryptocurrency in terms of market capitalization.

Ethereum as a concept was born in 2013 and came into the market in 2015 with an initial supply of 72 million coins after being crowdfunded in 2014.

3. Tether – USDT

Previously known as Realcoin, tether was launched in 2014 as is one of the first currencies to be pegged as US dollars.

Tether is a stable coin that is a form of cryptocurrency that aims at holding currency prices stable as opposed to the large fluctuations that are generally seen in other common cryptocurrencies such as Bitcoin and Ethereum.

Tethers are cryptocurrencies that are backed by equally commercial flat currencies kept in specified bank accounts such as dollars, and Japanese yen.

Tether was the third-largest cryptocurrency in January 2021 with a total market capitalization of 24.4 billion. The current rate for Tether in India is Rs. 73.39

4. Cardano or ADA

Cardano is an open-source network with the main aim of creating a public blockchain platform for smart contracts.

Cardano was developed in 2015 and was released to the public in 2017.

The current market rate for Cardano is 121.0488₹ per Cardano.

These are some of the most widely used cryptocurrencies that are used by traders for trading.

Most widely used apps in India for cryptocurrencies

Dealing with cryptocurrencies has become easier and less complicated even for a simple layman due to the following applications:

1. Binance

With more than 14lakh transactions happening any minute on the application, Binance is the world’s leading cryptocurrency exchange.

You can buy bitcoins using a UPI I’d or through Paytm. The app doesn’t charge you any additional fees for the purchase of cryptocurrencies. This app also offers tutorials for beginners.

2. Coinbase

Similar to Binance, Coinbase offers a vast knowledge base for those who want to learn everything about cryptocurrency and its trade.

The app is easy to use, it’s simple and you can use digital wallets such as GPay, and Paytm to transfer funds.

Coinbase is the starting point if you want to learn about everything cryptocurrencies and blockchains.

3. Wazirx

Wazirx owned by Binance is one of the most popular apps used for trading cryptocurrency.

You can transfer your deposits of cash between this Binance and Wazirx.

This integration means that traders can sell and buy cryptocurrencies at a competitive price.

There are around 70 cryptocurrencies that you can find on these apps.

4. Zebpay

Zebpay allows users to trade cryptocurrencies at competitive rates.

The app is easy to use, it’s friendly and has a quick interface for deposits and withdrawals.

5. CoinDCX

Ever since India lifted its ban on cryptocurrencies in 2018, CoinDCX was the first app to support withdrawals directly from your bank accounts.

CoinDCX has over 200 cryptocurrencies such as Bitcoin, XRP, Litecoin, ETH, ETH, and Dash for you to deal in. Withdrawals and deposits can be done easily through your bank account.

How do you buy and sell cryptocurrencies?

If you are looking to invest in cryptocurrencies then buying them through an exchange portal or app is the best option for you.

After downloading any of these apps mentioned above, all you have to do is sign up with the exchange of your choice and complete the KYC process.

For completion of the KYC process, you’ll have to verify your documents such as your Aadhar card, PAN Card, etc.

Most of these apps have a strict KYC process to remove any fraudulent or fake accounts.

After the registration process is completed, you can then add money into your wallet through Paytm, G Pay, or any other online transactions which can then be used to buy bitcoins.

In India, you can buy bitcoins for as low as 100₹.

Selling cryptocurrency on these apps is also easy. There’s an option called “selling”. Once you’ve sold these bitcoins, click on the funds and click on INR.

Once you click on INR, you’ll see an option for withdrawal you can either select standard withdrawal or an instant withdrawal. There’s a small fee that you’ll have to pay

if you select the instant withdrawal option as opposed to the standard withdrawal.

Earlier, you had to be a tech-savvy person to be able to invest in cryptocurrencies but with the invention of these apps, this process is made much easier and simpler to understand and use by anyone.

In Conclusion

Cryptocurrency like any other financial investment is a risk and requires some amount of planning and lots of knowledge about the field.

Just like any other investment scheme, here too there are risks and rewards that need to be considered by someone before they invest their hard-earned money.

We suggest that you study the market carefully, learn about various cryptocurrencies as well as other investment options, and then invest your savings in various schemes.

Instead of putting all of your savings into just one saving scheme, spread them out into small investments which can be divided into short-term investments and long-term investments as they’ll be more rewarding.