Bitcoin Archives -

How to Buy a Bitcoin in India?

Sat, 05 Jun 2021 17:46:50 +0000

The Buyt Desk

The digital currency, Bitcoin, is growing at an unimaginable pace. At the time this piece was written the value of a Bitcoin stood at Rs 27, 71,183.70. What seemed like a fraud to many is now channelizing into a revolutionary global financial system.

Requirements for investing in bitcoins

When you start an investment like buying a mutual fund, opening a bank account or starting a bank fixed deposit you need to fulfil certain formalities. In the same manner, if you want to buy and sell bitcoin you need to have the following system in place-

You require an account in a cryptocurrency exchange,
Next, personal identification documents,
You cannot transact in bitcoins without a secure and stable internet connection,
Finally, you require a method to make payments. Bank transfer, debit cards, credit cards, mobile wallets, Bitcoin ATMs, and peer-to-peer exchanges are some of the valid payment methods.

For your own safety, experts recommend possessing a personal wallet in addition to the cryptocurrency exchange account.

Steps for investing in bitcoins

Now that you have understood the necessary requirements before investing in bitcoins, let us discuss how to invest in bitcoins.

Step 1

A cryptocurrency exchange is like a stockbroker that facilitates the purchase, sale, and storage of bitcoins. To invest in cryptocurrency, choose an exchange. Observe whether the exchange deals in Indian currency or not. Is it easy for you to navigate the exchange app or not? It is a good idea to select the exchange that allows you to withdraw your digital money to store in a personal wallet

Crypto exchanges work round the clock and are self-regulated. They charge a small fee to help you trade cryptocurrency. Globally Binance is a popular cryptocurrency exchange and it owns one of the well known Indian crypto exchange the Wazir X. It has gained immense success since its inception in March 2018.

Step 2

After identifying the exchange, the next step is to create your account with the exchange and link a payment method with it. Most crypto exchanges are particular about the KYC process for account opening. The exchanges may ask for different personal identification documents depending on their regional location.

After verification and authentication of the account, you can link the payment method with your exchange account. As we discussed earlier, there are a variety of viable payment ways for trading cryptocurrency like bitcoins. It is a good practice to avoid using a credit card because you never know how the value of bitcoins fluctuates.

Each crypto exchange charges a fee for depositing money in your account depending on the chosen payment method. Coinbase charges a 1.49% fee for linking your exchange account with a bank account.

Step 3

Now you are all set to start investing in bitcoins. The good news is that you can buy bitcoins for as low as Rs.100. If you are a beginner in digital currency, the low capital requirement is a boon. Many exchanges allow you to set up recurring purchases of bitcoins.

Step 4

While exchanges offer advanced features, their main focus is not the security of the Bitcoin wallet. You should store the purchased bitcoins in a personal digital wallet to which you hold a private key. Storing bitcoins in a hardware wallet is safer than an online wallet.

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4 Popular cryptocurrency other than Bitcoin

Mon, 01 Mar 2021 05:38:26 +0000

The BuyT Desk

Bitcoin is the most talked-about cryptocurrency at this moment. At the time of writing this piece, the price of 1 bitcoin is hovering at 46,990 USD* which translates to roughly around Rs 35 Lakh*. The price surge of bitcoin has given a return of 205% to its investors so far. Bitcoin is the oldest and most circulated virtual currency with a market cap of 835 billion dollars.

But bitcoin is not alone, there are several more virtual currencies that are drawing attention. These currencies work on peer to peer technology and are not regulated by any central bank. These upcoming cryptocurrencies are also called Altcoins which means alternative coins as they are turning out to be an alternative to bitcoins. Let’s look at some of the popular Altcoins –

Dogecoin

Present Price – Rs 3.27*

After announcing a $ 1.5 billion investment in bitcoin, industrialist Elon Musk bought another digital currency Dogecoin. After Elon Musk’s announcement on Twitter, that ‘Dogecoin is people’s crypto’ the price of Dogecoin increased by 16% in one day. It was launched in 2013 by IBM software engineer Billy Markus and Adobe engineer Jackson Palmer. Instead of choosing a fancy name, they named the currency after a Japanese dog Sheeba Inu. It is a decentralized peer-to-peer digital currency, so that money can be sent online easily. This is an internet currency. There are many ways to buy Dogecoin. You can buy them, trade them. Their website states “You can use DogeCoin by participating in our community”. You can also buy Dogecoin from Faucet. It is a website which provides you with a small number of Dogecoin so that you can understand it. Mining is only for advanced users, as it requires a lot of technical knowledge.

Litecoin

Price – Rs 12,101*

Litecoin was launch in 2011 and is known to be a lighter version of bitcoin and are called the silver to bitcoin gold. Litecoin is based on the same code as bitcoin. Former Google and Coinbase engineer Charlie Lee is the founder of Litecoin. He added more speed to the code and made Litecoin a bit faster than Bitcoin. It uses a scrypt based network. The cost of Litecoin is lower than bitcoin. Litecoin is the sixth largest cryptocurrency in the world.

Ethereum

Price- Rs 99,619*

Ethereum is the technology platform that facilitates cryptocurrency transaction with a small fee. Their own currency is in the form of a token which is called ETH but they allow transaction of other cryptocurrencies as well. The official website of Ethereunm states- “Ethereum is a technology that is home to digital money, global payments and applications”. The Ethereum platform builds a decentralized platform for the financial transaction which can be accessed by anyone around the globe. Ether was launched in 2015.

XRP Ripple

Price- Rs 32.042*

Ripple was launched in 2012 and it works as an open-source platform for payment and it supports various cryptocurrencies. Their own currency is called XRP. This currency is used as a cross border settlement. Many banks have partnerships with it so that they can improve their cross border payments. Most of the cryptocurrency is based on bitcoin coding. But in the case of Ripple a fresh code was written right from the scratch. Unlike other cryptocurrencies, Ripple cannot be mined.

Recently the US Securities and Exchange Commission has filed a lawsuit against them. They are the world’s third-largest cryptocurrency platform. This lawsuit has been registered for the illegal sale of unregistered securities.

*The price of cryptocurrency varies on a daily basis. The price attributed is the value of the currency on the day this piece was written. It may change.

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How is Bitcoin Taxed?

Sun, 10 Jan 2021 06:22:56 +0000

The BuyT desk

Bitcoin is scaling new heights daily. It is getting geared up for breaking the Rs 30 lakh level. In all probability by the time you read this piece, it would have crossed this mark too. The price journey of bitcoin has been with many ups and downs. The currency was created in 2009 when it was valued at $0, for a few years after, it remained to be of few dollars. In December 2017, bitcoin touched a $19,500 and saw a nasty fall to $4000 in 2018. But 2020 proved to be the year of record return for bitcoins. It almost rose by 300% and in the first month of 2021, we saw it crossing $40,000.

Due to the grand return of cryptocurrency, lots of people are looking at it as an investment. But before you take the plunge you must know that though bitcoin is not illegal, they are not recognised yet. In March 2020, Supreme court lifted the ban on the trading of cryptocurrency imposed by the RBI. But there is no regulatory body which overlooks the trade in bitcoin. RBI has not yet given the status of legal tender to bitcoins.

Are bitcoin profit taxed?

The Income Tax law is ambiguous regarding how a cryptocurrency profit like a bitcoin will be taxed? But if you are earning a profit on it then be ready to pay tax too. There could be two ways that the profit will be taxed- either under capital gains or under the category of income from other sources.

Capital Gains Tax

If you have purchased a bitcoin and treat it as a capital asset, it will be taxed as per the capital gains tax rule. If held for more than 3 years, then the long-term gains would be taxed at a flat rate of 20% while short-term gains would be taxed as per the individual’s slab rate. If you are selling it after holding the bitcoins for three years, you will benefit from indexation.

Income from Other sources

What if you have not purchased the bitcoin? Bitcoins can be created through mining. So one cannot determine the cost of purchase as it is self-generated. So capital gains can not be implemented. In a scenario like this, bitcoin’s value will be taxed under the head Income from other sources when capital gain doesn’t imply.

GST on Bitcoin

Government has been considering a proposal by the Central Board of Indirect Taxes and Custom(CBIC) on imposing a GST of 18% on a bitcoin transaction. The Central Economic Intelligence Bureau has estimated tax collection from GST and informed CBIC that government could potentially gain Rs7200 crore annually by imposing GST. The government is mulling on categorising bitcoin as ‘intangible asset’ and impose GST on its trading.

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