Investments in crypto currencies in India have grown rapidly over the last few years, especially with the huge spurt in the value of these currencies.
What is a crypto currency?
A crypto currency is a digital currency where encryption techniques are used to regulate the generation of units and verify the transfer of funds. Currently, there are over one million Bitcoin users in India.
While investing in crypto currencies seems lucrative, there are some concerns as well. If you are planning to invest in any of these crypto currencies, here are some of the things that you should know:
- Crypto currencies are not regulated
The Bitcoin and other crypto currencies are not regulated by governments in most of the countries. Recently, Reserve Bank of India also issued a statement stating that it is uncomfortable with "non-fiat" crypto currencies like Bitcoin. "Any user, holder, investor or trader dealing with virtual currencies is doing it at their own risk," the RBI had cautioned on its website in February this year. The RBI has been repeatedly flagging concerns on virtual currencies like Bitcoins, stating that they pose potential financial, legal, customer protection and security-related risks.
- Bitcoin transactions are irreversible
When you create an account with a crypto currency service provider, your money is kept in a digital wallet with one public and one private key. The public key is like your mobile number and the private key is your username and password. You should keep both the keys confidential. You should note that the password of Bitcoin wallet is irrecoverable. Your money inside the wallet will be worthless if you don't remember password. Similarly, balance transfers of Bitcoins are also irreversible. So, if your Bitcoin gets stolen by hackers, here is no way to recover it.
How to buy Bitcoin in India: A step-by-step guide
- Beware of fake crypto currencies
As crypto currencies are not regulated, is gets difficult to distinguish between fake and real. So, before trading in any crypto currency, you should look into the underlying project, market cap and past performance. Research and analyze more about the currency before investing.
- Fraud agents
There are hundreds of crypto currency exchanges available online. There are many fake agents selling crypto currencies with the promise of delivering high returns. So, if you want to keep your money safe, it is better to deal with exchanges that are registered on bitcoin.org.