As the bitcoin prices skyrocket, it looks like everyone wants to join the bandwagon, but not many are aware about the instrument and the risks involved. If you want to get hold of cryptocurrency, here is how you can go about it.
How to get there?
Firstly, there are more than 1000 cryptocurrencies and the most popular amongst them is bitcoin. There are four ways to acquire the cryptocurrencies which include mining, receiving it as a gift, buying from a brokerage platform or an exchange and receiving it in exchange for goods and services you provide. Each of the method is discussed below:
Bitcoin mining: In bitcoin, the transactions happen directly between users without an intermediary and the same transactions are recorded in a public ledger known as blockchain. Once the users make a transfer, the transaction is broadcast between users and confirmed by the network. Once verified, it will be recorded in the blockchain and then the transfer is complete. This process of record keeping is known as mining and people who offer the computing power are known as miners.
Bitcoin as gift and payment: Once you receive bitcoins as a gift, you can sell them at any cryptocurrency platform and at times, you can encash only at a particular exchange. You need to provide a bitcoin address to receive a bitcoin payment. This will require you to open an account and give an address from where you can cash out.
Buying bitcoins from exchange platfroms: One more method is to purchase bitcoins on exchange platforms. The exchange platforms are like stock exchanges and they allow you to buy other cryptocurrencies as well. In India, such exchanges are Unocoin and Coinsecure.
How do you buy?
In order to purchase cryptocurrrency, you are required to register yourself. After that, you need to provide bank details and go through the KYC process. Here, you need to provide details like Aadhaar and PAN. Once this procedure is complete, you can start buying and selling the cryptocurrency. Buying a bitcoin is similar to an e-wallet where you can load money but the difference is that you can convert the currency into cryptocurrencies and for the same; you will have to load money through the fund transfer channels.
Fees and other charges
There is a cost involved in the above mentioned process. The transaction has a mining fee associated with it and to have a faster transaction, you can add a larger mining fee to expedite the validation process. Each exchange and brokerage has a different fee structure which range from 0.4% to 0.6%. While many brokerages also charge up to 2% in fess for the buying and selling of bitcoin.
What you should know
It is very important to be careful when deciding to invest in bitcoins. You need to do a thorough check when you choose a company from where you want to buy. There have been many instances of fake cryptocurrencies and you need to save yourself from the same. Research the market and gain complete information about the exchanges. Also, if you are not well aware about cryptocurrencies, do not expose yourself too much into it. Check if the company has a history of making payments and if your country has an outlet to convert it into currency if needed.
Do not get into this because of the recent bitcoin boom. Research and learn about what you are getting into and this will save you a lot of trouble in the future. Stay aware about the regulations before you decide to invest in bitcoins.