Being a relatively new industry with a promising future, the crypto industry bagged invited more than 20 million investors from India in 2021 alone. Even though this is not nearly as much volume of people as other countries, it still is enough to raise the question – is investing in crypto safe in India?
Every other day, we hear stories left and right about the innumerable profits traders generate via crypto.
Whatever the result though, it’s obvious that because of the freight train of money involved in the industry, a question of lacking infrastructure arises.
Sure we might have seen the introduction of tax laws and regulations on crypto in India recently, but that hasn’t brought a completely clear picture out.
Before you start investing, you need to figure out whether it is the best investment option out there for you. And to understand that, we need to start with the basics – the blockchain in general.
Understanding the blockchain technology
Cryptocurrency is directly proportional to money stored online. This money isn’t under anybody’s jurisdiction. Not even banks or any particular financial institution.
This makes the crypto industry a decentralized industry in general because the transfer of money to a recipient is done via a peer-to-peer network.
This network consists of a sender, a device [or a node] in between, the recipient’s device, and the blockchain.
This blockchain is a public ledger that keeps track of ALL the transactions done using cryptocurrency. And since the blockchain is decentralized, it also isn’t under the control of any organization or entity.
Why this is important is because the absence of any governing body also makes crypto open to all networks. If there are no worldwide restrictions or regulations, it is practically a very legal network to be a part of.
The growth of crypto in India
Following the pandemic right now is the rise in costs of everything, investing in regular assets such as real estate, gold, and silver can invite a lot of costs, not to mention taxes.
With a desperate need to complement the needs of regular-incomed investors, crypto markets are becoming one of the most popular assets people can hold.
In fact with the popularity of coins like Ethereum, growth in NFTs, and defi tokens, Indian investors also want a piece of the pie. This is why Indian investors, as low as age 18 have started building their portfolios to harness at least some potential of the crypto markets.
And surprisingly, the word is spreading like wildfire.
India, right now, is considered to be the country with the most crypto investors.
With such a raw market, convenience is the key. This is why we’re such growth in crypto exchanges in India at the same time.
Platforms such as CoinDCX, Coinswitch Kuber, WazirX, and BitBns have taken off incredibly well in India. These platforms allow Indian investors to invest in the crypto markets as third parties, taking most troubles away from regular investors.
The taxation and regulations on crypto in India
By now, we already know that crypto invites taxation and other regulations. While this decision did invite mixed reactions, it also opened a door for opportunity.
This opportunity was that the Indian government acknowledged cryptocurrency as a digital asset.
And even though there’s a tax, there’s still a reassurance that investing in cryptocurrency is safe [and of course legal].
Right now, India still is working to implement these taxation reforms in the crypto industry. It could safely be assumed that with the conversations and frameworks that could be potentially implemented in the industry, investing in cryptos is a safe and legal thing to do.
But what about the safety of investments in these digital assets?
If you are seeking confirmation from anybody about the safety of investments, truth is, nobody can actually provide an assurance.
This is because when you are investing money anywhere, it always comes with a risk of loss. In fact, there’s no entity or market that will assure you a profit. It all comes down to a few key fundamentals that you must believe in, at least in the crypto markets:
- Does the asset have a good and long-term use case?
- Does it have enough utility?
- Do you see people using it in their everyday lives?
- How much trading volume does it have?
- How much volatility does it have?
- Who is it backed by?
There are a lot of instances where digital assets tank. But there are a lot of instances where these assets also provide you with extraordinary returns.
Whatever your goal is, we always advise a lot of research on the assets you are planning to hold. Make sure your money is going to a place that you wholeheartedly trust.
And since legality and regulations are also a major concern, you’d also want to be on top of things. This is where you need to be aware of the taxes you are liable to pay. Good thing that with KoinX, you can easily not only calculate your crypto taxes but also download all required reports that you can use for tax filings.