Thinking Of Buying Cryptocurrencies? Here Are 5 Basic Questions Answered
The massive growth of cryptocurrency has piqued everyone. Over the last year or so, the value of Bitcoin has grown leaps and bounds. In fact, in April this year, the world's oldest and biggest cryptocurrency breached the $60,000-mark. Among others, Ether has followed almost the same trajectory as Bitcoin, but Dogecoin, the meme-based cryptocurrency, widely popularised by billionaire Elon Musk, has been the surprise package. What was once started and for the longest time dismissed as just a "meme" has a market cap of Rs 2.8 trillion.
Now, if you are thinking of buying a cryptocurrency, you must be having several questions on your mind. We answer the most critical five here:
1) How to start investing in Crypto?
Well, once you have decided to invest in a digital token -- Bitcoin, Ether, Dogecoin or any other of your liking -- here are a few very easy steps to follow:
a) Choose an exchange: A cryptocurrency exchange is a platform that facilitates transactions of digital currencies.
b) The second step involves transferring the money to your cryptocurrency account. In India, on crypto exchange platforms, once you create a trading account, you will be guided to transfer the money so that you start doing transactions.
c) Once you are there, take a call on whether you want to keep your coins with the exchange or move currency to a hot or cold wallet.
2) Why do we have so many of them?
This question has occurred many times. If the prices are so volatile, how come we have so many digital tokens? As and when Bitcoin grew, people decided to introduce newer digital currencies with perhaps some additional features to the market. Besides, investors and traders have always had their eyes on minting some money. Hence, we have so many of these tokens or digital assets now.
3) Could they fail?
Absolutely. In fact, according to an article in ColumbiaPacific is estimated that nearly 2,000 cryptocurrencies have failed, many of them during the initial boom in 2017-18. This happened for several reasons. Lack of funding at the start and after launch, failure to evolve, and a few were outright frauds were some of the reasons that surfaced.
4) Are they extremely volatile?
Sample this. In mid-April, following an unprecedented rally, Bitcoin traded at its highest, $65,000 (roughly Rs. 48 lakhs) but crashed to under $30,000-mark a month later, in May. In July, it showed some signs of recovery and once again breached the $40,000-mark again. On Friday, September 3, the oldest digital token opened at Rs 37,79,655 ($49,340).
5) Does any Indian company accept cryptocurrency?
Yes, not all but some do. The Rug Republic, a Delhi-based decor brand, accepts Bitcoin. Purse, an online store that sells electronic goods, accepts Bitcoin. Sapna, an online platform where you get from books to personal hygiene goods, allows you to buy items using Bitcoins.
