Last Updated on November 17, 2022 by Rajeev Bagra
- Just like there are so many stocks in the stock market from which you choose which stocks to buy, so is the case with cryptocurrencies. There are more than 16,000 cryptocurrencies to choose from. Many of them are actually scams. Just like in the stock market there are large caps (such as Microsoft and Apple in US, Infosys and TCS in India) that are reliable, so is the case with cryptocurrencies with the likes of Bitcoin, Binance, and Tether.
- Like in the stock market, cryptocurrencies too have an IPO. It is here where savvy investors make the most money. Discerning genuine ones from the scam is the key here, and one needs to do considerable research including going through the white papers to follow the track record of the founders behind the IPOs.
- You start by opening an account with platforms like Coinbase. After verification of your identity, you buy your first cryptocurrency against payment through a debit/credit card or bank transfer.
- All your cryptocurrency transactions are open to scrutiny by law enforcement agencies, and you need to pay applicable taxes. In India as per Budget 2022, a flat 30 per cent tax on gains from cryptocurrency transactions as well as a tax deducted source (TDS) of 1 per cent imposed. A ban on crypto in India was imposed in 2018 but lifted by the Supreme Court in 2020. The RBI has taken a stance to lobby for a ban on crypto on grounds that this asset class “derives value based on make-believe, without any underlying, just speculation under a sophisticated name“. On the contrary, Web 3.0 and startups thrive on blockchain and the underlying technology behind crypto, and banning cryptocurrency will be a setback for India in this space.
Cryptocurrency facilitates international payments almost instantly through a fraction of the cost that otherwise banks or financial intermediaries like PayPal will charge. Instead of waiting for days to arrive money in your bank account, the process is almost instantaneous here.
Many experts believe that after bringing it into the purview of tax, the government will not ban cryptocurrency. As per FM Nirmala Sithraman, international consensus is needed to ban crypto.
It does not appear that there will be a global ban on crypto. Instead, there will be regulations.
From an individual point of view, is our money safe in banks? If a bank fails, do we as savings account holders not lose money? So the final decision is to be taken by you if you want to trade/invest in crypto.
I recommend www.investment-mastery.com for systematic learning to trade/invest in crypto as I believe there is an opportunity to make immense money here despite current lows.
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The fundamentals of cryptocurrency (accessible only to paid The Economist subscribers)