Love it or hate it, you cannot ignore it. The cryptocurrency craze has taken the world by storm and India is no exception. The recent budget has also provided clarity on the Indian Government’s stand on digital assets, making it less likely to be banned in the future. With many people making exorbitant returns on cryptocurrency trading, even the 30% taxation on it does not seem too big a deterrent. Yet, does this mean that one should immediately start investing in the same?
As goes with any form of investing, one must first understand what they are getting into before putting any money into the same. Here are a few tips to keep in mind before starting trading in cryptocurrencies:
1. Caution first:
The crypto market is just a decade old and is still in its early stages. Hence, it is much more volatile and still lacks any form of regulation from authorities. This makes it nearly impossible to recover any investments in case of fraud or hacks. To add to this, it is very easy to make a cryptocurrency that looks legitimate but turns out to be a scam.
2. Invest only what you can afford to lose:
Ensure that your long term financial security is taken care of in the form of Fixed Deposits, Equity Mutual Funds, Debt Funds, necessary insurances, emergency funds, etc. If you still have any surplus after this security, you can consider investing in cryptocurrencies as this is money that you can afford to lose and remain unaffected financially.
3. Do your research:
It is easy to blindly invest by taking tips from friends or acquaintances. Yet, know that this is your money and no one will come to your rescue in case the investment fails. Hence, it is better to understand the cryptocurrency market first before investing any money into the same. Read about the dominant cryptocurrencies such as Bitcoin, Ethereum, Tether, Polygon and more. Learn about their use cases and potential before making any investment decisions.
4. Use a trusted exchange:
It is not uncommon for cryptocurrency exchanges to get hacked or scam investors. Ensure that you make your account with a large exchange that is historically credible and have insurances in place in case of a hack.
5. Learn the technicalities:
If you are more serious about cryptocurrency investments, it makes sense to learn about how to create your own digital wallets or purchase a trusted hard wallet to safeguard your investments. Learn about liquidity mining, staking, decentralised finance, and more to broaden your scope of knowledge.
Conclusion
The first and foremost step you need to take before diving into crypto investing is to do your research. Many a time, investors have a fear of missing out on big gains and blindly invest their money without a second thought. This is avoidable as it is your hard earned money you are playing with. Ensure that you are financially secure through other trusted and regulated instruments first. To know more about online brokerage and to open your demat account online, head over to the Motilal Oswal website.
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