Introduction
Hi guys, hope you all enjoyed my previous blog on bitcoin and its concepts.
In this blog, we can see the value of bitcoin, how it’s traded in India and the future of bitcoin.
Always remember when you trade on financial markets, please be aware of its market risks and conditions to avoid any loss aftermath.
What is Bitcoin?
Bitcoin is a digital currency, running with an open-source software with peer-to-peer network encrypted using cryptography.
When a transaction happens, it is formed as a block encrypted with information in a mathematical algorithm and it is sent to the nodes(peers) in the network.
They are then decrypted by miners with help of sophisticated computing equipment and after they verify the valid block by decoding the hash, they add the new block to the existing block chain and complete the transaction.
To know more about it please check my previous blog on https://layersofmanagement.com/2022/02/20/an-overview-and-analysis-on-bitcoin/
Example:
Source: https://www.researchgate.net/figure/How-Bitcoin-works-Wan-Hoblitzell-2014a_fig1_345643483
Value of Bitcoin
- When Bitcoin was first introduced in 2009, each coin was worth $0.
- The first known commercial transaction of cryptocurrency was equal to the purchase of two pizzas for 100 bitcoins.
- Today, the value of the same 100 bitcoins value is equivalent to $5.9 billion.
Source: https://www.comparitech.com/crypto/bitcoin-price-history/
Source: https://www.comparitech.com/crypto/bitcoin-price-history/
Bitcoin value in India over years
Source: https://en.bitcoinwiki.org/wiki/Bitcoin_history
How to trade bitcoin in India?
Before you think about investing in bitcoin or any other cryptocurrency, you must be aware that buying cryptocurrencies is a very risky business.
There is no certainty in returns so investing in it is not a guaranteed way to make money – so make sure you know the risks and can afford to lose money.
Unlike trading in markets, which is governed by bodies like the Reserve Bank of India and Securities and Exchange Board of India, that safeguard the interest of investors, dealing in cryptocurrency is free from any third-party control.
Cryptocurrencies are highly volatile, that is while your cash can go up, it can just as easily go down in the blink of an eye.
There are also concerns about the legitimacy of some tokens, as well as scams associated with cryptocurrencies.
So always, make sure you invest in something after knowing about it completely.
5 risks of crypto investments
The Financial Conduct Authority (FCA) has warned people about the risks of investing in cryptocurrencies.
| Consumer protection: | Some investments advertising high returns based on crypto assets may not be subject to regulation beyond anti-money laundering requirements. |
| Price volatility: | Significant price volatility in crypto assets, combined with the inherent difficulties of valuing crypto assets reliably, places consumers at a high risk of losses. |
| Product complexity: | The complexity of some products and services relating to crypto assets can make it hard for consumers to understand the risks. There is no guarantee that crypto assets can be converted back into cash. Converting a crypto asset back to cash depends on demand and supply existing in the market. |
| Charges and fees: | Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products |
| Marketing materials: | Firms may overstate the returns of products or understate the risks involved. |
Source: https://www.thesun.co.uk/money/15084747/bitcoin-history-chart-price-changed-over-time/
How to buy bitcoins in India?
The most popular cryptocurrency, Bitcoin, is tradeable and legal in India since there is no legislative law restricting it in the country.
The Reserve Bank of India (RBI), in a recent order, has stated that banks cannot deny services to their customers who are dealing in cryptocurrencies.
- You can buy Bitcoin in India using online exchanges such as WazirX, Coinbase, ZebPay and CoinDCX.
2. The issuing of the crypto is managed by the network of computers instead of a government agency.
3. While selecting the exchange it’s best to go with an exchange that allows you to withdraw cryptocurrency in INR to your personal online wallet for safekeeping.
4. Make sure the internet connection is secure and have two-factor authentication and unique and strong passwords for security reasons.
5. You must fill the details in KYC (Know your customer) form using your PAN card/Aadhar card and valid address proof
6. Now, add the bank account that is linked to your PAN card. The verification process will take around 2-3 days.
7. Once the verification is complete, you can start trading Bitcoin in India.
8. Money from your bank accounts can be transferred using NEFT, RTGS, and debit and credit cards.
9. It is not necessary to buy one bitcoin as it costs approximately in lakhs now instead buy in small parts.
10. That way, you will own a small percentage of the cryptocurrency.
source: https://www.91mobiles.com/hub/how-to-buy-bitcoin-in-india-mine-sell-blockchain-explained/
How to sell bitcoins in India?
1. To sell Bitcoin in India can be done through the same trading platform as buying or through peer-to-peer (P2P) exchanges.
2. In case of peer-to-peer network selling it allows you to sell the currency directly to the user, without a third party or intermediary.
3. In that case, it gives more control to you over who you want as your buyer, the pricing, and settlement time.
4. The traditional online exchange organises the transaction on your behalf with the utmost confidentiality.
5. There will be a small percentage of the crypto sale charge levied on the seller.
6. The demand and supply of the market determines the price of the currency.
7. A Bitcoin can either be sold as a coin as whole or in parts.
8. Exchanges generally have daily and monthly withdrawal limits, which means cash from a large-scale transaction may not be immediately available to the trader.
Important facts about Cryptocurrency
Future of Bitcoins
The supply of bitcoin is limited, and the maximum bitcoin supply will be 21 million.
Approximately every 10 minutes, a new bitcoin is added to the supply.
As of January 2022, 18.9 million bitcoins have already been issued, with about 2.1 million bitcoins still to be released
As the bitcoins halving is done once every four years the final bitcoin is not expected to be generated until the year 2140.
Once the Bitcoin supply reaches its upper limit, no additional bitcoins will be generated.
Then Bitcoin miners will likely earn income only from transaction fees.
Reaching this supply limit is likely to have the biggest impact on Bitcoin miners, but it’s possible that Bitcoin investors could experience negative impacts as well.
Conclusion
As we saw the price of Bitcoin is very volatile and the variance can occur depending on the demand and supply of the market’s condition.
However, if we see on a long run it is an appreciating asset as in the last ten years the value of bitcoin has grown multiple times and will also be likely to grow further in the future.
As the supply is limited to 21 million, we must really predict its future before investing as once in 4 years halving is done and once the target of bitcoins is achieved the supply will be stopped which will have a negative impact for both miners and investors.
So please understand the concepts involved in bitcoin and then trade with cryptocurrencies as the crypto market is a digital market with algorithms unlike the traditional trade market where you can buy and sell commodities based on certain factors.
Thank you guys, hope you enjoyed the blog!!! See you soon
Your article helped me a lot, is there any more related content? Thanks!
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