Is Bitcoin Legal in India? – Government Plans, Legality, Benefits, Drawbacks, How to Buy & moreLast Updated Date: Aug 30, 2023
This article has the perfect reply for the very common question – Is Bitcoin Legal in India?
Bitcoin is not a country-specific currency; it is being used worldwide. Hence, it is also termed as a “globally accepted” currency.
It is a digital currency that has no physical existence. Even the government of any country and the central bank doesn’t manage Bitcoin.
It is entirely based on crypto-currency technology, which can be viewed as a revolutionary way of making transactions that connect the world.
It eradicates all the hassles that used to come while sending and receiving money from one country to another. However, the value of one bitcoin is surprisingly more than any currency in the world.
Such as- using a single bitcoin, you can easily purchase 1 BHK flat in any metro city. Still, many people share different opinions about this popular digital currency.
One of the most popular questions, “Is Bitcoin Legal in India,” often confuses people who have recently developed their interest in crypto-currency.
If you also want to strengthen your bitcoin knowledge, let’s dive into this article and find out. But, before we get into the article, let’s understand bitcoins.
What is Bitcoin?
Bitcoin is one of the popular types of crypto-currency, also known as a digital currency. Unlike physical currencies, e.g., Rupees and Dollars, all the transactions in Bitcoins are performed online.
However, often people view it as an online payment mode, but it is more than that. You can withdraw physical money from standard online payment modes, but you can’t withdraw bitcoins.
It has no physical body and exists only virtually. You can see the figures but can’t feel them.
However, you can convert bitcoins into cash, e.g., an individual can convert bitcoins into Rupees, Dollars, or Pounds.
But the next biggest question is, ‘is Bitcoin Legal in India?’ because the Indian government has recently set some rules and regulations on cryptocurrency transactions.
Let’s get a proper insight into this most debatable subject so you can come up with the best answer.
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Government of India Plans on Cryptocurrency Trading
In the year 2020, the news spread like wildfire that the Government of India is likely to take some significant action against crypto-currency.
It’s no surprise that the news was creating a panic situation for many traders.
The government had to make some big moves after a big crypto transaction fraud made headlines in 2018. At that time, a significant drop in bitcoin prices was recorded.
Crypto-currency exchanges were called in the Supreme Court, but in the end, SC’s decision was in favor of Crypto-currency. Thereby, a 450% surge in trading was reported within two months.
From January to May 2020, approx. 883% growth recorded in Bitcoin marketplace. However, it was happening amid the global pandemic when the entire economy was in a recession phase.
That’s why experts were always against the government’s plans on banning Bitcoin.
It has been assumed that this may negatively impact 1.7 million+ Indian traders. Even international companies can experience a big loss.
That’s why, instead of banning Bitcoins, some robust rules and regulations were essential. Digital currency trading seeks a proper regulatory framework that is more likely to invite new investors.
Still, the legality of Bitcoin in India is an unclear thing for many. Next in the article, you will get the answer to this burning question.
Is Bitcoin Legal in India?
The answer is YES; Bitcoin is legal in India. You can buy, sell and hold bitcoins, as till yet, the Indian government has imposed no rules and regulations on it.
Hence, trading in bitcoin is entirely legal. It is just a false statement that bitcoins are illegal as no central authority in India regulates them.
That’s why traders can feel relaxed if they have already invested a massive amount in Bitcoin trading.
According to them, even though RBI and the government were against crypto-currency, the digital currency can be the easiest medium of money laundering and fraudulent activities.
That’s why RBI considered crypto-currency an illegal subject and posed a ban on it.
But thanks to Supreme Court, which declared that a ban on cryptocurrency can never be the best solution and ordered RBI to take back the decision.
Instead, SC asked the government to set new rules and regulations to resolve the disputes.
After the Supreme Court has reversed RBI’s decision on financial institutions which were using crypto-currency, e.g., bitcoin, a big hike was observed in Bitcoin prices.
The profits were almost double, and this happened within a few days, which set a new milestone.
But it also raises concerns because Bitcoin transactions currently have their own risk profile. That’s why it is highly recommended to purchase or invest in bitcoin using an official source.
Can I use Bitcoins in India?
Bitcoins are a globally accepted digital currency; it has no physical body, e.g., paper notes or coins. Therefore, you can use it anytime and anywhere in the world.
Even though you want to use Bitcoins only in India, you can. Using bitcoins, you can shop online too.
Even internationally, companies have started accepting bitcoins- e.g., Microsoft, Starbucks, and Twitch; these are some of the popular brands that officially accept bitcoin transactions.
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How to Buy Bitcoins in India?
How to buy Bitcoins is one of the most common questions among traders.
But don’t panic, it is very easy. Within a few steps, you can buy bitcoins, as the whole process is as easy as creating a new UPI account.
Simply find a licensed exchange online (Note: choose a reliable option only if you don’t want to experience any trouble in the future).
After finding a reliable option, you will be required to submit some documents related to KYC. You may need the following list of documents if you are buying bitcoins in India-
- Adhaar Card
- PAN card
- Individual Bank Account
- Phone Numbers
- Email Address
Currently, as of 25 Jan 2021, one bitcoin price is above Rs 24 lakh, but don’t worry, you do not need to spend such a big amount in Bitcoins.
You can start from Rs 500 only and purchase the smallest portion of bitcoin.
Also, don’t store your purchased bitcoins in the bitcoin exchange only. You need to find a secure wallet where your entire bitcoins can stay safe.
Since bitcoins is a decentralized currency, so government may refuse to help you if unexpectedly you lose money, which is the most common problem in the digital currency transaction.
Hackers can instantly gain access to your account. That’s why experts prefer to choose a licensed exchange and a separate wallet.
It is the most common way to secure your Bitcoins. However, offline wallets can better secure your bitcoins compared to online wallets.
How to Earn from Bitcoins in India?
The concept of earning from bitcoin is quite similar to earning from the forex market.
It works upon the same principle where when price rises, investors make profits, and when the price falls, the investors either purchase more or incur losses.
Hence, it is a game of patience and risk; the longer you are ready to wait, the more risk you are ready to take, the better you can earn from bitcoins.
Let’s understand it better through an example. Currently, the price of bitcoin is Rs 24 lakh, as of 25 Dec 2020, one bitcoin price was equal to 18 lakh, and it’s no surprise that today traders are enjoying a big chunk of profits who have invested in bitcoin in the past few months.
The Bitcoin prices increase automatically, but sometimes external factors can become a big reason behind if the price rises.
For example- after the Supreme Court ordered RBI to reverse its decision on banning crypto-currency, a significant rise got to see in Bitcoin’s prices.
However, if you don’t want to hold bitcoin for an extended interval, you can opt for some popular strategies.
Such as- you can choose day trading in which you can buy bitcoins at the start of the day and sell them by the end of the day.
Else, you can choose a scalping strategy if you are ready to monitor the prices actively and repeatedly buy and sell bitcoins. In this way, you secure small profits.
Can Government Track Bitcoin Transactions?
Yes, the government can track your every bitcoin transaction; even any person can do this. However, it is a bit surprising fact, but it is the reality of bitcoin.
Your every transaction is transparent in Bitcoin. Even the official bitcoin’s website claims it. It is public.
Even if you are from a government agency, or you are a random guy, you can easily view other bitcoin transactions.
Only the address of the bitcoin owner isn’t visible. Still, government can get that address by contacting the exchange to trace the person’s real identity.
Crypto-currency exchange asks you to submit the KYC documents at the first step of the account opening process; thus, they keep full information about you.
That’s why, whenever the government and legal authority would like to see someone’s address, it will be readily accessible through a crypto exchange.
It concludes that nothing is secret if you are trading bitcoins.
How to Withdraw Money from Bitcoins?
You can not withdraw money from bitcoins directly because bitcoin is a digital currency with no physical body.
You can not feel it. Instead, you can choose some additional methods to withdraw the amount.
You can either visit the exchange and fulfill the required condition to withdraw the amount directly. Else you can sell your bitcoins to someone and ask them to send money to your bank account.
Moreover, you can also sell bitcoins using e-wallets, e.g., Freecharge, Paytm, and Phone-Pe.
If you are selling bitcoins at a cryptocurrency exchange, make sure they offer the currency you are looking for. Else, it will invite additional expenses for you.
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Benefits of Bitcoin Investment
Bitcoin is a digital currency, and one can easily buy and sell even though wherever he/she resides.
From the corner of the world, you can make transactions in bitcoin, and in any region, you can use bitcoin. Also, no central authority manages the bitcoin network.
Traders who invest in bitcoins are generating ample profits as the prices exceed year upon year.
Moreover, bitcoins can be the safest option compared to other assets and currency pairs because this virtual currency is less vulnerable to market volatility.
The recent events witness the success of bitcoins. Such as-, after the RBI showed a positive sign, a significant hike has observed in the bitcoin’s prices.
It happened during the global pandemic when the prices of every asset were falling due to recession.
Drawbacks of Bitcoin Investment
Every trading comes with a significant degree of risk that defines its disadvantages. Since Bitcoin is a digital currency, so it is highly vulnerable to hackers.
A modest mistake can undoubtedly put you into big trouble. If you aren’t connecting with a reliable exchange, possibly it may risk your entire investment.
Lots of cases have been reported till now. Also, no government or regulatory body handles these currencies; that’s why if you lose your funds, the chances are less that you will get them back as the whole Bitcoin network is still in development. Lots of features are to come.
Moreover, the limited amount of bitcoins is also the biggest concern. There are a total of 21 million bitcoins. Already 18.5 million bitcoins have been mined.
Is Bitcoin Legal in India? – Conclusion
Bitcoin is legal in India. Though, over the last couple of months, many assumptions around were creating a mind-boggling situation for people.
But in the end, it is very-obvious that bitcoins are not illegal in India. Hence, you can confidently trade bitcoins. Still, we can’t forget few ups and downs about Bitcoins.
However, these ups and downs are a subject of concern. Not for Indians only but for every person who uses bitcoin network.
In this article, we have briefly discussed everything about bitcoins. Even though it is emerging as the most profitable instrument among traders, we still can’t forget the risk associated with it.
Make sure you are choosing a reliable exchange and wallet. It will avoid problems that people often experience before, during, or after investing in bitcoins.
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