Hey folks,

Welcome back to the sixth issue of Finshots Cracks Crypto.

The last story looked at Web3, altcoins and the endless possibilities of crypto beyond just Bitcoin and Ethereum. By now, you know how blockchain works and why it’s revolutionising traditional finance.

But knowing is one thing. What do you do with it? Because let’s be real. You didn’t just learn about crypto to sit on the sidelines, yeah? The real question is: How do you actually buy, sell and trade crypto in India, and that’s what we’re diving into today.

Now, we get it. The idea of getting started with crypto investing might seem daunting. Too technical. Too risky. Too many horror stories of people losing their investments overnight. But the truth is that once you understand a few basic fundamentals and the right way to approach it, it’s just another asset class, like stocks or real estate, with its own set of rules. And to make it easy-peasy, we’re focusing on three things today - the process of crypto buying-selling, how to evaluate crypto assets, and the tax and legal implications that come with it.

So let’s take it from the top, shall we?

Before we get into the ‘how’, let’s take a moment to address the ‘where’—as in, where exactly does crypto stand in India?

The short answer is it’s not illegal, but it’s not money or ‘legal tender’ either. You can’t walk into a kirana store and buy groceries with Bitcoin, but you can trade it, invest in it, just like any other asset. The government labels crypto as a “Virtual Digital Asset” (VDA), which is a fancy term that basically means you can own it, but you’ll pay a hefty tax for doing so. And yet, despite all the regulatory uncertainty, India leads the world in crypto adoption. Yup. In 2024, for the second year in a row, India ranked #1 globally in crypto adoption. And that sure is impressive.

Alright, now that we’ve set the stage, let’s talk about how you actually get your hands on crypto.

If you think of cryptocurrencies like stocks, things start making a lot more sense. Just like you need a Demat account to trade stocks, you need a crypto exchange account to trade digital assets.

Here’s the process, and this could take a few clicks and a few minutes:

#1 - Choose a reliable exchange: This one’s an important step because exchanges are prime targets for hacks, scams and sudden shutdowns. If history has taught us anything, it’s that no exchange is too big to fail. So, choose wisely. Look for solid security measures (2FA, withdrawal whitelists, proof of reserves), high trading volumes (because liquidity = better pricing), KYC verification (which ensures legitimacy) and smooth withdrawals – which is how easily you can get your money out from an exchange. You can even go through the exchange's terms and conditions. 

#2 - Fund your account: This is an easy one where you deposit INR into an exchange using UPI, bank transfer, or payment gateways. And there’s also another way — buying stablecoins directly via peer-to-peer (P2P) trading. Stablecoins act as a bridge between fiat and crypto, making trading smoother without INR conversion delays. So, instead of waiting for INR deposits to clear, you can buy stable coins like USD Tether (USDT) from a verified seller on the exchange by sending INR via UPI. The exchange here acts as an escrow, releasing funds only after confirmation.

#3 – Make your first crypto transaction: Okay so now you’ve got INR or USDT in your account. It’s time to trade. Want Bitcoin? Buy BTC/USDT. Prefer Ethereum? Go for ETH/USDT. Exploring altcoins? Do your homework. Basically, just enter the cryptocurrency name, just as you would any stock name over your stock trading platform. And choose the cryptocurrency that’s paired to Tether. Before transacting, you might also want to check liquidity, volatility and credibility of the coin. A pro tip? Start small. Make your first trade with a tiny amount just to get the hang of things. And use limit orders instead of market buys — because well, they help you avoid bad pricing.

And once you're done buying, take a note of your credentials – login details, private and public key and the amount of crypto funds you have in this wallet.

#4 - Move to a Secure Wallet: Now, if you have been paying close attention to our previous stories in this series, you’ll know that if your crypto is on an exchange, it’s not really yours. Hacks, sudden bankruptcies, frozen withdrawals, it’s all possible. And the only way to truly own your crypto is by transferring it to a private wallet (cold/dark/hard wallet). So…

• Hot wallets (software-based) = good for convenience, bad for security.
• Cold wallets (hardware-based) = best for long-term storage. Offline, untouchable and secure.

And don’t forget the golden rule: “Not your keys, not your coins.” If you don’t control your private keys, someone else does. And that’s a risk you don’t want to take. So, when you buy your first crypto, remember your keys and make a note of them. And since we’re talking about wallets, let’s clear this up once and for all because this is where crypto ownership really matters. So, moving your crypto to a cold wallet puts you back in control. How, you ask? Well, it removes your digital footprint and makes the transaction untraceable on two ends: your identity stays private and your assets stay private. In short, if it’s in an exchange’s wallet, it’s not really yours.

Here’s the thing though. Buying crypto is the easy part. What will you do next?

Let’s break that down to trading, investing and how to think smartly about crypto so you don’t end up making rookie mistakes.

But first, a few warnings. Crypto trading isn’t like stocks. It plays by its own rules. There’s no opening bell, no closing time, no circuit breakers to cool things down. The market runs 24/7, and prices can swing 10% in seconds.

Secondly, know that not all cryptos are created equal. Some are highly liquid and widely adopted, making them easier to trade, while others are volatile, low-ranked and built on shaky fundamentals. So before putting your money in, ask yourself—how liquid is this crypto? What are its real-world use cases? Where does it rank in the market, and how strong is its adoption? A higher market capitalisation and ranking often mean more stability.

Then comes the hard question about allocation. And this could be an important one. Basically, it’s about asking How much should I invest in cryptos? Because cryptocurrencies as an asset class don’t have much history and that’s why they can be volatile and riskier. A few questions that could help are: Am I going heavy on any particular crypto? Why is that so? And how much of my overall portfolio should even be in crypto?

Doing this homework before you trade ensures you’re making decisions based on strategy, not just FOMO.

Okay, so once you’ve got a solid grasp of these basics, it’s time to get clear on your game plan. Are you here to hold crypto as a long-term investment, or are you looking to trade and profit from short-term moves?

Here’s how to break it down.

Trading in crypto, just as in stocks, is all about short-term moves and market timing. Traders thrive on volatility, using technical analysis, price patterns and momentum to buy low and sell high. So you’ll need to consider:

• Trading pairs: BTC/USDT, ETH/USDT and other major pairs.
• Liquidity: How easy is it to buy/sell these pairs of crypto?
• Market Cap: Larger market cap cryptos tend to be less volatile.
• Technical Analysis: Studying price patterns to make short-term trades.

The most common way to trade? The spot market. Buy, sell, repeat. But if you want to amplify gains (or losses), there’s also the crypto Futures & Options (F&O) trading. Just like in stocks, traders can leverage positions, hedge risks and bet on price swings using various F&O strategies. These are something that you call CFDs (Contracts for Difference) which basically let you speculate on price movements without owning the asset.

Investing, on the other hand, is a long-term game. It’s more about believing in the fundamentals of a cryptocurrency and the technology and holding through the ups and downs. Pick a few strong cryptos, stick with them, and ignore the noise. Some investors take it a step further with crypto Exchange-Traded Funds (ETFs). Many also choose Dollar-Cost Averaging (DCA), which is simply investing a fixed amount regularly, regardless of price (just like an SIP). Instead of worrying about daily price swings, DCA smooths out volatility and builds a strong portfolio over time. And just like in stocks, investing strategies matter. So have a plan and be sure about your investment thesis. Know why you’re buying, when you’ll sell, and how you’ll protect your assets.

But whether it's trading or investing, risk management is everything. In trading, that means stop-loss orders, position sizing and portfolio rebalancing to keep losses in check. In investing, it’s about diversification — spreading bets across cryptos to avoid overexposure.

And then there’s taxes, the silent killer of profits. Whether you’re trading or investing in cryptos, they can make or break your returns.

So, let’s dive into the final piece of the puzzle that is crypto taxation.

In India, the taxman doesn’t just want a piece of your crypto profits. It takes a giant bite. A straight up 30% tax on gains, no deductions, no exemptions, no offsets with any other income or expense. Plus there’s a 1% tax deducted at source (TDS) on every transaction of Virtual Digital Assets exceeding ₹50,000. So it’s fair to say that crypto taxation in India is brutal. And if you are a serious trader or investor, consulting a tax expert could be a good way to stay compliant and avoid surprises.

And while taxes sting, regulations add another layer of complexity. A few major players call the shots in India’s crypto landscape:

• The Reserve Bank of India (RBI) — worried about financial stability and crypto’s impact on the economy.
• The Ministry of Finance — setting tax policies and cracking down on money laundering risks.
• The Securities and Exchange Board of India (SEBI) — while not a direct regulator, it has recommended inputs, particularly about the need to regulate crypto-linked financial products.

And the regulatory back-and-forth has also been a bit of a task to track. Back in 2018, the RBI imposed a banking ban on crypto exchanges, making it nearly impossible for Indians to buy or sell crypto legally. The Supreme Court overturned that decision in 2020, but the uncertainty never really went away. Then came the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, a proposal to restrict private cryptocurrencies while recommending a way for Central Bank Digital Currency (CBDC). What’s the status today? The bill still hasn’t been passed. So as we can read it, it says that India isn’t banning crypto, but it sure wants to control it.

So yeah, that explains why some call crypto a casino, while others see it as the future of finance. The truth probably lies somewhere in between.

Bitcoin’s meteoric rise proves that crypto isn’t just hype. It’s a movement, a new way to think about money, value, and decentralisation. But for every Bitcoin success story, there’s a graveyard of worthless altcoins and market crashes which remind us that scams and speculation runs wild here.

And that begs the question — Is it worth it?

Well, that depends on you. If you understand it, respect the risks and approach it with a plan — not blind greed — crypto could be an asset, not just a gamble. So set a strategy, diversify your portfolio, manage risks, and never invest what you can’t afford to lose. And if all that feels overwhelming, maybe learning first is better than diving in headfirst.

On that note, we’ll end this story.

And in the next one, we’re flipping the script to ask “Is crypto trading really worth it, or is the real future of crypto something entirely different.”

See you next week!

Until then…

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