Cryptocurrency market has seen an unparalleled boom in the last few years, compelling even the sceptics to have a second look. But fewer countries have seen the popularity and growth of digital tokens on the scale India has. Despite the Reserve Bank of India (RBI) expressing “major concerns” about them, the popularity of virtual currencies in the country has grown significantly, especially in the last year. Having said that, we shouldn’t be blindsided merely by the momentum of cryptocurrencies and understand every aspect of the market before investing. And one such crucial component of the crypto ecosystem is a cryptocurrency exchange.
What is a cryptocurrency exchange?
A cryptocurrency exchange is a platform that facilitates the trading of cryptocurrencies for other assets, including both virtual (Bitcoin, Ether) as well as fiat currencies (Indian Rupee, US Dollar). In fact, they act as an intermediary between buyers and sellers. Commissions and transaction fees are their major source of income. Bitcoin price in India stood at Rs. 28.2 lakhs and Ethereum price in India stood at Rs. 1.84 lakh as of 9:30am IST on August 4.
How does a cryptocurrency exchange work?
A cryptocurrency exchange — like a brokerage firm — acts as a go-between buyers and sellers. An investor can deposit money via different methods, including direct bank transfers, card transactions, UPI, etc. depending on the exchange, which can then be used to purchase cryptocurrencies. And in return for the services provided by the crypto exchange, you have to pay them a fee. For example, at an exchange that deals in both Bitcoin and Ether, the two currencies can be traded for each other’s equivalent value as well as fiat currencies.
How to open a cryptocurrency trading account?
Opening a cryptocurrency trading account is fairly simple. However, choosing a platform, which offers you not just the basic facilities but also other benefits requires a bit of research. For example, if you want to open an account with WazirX, one of the popular cryptocurrency exchanges in India, you can follow these steps.
- Download the WazirX app or go to its website and hit the Sign Up button
- Enter your email address and set a password
- An email will be sent to the address, locate it and click on Verify Email
- Read all the terms and conditions before ticking the checkbox
- Now, you are ready to begin
But before you can start trading in cryptocurrencies, you have to go through a KYC (Know Your Customer) verification process, which may differ for exchanges.
What facilities do crypto exchanges offer?
Among the top crypto exchanges in India are WazirX, CoinDCX, Binance, Unocoin. On WazirX, for example, a user can buy, sell, and trade digital currencies with ease. WazirX also provides the facility of P2P (Peer-to-Peer), which means direct trading of cryptocurrencies between users, without the intervention of a third party or an intermediary. These cryptocurrency platforms also facilitate the conversion of cryptocurrencies into fiat currencies, which can then be transferred back into a user’s source account.