The interest in cryptocurrencies in India has been steadily rising in the last several years. In the 2022 Union Budget, the Indian Finance Minister mentioned that with proper regulations, cryptocurrencies have the potential to become legitimate and mainstream currencies like the Indian Rupee.
Therefore, cryptocurrency is the most stable and secure payment option in the world, commonly used for local and international payments.
So, let’s find out how to use cryptocurrencies in India.
What is cryptocurrency?
In simple words, cryptocurrency is a digital currency that can be held like an asset or exchanged for goods and services. It’s quite similar to the regular currencies in circulation, like the US Dollar or the Indian Rupee. However, one important difference is that cryptocurrencies do not exist in physical forms.
Also, all cryptocurrencies are decentralized, which means they are not controlled or regulated by any central bank or government agency.
Individuals and businesses can hold cryptocurrencies and use them for making payments without intervention by any government agency. So, cryptocurrencies do not need financial intermediaries like banks.
Note. The most common cryptocurrency is Bitcoin. Some other important cryptocurrencies are Ethereum, Cardano, XRP, and Tether (stablecoin).
Cryptocurrency vs. fiat currency
Fiat is the general currency in circulation, like the Indian rupee. It is a paper currency, the value of which is guaranteed by the Government of India. Fiat currencies are issued and controlled by the Central Bank. The value of a fiat currency falls when more and more notes are in circulation. However, the total amount of a currency is fixed.
Cryptocurrency is a virtual currency that is not regulated or controlled by any central bank or government agencies. Cryptocurrencies don’t need any intermediaries, crypto transactions can eliminate transaction costs. This is a big advantage of cryptocurrencies.
Stablecoins are cryptocurrencies whose value is tied to the value of another currency or commodity. For example, USDT is considered to be the least risky coin. Stablecoins are pegged to real assets like gold, precious metals, US dollars, and other fiat currencies. Stablecoins can be used for conversion on exchanges instead of dollars.
Advantages of stablecoins:
- Stablecoins are less volatile compared to other cryptocurrencies.
- Stablecoins are safe to invest as they are backed by fixed assets.
- Stablecoins make payments abroad a lot easier.
How to start using cryptocurrencies in India?
Here are the 3 steps to becoming a crypto owner:
Let’s see how these steps are done.
Buying, holding and using cryptocurrencies in India
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Buying cryptocurrency
You can buy cryptocurrencies with the Indian rupee, your fiat money. In this process, you are basically converting your fiat currency to cryptocurrencies.
Do I have to pay the TDS tax?
The central board of direct taxes (CBDT) has clarified that when someone is buying crypto via an exchange (P2P transactions count as well), the tax can be deducted under section 194S by the exchange. So as a buyer, you won’t have to pay it. Learn more.
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Holding cryptocurrency
Once you have bought cryptocurrencies, you can hold them in a crypto wallet.
A hot wallet is a wallet that is connected to the Internet, for example, a crypto wallet in a mobile application. A hot wallet is extremely convenient and easy to use as you can easily make payments, exchange your cryptos for fiat, or exchange one crypto with another.
A cold wallet is an offline wallet that is stored in a hardware device, like a flash drive. A cold wallet is not connected to the Internet.
Therefore, hot wallets are the most convenient way to hold and use crypto coins.
There are many crypto exchanges (wallets) like WazirX, Binance, Ledger, CoinDCX, etc. through which you can buy and hold cryptocurrencies.
A good crypto exchange has the following features:
- Number of supported coins
- Low or no fees
- Easy to use interface
- Trustworthiness and reputation
- Large user base
- Advanced trading and investment features
- Customer support
- Data security
Let’s explore the most popular wallets in detail and compare:
| Wallet name | Wallet type | Deposit fees | Withdrawal fees | Main features | Number of supported currencies | Accessibility | Payment methods |
|
Desktop and mobile wallet |
Free |
Instant withdrawals: Rs20 per withdrawal NEFT withdrawals: Rs10 per withdrawal |
1. Highly trustworthy and user-friendly 2. Fast KYC 3. P2P payment option 4. Fast transactions |
More than 100 |
Website and mobile app for iOS and Android |
IMPS, NEFT, RTGS, UPI, Debit Cards |
|
|
Hot wallet |
Free |
Flat fee for cryptos and variable fees for fiat currency. |
1. Best crypto wallet in India with 24/7 support 2. Secure wallet with 2 factors authentication |
More than 1,000 |
Website and mobile app for iOS and Android |
Cryptocurrency, Internet banking, Credit Cards, Debit Cards |
|
|
Hot wallet |
Free |
Depends on the type of coin |
1. Promotions (for example, free bitcoin everyday) 2. Educational materials |
More than 150 |
Website and mobile app for iOS and Android |
||
|
Hot wallet |
Rs10 per deposit transaction made using Internet banking. Rs25 per deposit using UPI. Rs7 for rupee deposited through bank transfer. All crypto deposits are free |
The withdrawal fees vary from currency to currency and are |
1. Possibility to lend cryptocurrency 2. Educational materials 3. Safe and secure |
More than 150 |
Website and mobile app for iOS and Android |
Mobikwik, UPI, GoCashFree, Internet banking |
All of these wallets can be used to buy and hold cryptocurrencies.
What wallets are best for crypto deposits?
Here are the top 3 wallets in India based on reliability: Binance, Bitbns, and Wazirix.
|
Wallet |
Can it hold INR? |
How to buy coins with INR? |
Commissions for transfers to Binomo |
Comments |
|
Binance |
No |
1. Via P2P service. 2. Via a bank card. |
There are no fees to buy crypto via P2P. Flat low fees on withdrawals. |
1. Global wallet. 2. Deposit on Binomo via Binancepay method. |
|
BITbns |
Yes, via UPI or other payment methods. fee: 0% |
1. Via USDT P2P service: 2. Via Quick Swap service from your INR/USDT account or on the market. |
There are no fees to buy crypto via P2P. 0.25% fee to buy crypto on the market. Low fees on withdrawals. |
1. Indian-based company. 2. Guide on crypto withdrawals. |
|
Wazirix |
1. Via USDT P2P service. 2. On the market. |
There are no fees to buy crypto via P2P. 0,2% fee to buy crypto on the market. Fees on crypto withdrawals. |
1. Indian-based company 2. Guide on crypto withdrawals. |
Wallets that are less convenient for crypto deposits: Zebpay, CoinDCX, and Coinswitch.
Note. ERC20 token transfers usually have the highest fees.
There are two ways to hold crypto coins:
- You can buy from a crypto exchange like WazirX and Binance and then keep crypto coins there. In this case, the cryptos are stored in the exchange’s wallet and when you make a transfer to someone, it goes through the exchange.
- You can buy cryptos from a platform like Metamask, which will give you a digital wallet address through which you can make P2P transfers (person-to-person).
What is P2P?
P2P is a cryptocurrency exchange method in which people can directly exchange cryptocurrencies with each other and receive payments.
Via WazirX P2P, you can buy USDT with rupees or sell USDT to get rupees. Once you buy USDT, you can exchange it for an equivalent amount of cryptos like Bitcoin.
Officially P2P can cause tax evasion and P2P accounts can be frozen. Therefore, please assess the risks before using it.
Using cryptocurrency
Choose a wallet you prefer and go to its website. Sign up to be able to convert fiat into crypto coins, i.e. buy cryptocurrency. Here are the registration pages of WazirX and CoinSwitchKuber crypto platforms:
The sign up process is straightforward. In most cases you just need to provide your name (make sure it matches your PAN card), email address, mobile number, etc. Also, remember to set a strong password to secure your account.
Identity verification and bank account details
After you have registered with a crypto exchange, you are just a few steps away from buying cryptocurrency. Please note that most crypto exchanges require identity verification.
After creating an account, you will see a page similar to this (CoinSwitchKuber verification page). Click on the “Use Verification” tab and verify your PAN details and details of any additional ID.
Note. Most crypto exchanges take around 24 hours to verify the documents. After verification of your identity, you will be able to add your bank account details.
After your account is ready, you can use it to buy cryptocurrency. You can later send those coins to others using P2P, sell for fiat, and withdraw fiat to your bank account.
How to convert your fiat for crypto and crypto for fiat and make deposits and withdrawals?
- Deposit INR with payment methods like NEFT, RTGS, or UPI.
- Buy cryptocurrency. You can also convert one crypto into another through the exchange.
- You can withdraw your fiat from the exchange wallet to your bank account.
How to deposit money into your hot wallet account?
There are several ways to add your money to a crypto wallet.
The most popular are P2P and TDS. We recommend using TDS since it's a reliable, secure, and legal method to fund your crypto wallet because it deducts 1% from your payment to pay to the government.
How to set up a Binance account?
Binance is an extremely user-friendly platform for buying cryptocurrency in India. It has a simple sign up process, more than 350 cryptocurrencies to trade and the lowest transaction fees (less than 0,10%)
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Sign up on Binance with your email or mobile number and pass an identity verification.
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Fund your Binance wallet and choose a crypto coin you would like to purchase.
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You can buy and sell cryptocurrencies using your currency of choice.
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You can deposit with various payment methods.
Note. Binance does not charge deposit fees and it charges a 0,10% fee for withdrawals.
How to pay with cryptocurrency?
Cryptocurrency is increasingly becoming a legitimate means of paying for real goods and services. Currently, several crypto platforms such as Unicoin allow exchanges of Bitcoins for vouchers of more than 90 brands such as Domino's, Baskin Robbins, Himalaya, and Prestige.
You can convert your fiat into Bitcoins and then use these vouchers by transferring your Bitcoins from hot or cold wallets to Unicoin.
As we have more crypto users, exchanges, and merchants accepting cryptos for real goods and services, crypto will play an important role as an alternate currency in the digital economy.
Here’s the instruction on how to deposit with crypto on Binomo.