Cryptocurrency Basics

Is it the future of money or a giant bubble? The answer is probably somewhere in between.

What is Cryptocurrency?

It is digital money that is not controlled by any government or bank. It uses Cryptography for security.

The Problem with Traditional Money (Fiat)

• Centralized: RBI/Fed controls it. They can print unlimited money (Inflation).
• Trust-based: You have to trust the bank not to freeze your account.

The Crypto Solution

• Decentralized: No boss. Controlled by code and math.
• Limited Supply: Bitcoin has a hard limit of 21 Million coins. No inflation.

How Blockchain Works (The Tech)

Imagine a Google Sheet that:

1. Everyone can see (Public).
2. Nobody can edit/delete past rows (Immutable).
3. New rows are added only if everyone agrees (Consensus).

That is Blockchain. It is a public ledger of transactions.

Major Cryptocurrencies

1. Bitcoin (BTC) - The Digital Gold

• Purpose: Store of Value.
• Supply: 21 Million max.
• Status: The King. Safest crypto.

2. Ethereum (ETH) - The World Computer

• Purpose: Smart Contracts. You can build apps (DApps) on top of it.
• Status: The Queen. Powering DeFi and NFTs.

3. Stablecoins (USDT, USDC)

• Purpose: Stability. Value is pegged to $1.
• Use: To park money when market is volatile.

4. Altcoins (Solana, Cardano, Doge)

• Purpose: Various (Speed, Memes, Tech).
• Risk: Very High. 99% of Altcoins will likely go to zero.

Risks of Crypto (Read Carefully!)

1. Volatility: Bitcoin can drop 50% in a month. Can you stomach that?
2. No Regulation: If you send money to the wrong address, it is GONE forever. No customer care.
3. Scams: "Send 1 BTC, get 2 BTC back" is always a scam.
4. Government Ban: Governments can ban or tax it heavily (India has 30% tax + 1% TDS).

Investing in Crypto in India

Taxation (The Pain)

• Flat 30% Tax on profits. (No slab benefit).
• No Loss Set-off: Loss in Bitcoin cannot be adjusted against profit in Ethereum.
• 1% TDS on every sell transaction.

How to Buy?

Use exchanges like CoinDCX, WazirX, or ZebPay.

1. KYC is mandatory.
2. Deposit INR via IMPS/NEFT.
3. Buy Bitcoin/Ethereum.

Strategy for Beginners

If you want to invest:

1. Allocation: Max 5% of your portfolio. (Money you can afford to lose).
2. Blue Chips Only: Stick to Bitcoin (BTC) and Ethereum (ETH). Avoid "Shitcoins."
3. HODL: Buy and hold for 5+ years. Trading crypto is extremely difficult.

7-Day Action Plan

Day 1: Watch a 10-min video on "How Bitcoin Works."
Day 2: Understand the difference between "Hot Wallet" (Exchange) and "Cold Wallet" (Hardware).
Day 3: Check the current price of Bitcoin. Look at the 5-year chart to see volatility.
Day 4: If you decide to invest, sign up on an Indian exchange (CoinDCX/WazirX).
Day 5: Complete KYC.
Day 6: Invest a tiny amount (₹500) in Bitcoin just to learn the process.
Day 7: Read about the "FTX Crash" to understand why "Not your keys, not your coins" is a famous saying.

Quiz

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💡 Final Wisdom: Crypto is high risk, high reward. Treat it like a lottery ticket that might pay off, not your retirement fund.