In April 2018, a circular was pushed by the Reserve Bank of India (RBI) that would forbid financial entities like banks to provide services to companies and individuals dealing in cryptocurrencies (a.k.a. the Banking Ban). Fortunately for the Indian community, the Banking Ban was quashed in March 2020—allowing cryptocurrency traders to experience a big win. With that being said, what is now the easiest way to buy bitcoin in India?
Your two main options:
When it comes to buying and selling bitcoin, crypto exchanges always come to mind. In today’s world, there are two main types of bitcoin exchanges: traditional bitcoin exchanges and peer-to-peer marketplaces.
Each of them has its own set of pros and cons, so let’s break it down:
Traditional bitcoin exchanges:
Traditional bitcoin exchanges, such as Coinbase, WazirX, and Binance, have always been the more popular choice—they’ve been around for much longer and are still one of the easiest ways to buy BTC.
The first-ever bitcoin exchange (Bitcoinmarketcap, now defunct) went live in 2010. Although the platforms had a lot of bugs and glitches, it proved its purpose—to show that the BTC industry has a real demand for platforms that could establish real-time exchange rates for BTC and the US dollar.
On traditional bitcoin exchanges, buyers and sellers are matched via order books. Two traders are paired, then the platform acts as a middleman to help carry out the trade.
- Ease – Because the platform acts as a middleman that helps carry out the trade, the transaction is mediated—allowing the traders an easier trading experience. This feature makes these types of exchanges more beginner-friendly.
- (Somewhat) Anonymous – Although most exchanges nowadays implement KYC rules, the platform acting as a middleman means that there is little to no interaction between you and the seller—meaning an extra dash of anonymity.
- Beginner-friendly – Aside from the platform acting as a middleman, traditional bitcoin exchanges will often allow you to link your bank account to your exchange account—allowing for quicker and easier transactions.
- Compensation – Because the platform will act as a middleman for both buyers and sellers, they require more compensation—meaning more fees for trade participants.
- Financial inclusion – A lot of traditional bitcoin exchanges will often require its users to link their bank accounts. Although that link can make trading more efficient, not everyone has access to a bank account. There is still an unbanked and underbanked population out there that are given the same financial rights as terrorists—no financial inclusion, not being able to meet the requirements, inability to participate in daily transactions, etc.
Peer-to-peer bitcoin marketplaces:
Peer-to-peer bitcoin marketplaces, just like traditional bitcoin exchanges, match buyers and sellers via order books. However, the main difference between the two is that peer-to-peer marketplaces only interact with the traders when there are disputes. Otherwise, buyers and sellers complete the trades themselves via live chat.
Through this peer-to-peer system, buyers can search through the listed offers based on preferences they input (payment method, preferred fiat currency, location, etc.). Additionally, sellers can also create offers with their set preferences (profit percentage, payment window, offer limits, etc.)
Essentially, peer-to-peer bitcoin marketplaces personalize the entire trading process in the hopes of making it more efficient. Let’s take a look at the pros and cons:
- Hundreds of payment methods – Peer-to-peer bitcoin marketplaces will offer more flexibility in terms of payment methods— you can buy bitcoin with Cash App, bank transfers, gift cards, and many more.
- Cost-efficiency – Because the platform has little to no interference with trades, there’s not much need for compensation—meaning lower fees.
- Accessibility – Unlike traditional bitcoin exchanges that require you to link a bank account, all you need to sign up on a peer-to-peer bitcoin marketplace is an email address and mobile phone number (as well as the additional ID verification).
- Financial passport – Since peer-to-peer bitcoin marketplaces are more accessible than traditional bitcoin exchanges, people can use these marketplaces as a financial passport—so that they, in turn, can participate in every day (and online) transactions.
- Steeper learning curve – Since the platform doesn’t act as a middleman (like on traditional bitcoin exchanges), the learning curve is much steeper on peer-to-peer bitcoin marketplaces. They’re not difficult by any means, but compared to traditional bitcoin exchanges that act as middlemen to help facilitate the trade, peer-to-peer marketplaces require a bit more research.
- Scammers – In its earlier days, peer-to-peer bitcoin marketplaces were often associated with an abundance of scammers. However, they have developed since then and now have better security protocols to mitigate the risks.
It all boils down to trading style:
When it comes to choosing between traditional bitcoin exchanges and peer-to-peer bitcoin marketplaces, neither is a bad option. Ultimately, it all boils down to the type of trading style you prefer—do you want an easy and (somewhat) anonymous means of buying and selling BTC? Do you want flexibility when it comes to payment methods? How cost-efficient do you want your trades to be?
The question you should be asking yourself is: which kind of exchange more applies to your preferred trading style?
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