Before you buy your first crypto

Most people who lose money on their first crypto purchase don’t lose it to a market crash. They lose it to a fake app, a shared OTP, a “guaranteed” scheme, or a platform that disappears. Go through this list before you put in your first rupee.

1. Decide what money this is

Crypto is volatile. Prices can fall 50% in weeks, and some tokens go to zero. It is also not regulated as an investment in India, so there is no SEBI-style investor protection and no deposit insurance if a platform fails.

Only use money you could lose entirely without it changing your rent, EMIs or emergency fund. Never borrow to buy crypto.

2. Write down why you’re buying

One line is enough. “I want a small long-term position in Bitcoin.” “I want to understand how this works with ₹2,000.” If you can’t say why, you’ll have no way to decide when to sell, and you’ll be easy to talk into the next hot coin.

3. Use a registered platform

Since 2023, crypto platforms serving Indian users must register with the Financial Intelligence Unit-India (FIU-IND) under anti-money-laundering law. Check that the exchange you’re using is registered, download its app only from the official Play Store or App Store listing, and type its web address yourself rather than clicking links in messages.

4. Lock down your account

• Use an authenticator app for two-factor login, not just SMS.
• Turn on withdrawal address whitelisting if the platform offers it.
• Use a unique password you don’t use anywhere else.
• Never share an OTP, password or recovery phrase with anyone. No exchange, bank or “support agent” will ever ask for them.

5. Understand who holds your coins

On an exchange, the exchange holds the keys and you hold an account balance. That’s convenient, but if the exchange is hacked or shuts down, your coins may be stuck. With a self-custody wallet, you hold the keys yourself. That removes the exchange risk but makes you fully responsible: lose the recovery phrase and the coins are gone for good.

For small amounts, a reputable registered exchange is usually simpler. If your holding grows, learn about self-custody before you need it.

6. Start small and test everything

Buy a small amount first. Try a withdrawal to your bank. If you plan to move coins to a wallet, send a tiny test transaction before the full amount. Mistakes on a blockchain usually can’t be reversed.

7. Avoid leverage and futures

Futures and margin trading let you bet with borrowed money. They can wipe out your whole deposit in hours, and many of the apps offering them to Indians operate offshore without registration. If you’re new, stay away.

8. Ignore anyone who promises returns

No legitimate person can promise fixed returns from crypto. Tips in Telegram or WhatsApp groups, “signal” subscriptions and influencer coin calls are where most retail losses start. If someone profits from you buying, treat their advice as an advert.

9. Keep records from day one

Every sale, swap or spend is a taxable event in India, taxed at a flat 30%, and losses can’t be set off. Download your transaction history every year and keep a simple log. Our crypto tax guide explains the rules with a worked example.

10. Know where to report problems

If you are scammed or your account is compromised, report it at once on the national cybercrime portal, cybercrime.gov.in, or call 1930, the cyber fraud helpline. The faster you report, the better the chance of freezing the money.

This is general safety information, not investment advice. Encume does not recommend buying any particular asset.