Cryptocurrency: Things you need to know about the crypto world

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People are becoming more interested in cryptocurrencies these days. Cryptocurrency is a popular form of digital currency that can be used to buy things on certain websites and platforms. Because of how unpredictable cryptocurrencies can be, not many accept them. Unlike traditional money, the value of cryptocurrency is calculated by the market.

These days cryptocurrencies are all around in the news, and curiosity subject for many. Cryptocurrencies such as Bitcoin, Etherium, Ripple and Dogecoin are making big news. Dogecoin made more than 1000 per cent return this month. Other Cryptocurrencies are also making a good return for their investors.

Personalities like Elon Musk, CEO of Tesla and Mark Cuban, owner of Dallas Maverick believe that cryptocurrencies are here to stay and they have shown their interest in cryptocurrencies as well. But the question here is whether cryptocurrencies are safe for investors or users in India? Let’s understand this.

What is Cryptocurrency?

A cryptocurrency is a virtual or digital currency secured by cryptography, which makes it nearly impossible to counterfeit and double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology – a distributed ledger enforced by a disparate network of computers. A defining feature of Cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation.

The first blockchain-based cryptocurrency was Bitcoin. Bitcoin was launched in 2009 by the pseudonym Satoshi Nakamoto in Japan. Till March 2021, 18.6 million bitcoins were in circulation with a total market cap of around $927 billion.

Cryptocurrency in India

In 2018, then Finance Minister Arun Jaitley had stated the government’s resolve to discontinue the use of bitcoin and other virtual currencies. And RBI had banned cryptocurrency transactions. But the Supreme court, vide judgment dated March 4, 2020, lifted the ban and allowed people to buy and sell cryptocurrency.

In the budget session of 2021, FM Nirmala Sitharaman stated that they are preparing the law for cryptocurrencies because an Inter-Ministerial Committee (IMC) has suggested a ban on private cryptocurrencies in India, and the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 is in a queue to introduce by the Finance Ministry.

What are the concerns with cryptocurrency?

A cryptocurrency is a form of virtual/digital asset based on a network that is distributed across a large number of computers. This decentralized network structure allows them to exist outside the control of governments and central authorities. Experts believe that blockchain and related technology can disrupt many industries, including finance and law. Cryptocurrencies face criticism as they can be used for illegal activities, exchange rate volatility, and vulnerabilities of the infrastructure underlying them.

Where are cryptocurrencies legal, and where not?

Many governments in the world allowed, and many nations are still opposed to this asset class. Cryptocurrencies are legal in countries such as the USA, European Union, South Korea and Japan. In India, as of now, virtual currency is not illegal. However, a country like China doesn’t consider cryptocurrencies as legal tender.

Is the Ban on cryptocurrency the only option the Indian government has?

Considering India’s interest, Finance Minister Nirmala Sitharaman has stated that India is not shutting off all options for cryptocurrency or blockchain, and fintech. The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 is in the process.

So it is to be believed that people can have enough information about trading or investment in cryptocurrencies when the bill is ready.