What is Cryptocurrency? What is the future of cryptocurrency?

What is Cryptocurrency? Will Cryptocurrency be completely banned in India? Let's understand the future of cryptocurrency in India:
What is Cryptocurrency?
What is Cryptocurrency?

Indians own the highest number of cryptocurrencies in the world. – BrokerChoose annual crypto proliferation index.

The question of the hour is:

What is cryptocurrency and its pros and cons?

Well, Cryptocurrency is a digital currency and a decentralised currency that depends on the market demand and supply which is driven by huge players.

For example, Elon Musk influenced Cryptocurrency.

In February 2021, Tesla announced it's 1.5 Billion USD investment in Bitcoin and Musk said, they will also accept payment for cars in crypto. The price of Bitcoin went to Approximately 46,000 USD. However, in April, Musk changed his mind and sold 10% of Bitcoin and no longer accepting payments. Bitcoin fell to nearly $30,000.

What is blockchain technology?

Cryptocurrency works using Blockchain technology which is decentralised and spread across several computers which manage and record transactions.

Who controls digital currency?

Unregulated digital currency is controlled by the developers or a founding organization consisting of various stakeholders. Central Bank Digital Currency or CBDC is controlled by Central banks.

Why is Cryptocurrency becoming popular?

  • Future: Well, some supporters come with a visionary insight believing the crypto is the currency of the future and are buying them before they turn more valuable.

  • Not Affected By Inflation: Cryptocurrencies depend on the market and offers the opportunity to hedge against very high inflation.

  • Security: Blockchain provides security. A participant within the blockchain network, a blockchain node holds a full copy of the blockchain ledger and plays a crucial role in maintaining the network's operational functionality and security.

Risks of Cryptocurrency

  • Anonymity: As a part of its privacy feature, it allows the users to hide their information while transacting but it also allows the opportunity for people pursuing illegal trade like smuggling and terrorism.

  • Global: Because it is a global currency not linked to a specific country, it can lead to hedging against country-specific risks like inflation.

  • Increased Risk of Fraud: There is a lack of digital literacy about cryptocurrency. Its novel nature allows the fraudsters to attack easily.

Cryptocurrency in India

Is there any cryptocurrency that belongs to India?

Yes, there are several local cryptocurrency exchanges like Unocoin, CoinDCX, CoinSwitch Kuber, etc which have increased in volumes and raised capital from high profile investors.

Well, the BrokerChooser’s report indicated 10 crore Indians own the cryptocurrencies realised in October 2021. Around the same time, there were thousands of jobs opening up in the Indian cryptocurrency segment in India. Several platforms accept payments in Cryptocurrency. Several companies started accepting Cryptocurrency as payment option in India.

In November 2021, several investors feared losing all their savings invested in cryptocurrency due to the emergence of Blockchain & Cryptocurrency Laws and Regulations.

What changed since October 2021?

In the mid of November 2021, Crypto Act became the hot topic of the news. It implied that the Indian Government will ban private cryptocurrencies.

Let’s understand, “What is Crypto Act?”

The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 will be introduced into the Winter Session of Parliament in India. The bill suggests that no individual can mine, buy, generate, hold, sell, deal in, issue, transfer, dispose of or use cryptocurrency. Traders may use a crypto wallet for safe transactions.

The two key points mentioned above about the popularity of the cryptocurrency have become concerns for India’s central bank, Reserve Bank of India and the government.

The bill is focused on facilitating the framework for the creation of official digital currency to the Reserve Bank of India. Crypto Act is an initiative taken to regulate the decentralised blockchain-based cryptocurrency’s investing and trading with certain restrictions.

India plans to prohibit “all private cryptocurrencies”. Private Cryptocurrency allows the transactions to happen with masked (hidden) addresses of the users, offering them privacy. It is said that all top private coins defended several hacking attempts.

How will Cryptocurrency impact our future?

Experts believe that possible that cryptocurrencies will not be completely banned. Its trading and use as a means of exchange or payment can be banned or restricted.

Cryptocurrency Is The Future, But Not As A Currency?

  • Possibly Bright Investment: Well, it is safe to say that crypto is an unsaturated market that has chances to grow multi-fold and offers its investors great returns over the upcoming decades.

  • Too Unstable To Be A Currency: But some suggest, that even though it might be used to benefit from the increasing value, its price instability makes it hard to be called a currency. A currency needs to be stable for merchants and consumers to decide a fair price of goods.

  • Can be Treated As An Asset Class: Experts suggest that even though bitcoins can be used as risky investments, they cannot become a medium of exchange. It may be treated as an asset class, like gold, oil, and stock.

  • Crypto Act will Make Things Clear: There will be more transparency and accountability on crypto trading platforms and cross-border transactions. It can also be used as an opportunity to get tax returns on crypto assets.

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