Cryptocurrency

Cryptocurrency

 Cryptocurrency

• Cryptocurrencies, often regarded as a threat to traditional banking and financial institutions, have gained substantial popularity in the previous half-decade while also posing a regulatory nightmare for banking authorities worldwide. There are currently over 969 cryptocurrencies in use worldwide, with a total market valuation of around 116 billion US dollars.
• A cryptocurrency is a type of digital currency created and stored using computers. The supply of a cryptocurrency, unlike the monetary currency, is not controlled by any central bank or government, and the network is fully decentralized.
• A cryptocurrency is a digital curreny designed to function as a means of exchange that use encryption to safeguard transactions, limit the creation of new units, and verify asset transfers. Cryptocurrencies are a sort of digital currency that is also known as an alternative currency or a virtual currency, in contrast to centralized electronic money and central banking institutions. Each cryptocurrency has decentralized governance thanks to a blockchain, a public transaction database that acts as a distributed ledger.
• Blockchain ensures that each cryptocurrency's coins are valid. A blockchain is a long list of records, or blocks, linked and safeguarded using cryptography.
• It has sent directly between peers, and all transactions are recorded in a public ledger that's open to everyone. Mining, keeping this ledger up to date, and validating transactions is done in a decentralized manner. Rather than faith, the core concept of the validity of current to previous transactions is cryptographic evidence; this contrasts with how traditional banking systems work.
• Bitcoin, the first decentralized cryptocurrency, was launched in 2009. As previously said, various additional cryptocurrencies have been established since then. Cryptocurrencies are gaining high popularity because they offer privacy protection, cost-effectiveness, and lower entry barriers; they can be used as an alternative to banking systems and fiat currencies. They have an open-source methodology, public participation, and immunity from government-led financial retaliation. Every transaction is visible, self-contained, and protected. The cryptocurrency began to acquire recognition around the world as a result of these advantages.
• Despite their numerous benefits and user-friendly methods, cryptocurrencies come with their own concerns, such as price volatility, a lack of liquidity, security, and so on. Many countries have condemned cryptocurrency in grey and illicit markets because of its use. There are two sets of interconnected dangers: the growth and extension of these platforms in an unclear legislative environment and the threats these platforms represent to users and the state's security. They could also be utilized for Illicit Trade, Criminal Activities, and Terrorism Financing. They may also be used to avoid paying taxes.
• The legal acceptance of cryptocurrencies as a legal instrument now differs by country; while some are drafting rules and regulations, others have yet to respond to this disruptive upheaval. The growing use of cryptocurrencies in terror financing, ransomware, the illicit drug or arms trade, and cybercrime has also sparked security and law enforcement concerns. They may potentially supplant existing financial systems that allow for the electronic transfer of money across national borders.
• Cryptocurrencies are gradually being brought within the regulatory umbrella to prevent their misuse. Japan was the first country to regulate cryptocurrencies, and the United States is swiftly following suit. The United Kingdom and Australia are still working out the details. At the same time, China has just banned Initial Coin Offerings (ICO) for a variety of reasons, including ICO scams all over the world. With only about 2% of the global cryptocurrency market cap, India plays a very little role in the global cryptocurrency market.
• The Reserve Bank of India has been having a close eye on the growing popularity of cryptocurrencies. In 2013, it published advice warning users, holders, and traders about the potential financial, legal, and security concerns. In May 2017, the Ministry of Finance took a public consultation on virtual currency regulation.
• While delivering the Union Budget, Finance Minister Arun Jaitly once again declared cryptocurrencies an illegal tender in India, emphasizing that the government will take all necessary steps to prevent cryptocurrency from being used to finance illicit activities.
• Cryptocurrencies will be subject to RBI regulation if they are approved as an electronic payment system or classified as a legal instrument; capital gains and business transactions will be taxed, and overseas transfers will be subject to the Foreign Exchange Management Act. Consumer protection provisions will be enshrined in regulated cryptocurrencies. In terms of benefits, this might be a game-changer in India's push for financial inclusion, alongside electronic payment options like digital wallets and the Adhaar Enabled Payment System. It has the potential to lower the cost of remittances, which brings in close to 62 billion US dollars to India each year. It would also attract future business entrepreneurs, resulting in innovation, job development, and wealth creation in the payments, e-commerce, and taxation processes.
• Because of the insecure and nascent nature of cryptocurrencies and their limited use, it is expected that, while Indian citizens are eager for transparent, quick, and high-return currencies, the Indian government will take a position that believes in learning and exploring more about the cryptocurrency.