A cryptocurrency is a type of digital or virtual currency, which is based on a network distributed across a large number of networks. This is called blockchain technology. Cryptocurrencies are secured by cryptography, which makes it almost impossible to counterfeit the digital coins. It is meant to work as a medium of trading, in which individual ownership records are stored in a computerized database.Cryptocurrencies are not generally issued by a central authority, and are mined using these blockchain technologies. The common man can also buy a cryptocurrency using crypto exchanges, just as they invest in the stock market. In the past few years, the price of cryptocurrencies have skyrocketed despite their non-recognition in many countries across the world, and has made crypto enthusiasts dream of a future where these coins are legalised and used in daily transaction systems.
Cryptocurrency markets function just like a regular stock market. For example, if a cryptocurrency named X introduces new features or sees an influx of money, the value of it rises. However, if any problem is detected within this X, its value will go down. However, they are still hardly used in retail transactions and are used as popular trading instruments.
Fun Fact of the Day: Do you know where India stands in term of cryptocurrency ownership?
What is Bitcoin?
Bitcoin is the most valuable cryptocurrency or crypto coin in the world, and is also the most famous among the thousands of cryptocurrencies that do rounds in the market. It was created in 2008 by a group of people going by the pseudonym Satoshi Nakamoto. As of this date, one unit of Bitcoin is valued around $30,000, thus making it the topmost cryptocurrency in the world. Introduced to the public in 2009, Bitcoin is the most traded cryptocurrency around the world.
Another popular cryptocurrency, that was introduced after Bitcoin, is Ethereum – commonly referred to as Ether. This is an ‘altcoin’, which is an alternative to Bitcoin, and is the second most popular cryptocurrency in the world. Solana, Cardano, XRP, Terra and USD Coin are some other examples of major cryptocurrencies across the world.
Here’s Another Fun Fact: Thirty-eight per cent Indian women own cryptocurrency!
Cryptocurrency, Digital Currency and India’s Stand on Them
“In India, the government has been consistently investing in various reforms for greater financial inclusion. During the last few years’ initiatives such as Jan Dhan accounts, Aadhar enabled payment systems, e-Wallets, National Financial Switch (NFS) and others have strengthened the government’s resolve to go cashless,” says the NCERT textbook chapter we have already mentioned in this article. However, when it comes to cryptocurrencies, the stand is rather different. India does not recognize cryptocurrencies as a legal currency and has taken quite a strict viewpoint on the matter. The government has in this year introduced a new cryptocurrency tax on all gains arising from the sale of virtual digital assets, including cryptocurrencies. Therefore, cryptocurrency profits in India will now be taxed at 30 per cent as per the new law. Indian ministers, including Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman, as well as the central bank, have repeatedly flagged the risks of unregulated cryptocurrencies. As per the ministers, cryptocurrency transactions are risky and can give rise to criminal activities including money laundering and fund terror. The RBI has on the other hand flagged the role of cryptocurrency in toppling the economic situation in India.
The Last Fun Fact, We Promise: Fifty per cent of cryptocurrency owners are between 18 to 34 years of age
The Reserve Bank of India, is meanwhile, in the process of introducing the Central Bank Digital Coin, which will be the first centrally controlled digital coin in India, thus indicating the country’s eminent shift towards a digital future in terms of economy. If all goes well, the digital rupee will be launched in the financial year 2022-23, according to RBI estimates. As of now, only two countries accept cryptocurrencies as a legal tender – El Salvador and the Central African Republic.
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