What is cryptocurrency?
It is a digital token with which you can buy goods and services or trade for profit, using a shared online ledger with strong cryptography to secure online transactions.
Can anyone buy stuff with it?
Crypto is recognized as legal tender in only two countries – El Salvador and Cuba. The rest of the world, including India, only allows trading in cryptocurrencies.
What is Blockchain Technology?
The underlying technology of crypto, blockchain is the decentralized, distributed ledger of all transactions in a peer-to-peer network.
How secure is a blockchain?
Each ‘block’ in the blockchain contains the data of that particular transaction and the previous transaction. If someone tries to break into the blockchain or manipulate a transaction, all subsequent transactions will be invalidated. The crypto lobby cites this feature to claim that breaking into the crypto space is far more difficult than in digital banking.
What else can blockchain technology be used for?
Blockchain applications include secure sharing of medical data, tracking music royalties, cross-border payments, enabling real-time IoT (Internet of Things) operating systems, money laundering tracking systems, supply chain and logistics monitoring.
Where does the world stand on crypto?
El Salvador and Cuba are the only ones to have passed legislation to recognize bitcoin as legal tender. The US, Canada and the UK allow trading in bitcoin but Russia and China do not. In fact, China imposed a complete ban on all crypto transactions earlier this year.
What is India doing to regulate cryptocurrency?
- In 2018, the RBI had banned trading in cryptocurrencies, which was overturned by a three-judge bench of the Supreme Court in March 2020.
- Prime Minister Narendra Modi chaired a high-level meeting on 13 November, flagging off “misleading”, “over-promising” and “non-transparent” advertising on cryptocurrency and why “unregulated crypto markets can be protected from money laundering and money laundering”. Terror cannot be allowed to become avenues for “financing”.
- RBI Governor Shaktikanta Das says cryptocurrencies pose a threat to the country’s “macroeconomic and financial stability”.
- The government is likely to introduce the bill in the coming winter session. Crypto may be banned as legal tender, but is allowed as an asset class, subject to regulation, perhaps by SEBI.
How does one trade in crypto?
Crypto can be bought or sold on 40-odd crypto exchanges including Coinbase, Binance, CoinDCX, WazirX and Coinswitch Kuber. Experts recommend investing an amount that a person may lose initially. It is also recommended for newcomers to take the help of experts
How did it originate?
The 2008 Lehman Brothers crisis in America, the biggest bankruptcy in recent times, prompted some to re-imagine our financial system in a new way. Hence a decentralized monetary system where people can transact with each other over the Internet instead of relying on central institutions such as central banks and centralized regulators, where a handful of officials make all the decisions.
Who Invented Cryptocurrency?
In 2008, an individual or group of individuals, under the pseudonym Satoshi Nakamoto, came up with a white paper calling for a decentralized payment system. They called this global virtual currency bitcoin, and registered the domain name, bitcoin.org. The idea was to conduct person-to-person transactions across borders, without “trusted middlemen” in the middle.
How did technology develop?
The decentralized community uses a protocol called blockchain, which was first proposed as a research project in 1991. Nakamoto and others refined it further in 2009 through crowdsourcing, as they believed it was a good social cause.
5 Steps to Crypto Investing
1. Identify a Cryptocurrency Exchange
2. Use a Debit Card or Wire Transfer to Add Money to the Digital Wallet
3. Choose from cryptos listed on the exchange
4. Choose a trading strategy: scalping (short term, people hold coins for a few minutes or seconds before selling), day trading (holding an asset for a day), swing trading (holding a position for several days or weeks) ), position trading (focusing on long-term price movements). Profits are sent to the bank account linked to the crypto account. The same account funds the purchase of crypto
5. Securely store your crypto on a hardware or software digital wallet
(Source: blockchain-council.org)
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