Regulation of Cryptocurrency
23rd Nov, 2021
Amid a global surge in cryptocurrencies, the Union Finance Ministry has stated that it will make a decision on a state-issued cryptocurrency soon but ban all private cryptocurrencies.
What is Cryptocurrency?
- Cryptocurrency can be understood as decentralized digital money, based on blockchain technology.
- Simply put, cryptocurrency is a medium of exchange that is digital, encrypted, and decentralized.
- Some of the peculiar features of this currency are:
- Transfer of funds between two parties becomes more relaxed with a negligible processing fee.
- Makes use of blockchain technology to secure and encrypt transactions, whose database is highly secure and unalterable.
- Outside the ambit of governments and central banks of countries.
Regulation of cryptocurrency
- Unlike the U.S. Dollar or the Euro, there is no central authority that manages and maintains the value of a cryptocurrency.
- Instead, these tasks are broadly distributed among a cryptocurrency’s users via the internet.
- Bitcoin was the first cryptocurrency, first outlined in principle by Satoshi Nakamoto in a 2008 paper titled “Bitcoin: A Peer-to-Peer Electronic Cash System.”
- A blockchain is an open, distributed ledger that records transactions in code.
- In practice, it’s a little like a checkbook that’s distributed across countless computers around the world.
- Transactions are recorded in “blocks” that are then linked together on a “chain” of previous cryptocurrency transactions.
Pros and cons of cryptocurrency
- Bypassing fees and having privacy
- Good investment opportunity
- Less chance of hyperinflation
- Extreme volatile
- Security issue
- Taxable profits
- Less mobility of money
The concept of the digital rupee in India
About 100 million Indians own cryptocurrencies, according to a recent study. Top crypto exchanges serving the Indian market:
- CoinSwitch Kuber
- Legality:At the moment, no legislature covers cryptocurrencies in India. But this doesn't mean that owning cryptocurrencies is illegal.
There are more than 14,000 cryptos in existence, and there are more being created every day. The more well-known, established cryptos, are as given below:
- Bitcoin: Bitcoin was the first cryptocurrency and was created by Satoshi Nakamoto in 2009.
- Ethereum: It is a software platform built on blockchain technology. Ether was launched in 2015 as the digital currency of the Ethereum network.
- Dogecoin: Dogecoin was started in 2013.
- Binance Coin: It is a token issued by Binance exchange, one of the world’s largest cryptocurrency exchanges by trading volume.
- Cardano: Created by one of Ethereum's co-creators the Cardano network and the associated crypto — called ADA — launched in 2017.
- Litecoin: Litecoin is an altcoin that was developed based on Bitcoin’s open-source code but with several changes, like speeding the time it takes to mine new coins.