As we know, Humans are in the urge of seeking double our money and gain profits by way of investment. In India, there is a concept in the minds of people investing in FDs, gold, and shares. But there is another way of investing also.
We all are heard about the word “Crypto Currency” but many of them don’t know about Cryptocurrency and the way of investing into…
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What is CryptoCurrency?
Cryptocurrency is a digital or virtual currency that is designed to work for a medium of exchange, mainly secured by cryptography. It is decentralized digital money consist of blockchains. It is not in the monetary base (like coins or paper currency) it is digital money, stored in a ledger existing in a form of a computerized database. There is no central authority in cryptocurrency. Each Cryptocurrency miners’ transaction is recorded in the blockchain.
Types of CryptoCurrency?
There are 5000 plus Crypto Currencies available, and from April 2021, there are over 10,000 crypto Currencies. The first blockchain-based CryptoCurrency is none other than Bitcoin. Bitcoin was invented in 2008, by the person known by alias Santoshi Nakamoto. Its domain name “bitcoin.org” was registered on 18 August 2008. Bitcoin is digital money used in a “peer-to-peer network”, Transaction is done through private and public key nodes from the blockchain. Bitcoin transactions are carried out by Bitcoin miners, who approve these transactions through solving complex algorithms in their high-performance personal computers. Bitcoin can be exchanged through various currencies (Dollar, Indian Rupees, Yen, Euro, Etc.) also people can use another crypto to buy Bitcoin. Various merchants these days use Bitcoin as a medium of exchange for various products and services. You can in fact shop, Trade, and travel around the world with literally no wallet in your pocket but with few Bitcoins in your digital wallet.
Now let’s understand what is Crypto mining?
Mining means to dig out something that is embedded deep into Earth’s crust. In the same way, crypto mining means digging out Crypto from the ongoing transaction. Actually, Bitcoin miners are super techy who use the power systems to dig out (Mine) Bitcoin by solving complex algorithms to approve transactions, and in return, they earn some part of that coin as a reward.
In other words, Crypto mining is a term for gaining cryptocurrencies, through the use of computers to solve complex function data of a blockchain. As we know in CryptoCurrency there is neither central authority nor there is centralized ledger because cryptocurrencies operate in a decentralized manner with a distributed ledger named blockchain. You can “receive” and “send” payments directly connected to the users and by this, you can be a part of the cryptocurrency system and miners can reward with the token of the cryptocurrency like BITCOIN. This record (ledger) of all transactions in a public key is available and stored in a different computer. For verification, this transaction of Cryptocurrency uses a cryptography algorithm to verify the transactions.
Future of Crypto Currencies in India
From the beginning of its origin, the fate of Crypto is uncertain in India. At some point, the government seemed very hostile to it, while the Courts and RBI took a more progressive step and considered its implications on both the positive and negative magnitude. Recently RBI has decided to launch its own Crypto, for which all the central bank authorities are putting more stress on Research and Development for procedural development of our country first officially own Crypto. It would be a thrilling experience to see such development in a country like India.
Let us now see some of the Pros and Cons of Crypto Currencies.
Pros of cryptocurrencies:
1. Easy to Transact: For a Cryptocurrency, you just need a device (Mobile, Laptop, or Computer) with a proper Internet connection, in that device you can create a wallet on any platform that provides diverse services such as Binance, Olymp Trade, etc, and use whenever and where ever you like. This process is much easier than opening a bank account in a bank.
2. No Interference: There is no control of central authority over the cryptocurrency. The network is distributed to each miner, by the computer through mining nodes.
3. Highly Secured: Bitcoin contains a complex algorithm, its funds are locked in a public key, it cannot be manipulated by any individual, organization, and it requires serious skills for the digital heist. A bitcoin address is more secured than Fort Knox.
4. Fastly transaction system: Cryptocurrencies offer faster transactions. It takes around 10 minutes for the validation process. It is better than standing in a queue in the bank ATM and waiting for the money withdrawal.
5. Few costs: Most cryptocurrencies are free that anyone can exchange without paying transaction fees.
6. No Inflation: In Cryptocurrencies, neither political forces nor corporations can exchange the order for use of coins and mines in it.
In spite, all of the Pros cryptocurrency also contain Cons in it:
Cons of cryptocurrencies :
1. Irreversible: After the transaction confirmation, it can’t be reversed by anyone.
2. Complex Techniques: CryptoCurrencies contain more complex techniques, as it becomes difficult to understand by the service providers.
3. Theft and scam: Due to complex techniques and high-level blockchain technology people are not aware of its full mechanism. Hence, they become a victim of online fraud and lose all their capital.
4. Possibility of Terror Funding: As we know, there is no personal identity for trading in Crypto so there is a possibility of an increase in terror funding. Also, many unlawful activities can be done, like bootlegging, Drugs, Child Trafficking, Political funding, etc. All these could actually put the peace and social order of society into deep harm. According to www.topbrokers.trade, the infamous “dark web” marketplace Silk Road used Bitcoin, facilitating illegal drug purchases and other illicit activities before it was shut down in 2014.
5. Not treated as Fiat money: Bitcoin can’t be converted into Fiat money. There is no possibility of direct change of bitcoin into fiat money and hence, this might devalue the cryptocurrency less demanded in the market.
Nowadays, several countries allow Bitcoin as a legal tender of payment method because of a high percentage of profit in Bitcoins.
- Japan: As we know Japan is one of the fastest developing technology markets in the world, Japan has to legalize Crypto Currencies sooner. Japan’s government has a set up a PSA (Payment Service Act) based framework which allows some cryptocurrencies.
- United States: In 2013, the United States also legalize bitcoin as a decentralized virtual currency. It was classified as a BTCs payment method including San Francisco, which has several crypto Currencies trading networks.
- Switzerland: Switzerland also allows people BTCs for taxation purposes. They Started a trial scheme from the ton of Zug, which is also known as Crypto-valley, because of its Crypto Currencies. Zermatt, also one of the most resided municipalities, allow Swiss people to use BTCs for payment purpose.
- France: On 11 July 2014, the country has legalized the operation of virtual currencies such as bitcoin with cryptocurrency exchanges, taxation provided authority. And many more countries
This would not stop here:
The government, which plans a law to ban private digital currencies, favors a digital currency backed by the Reserve Bank of India… The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, which will prohibit all private cryptocurrencies now a regulatory framework for the launch of an “official digital currency”, was to be introduced in Parliament’s Budget session, but was held up as it continues the discussion with stakeholders. RBI had expressed concern over other cryptocurrencies, by saying that cryptocurrencies are used for illegal activities, and pose a threat to financial stability. In April 2018, RBI banned banks and other regulated entities from supporting crypto transactions and digital currencies were used for frauds. In March 2020, the Supreme Court struck down the ban as unconstitutional. One of the reasons it gave was that cryptocurrencies, though unregulated, were not illegal in India.
Conclusion:
The cryptocurrency gonna be an evolution in upcoming times. Nowadays people want their money to be multiple overnights also they want an instant investment with no risk. The concept of cryptocurrency would be full fill all the conditions of a new type of investment. However, this could replace the ways of digital banking and fund transfer. Though, constraints would be it can’t take the place of Paper notes and metal coins but, eventually, it has changed the ways of banking and investment.
Author Bio
Cryptocurrency is a digital currency that has boomed in recent times. Everyone is going crazy over it and seems to show deep interest in it. Not everyone has accepted it yet but many countries have shown their support towards it, which clearly an indication that cryptocurrency is the future.