A cryptocurrency is a digital or Virtual currency that is secured by blockchain, which makes it nearly impossible to counterfeit or double-spend. It is decentralized digital money that’s based on blockchain technology. Most familiar cryptocurrencies are Bitcoin and Ethereum but there are thousands of cryptocurrencies in circulation. Bitcoin was the first cryptocurrency, first outlined in principle by Satoshi Nakamoto in a 2008.
What is blockchain?
Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network. Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved. Business runs on information. The faster it’s received and the more accurate it is, the better. Blockchain is ideal for delivering that information because it provides immediate, shared and completely transparent information stored on an immutable ledger that can be accessed only by permissioned network members. A blockchain network can track orders, payments, accounts, production, cryptocurrencies and much more. And because members share a single view of the truth, you can see all details of a transaction end to end, giving you greater confidence, as well as new efficiencies and opportunities.
Advantages of Cryptocurrency-
- Eliminate the Role of Banks – When transferring traditional money, the bank charges you fees as an intermediary. In the case of cryptocurrencies, the network members themselves in the blockchain act as an intermediary and transfer them. Anyone with mobile phone can make the payment without need of bank account.
- The Money is Really Yours – Some bank may go broke or your bank account may be frozen which can restrict account holders to withdraw money. In the case of cryptocurrencies, only you can access and use your money.
- Less Devaluation – Government central banks can print money in the event of economic crises, which can devalue the currency and generate side effects (such as inflation). There is no central agency who creates cryptocurrencies.
- Easy transfer of funds – Transactions, whether international or domestic in cryptocurrencies, are lightning-fast.
Disadvantages of Cryptocurrency-
- Illegal transactions- Since the privacy and security of cryptocurrency transactions are high, it’s hard for the government to trace down any user by their wallet address or keep tabs on their data.
- Power lies with few people – Although cryptocurrencies are known for their feature of being decentralized, the flow and amount of some currencies within the market are still controlled by their creators and some organizations. Creators may manipulate the price.
- No refunds or Cancellations – If there is a dispute between concerned parties, or if someone mistakenly sends funds to a wrong wallet address, the coin cannot be retrieved by the sender.
- High consumption of Energy – Mining cryptocurrencies require plenty of computational power and electricity input, making it highly energy-intensive.
Why are cryptocurrencies so popular?
Here are some of the most popular reasons that appeal their supporters:
- They see cryptocurrencies such as bitcoin as the currency of the future and are racing to buy them now, presumably before they become more valuable
- Supporters like the technology behind cryptocurrencies, the blockchain, because it’s a decentralized processing and recording system and can be more secure than traditional payment systems
Cryptocurrencies in India –
It’s one of the biggest in the region and expanding rapidly. Indian market grew 641% over the period from July 2020 through July 2021. India has had a hot-and-cold relationship with digital currencies, which exist in a grey area. In 2018, India effectively banned crypto transactions, but the Supreme Court struck down the restriction in March 2020.
The RBI says they pose serious threats to the nation’s macroeconomic and financial stability. The central bank is clear that it wants all private cryptocurrencies banned while it creates an official digital currency. The government, however, is open to exceptions to promote blockchain technology. Amid these competing goals, Prime Minister Narendra Modi’s administration is racing to finalize legislation in time for the last parliament session of the year.
A description posted on the parliament’s website says it “seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses. If it wants the bill to pass this year, it needs to finalize the draft and clear it through the cabinet well before Dec. 23, when the winter session of parliament ends.