The economy has undergone an ultimate revolution from being barter system based to having fiat money and now towards complete digitalisation of currency.
Cryptocurrency is a digital coin currency which is stored in digital wallets. In a layman’s language it is a medium of exchange designed through a computer network, which can be exchanged for goods and services. It is a sort of digital currency that use cryptography to safeguard and verify transactions while also controlling the generation of new units.
It is decentralized, meaning that it is not controlled by a central authority or government and unlike traditional currency it is untethered from national borders, central banks, sovereigns, or fiats. It is believed that the first successful decentralized cryptocurrency, Bitcoin, was launched by pseudonymous (and still unidentified) developer Satoshi Nakamoto in the year 2009. Since the creation of Bitcoin, thousands of other cryptocurrencies have been created, with some of the most popular being Ethereum, Ripple, Litecoin, and Bitcoin Cash.
Source:- https://mail.cryptonomy.gr/privacy-policy
Mining is a process that includes solving difficult mathematical equations in order to confirm and safeguard transactions on the blockchain. Miners receive newly produced units of the cryptocurrency that they are mining.
When cryptocurrency is created, it is stored in a digital wallet that is protected by private keys. These keys are used to sign and validate blockchain transactions and losing them means losing access to the cryptocurrency held in the wallet. Cryptocurrency transactions are recorded on the blockchain, a public database that anyone can examine. Because transactions cannot be changed or altered once they are recorded on the blockchain, they enable transparency and accountability.
A new technology-based way to go about business has been provided by cryptocurrency. One of the main advantages of cryptocurrency is its decentralization, which means that it is not controlled by a central authority or government. This makes it resistant to government interference or manipulation and allows for more freedom and privacy in financial transactions. It is of immense benefit to entrepreneurs as well as developing nations and has also facilitated international trade more smoothly.
Cryptocurrency transactions are encrypted with cryptography, making them impossible to hack or manipulate. This provides users with a high level of security, especially when compared to traditional banking systems. The crypto has made it possible for the global economy to be more closely intertwined. The cost associated with the crypto transactions is minimal which encourages people to set off more transactions. The small and medium businesses are also able to get better financial coverage and liberated connections all around the globe. The speed of settlement for cross-border payments is more frequent and feasible now because of quick digital transactions.
Source:- https://www.weforum.org/agenda/2022/11/cryptocurrency-us-midterms/
As a coin has two sides, there are certain discrepancies in dealing with crypto. Despite their promising potential, it is debatable whether all countries could be encouraged to trade more in crypto. The countries facing economic or political development and stability issues may face these challenges even after the use of digital currencies. It can pose challenges for the nations with lack of financial and technical infrastructure and expertise.
One of the most significant issues is a lack of regulation and control, which can result in fraud, scams, and other unlawful actions. Cryptocurrency prices are also extremely unpredictable, frequently fluctuating substantially in a short period of time. For many people, this makes it a dangerous investment, and it has led to some criticism of cryptocurrencies as a genuine form of cash. Finally, for those who are unfamiliar with cryptocurrencies, there is a high learning curve that can make it difficult to use and understand for many people.
India being one of the developing economies will have significant effects of the emerging cryptocurrencies in the nation. With the government bringing strong regulatory measures to accelerate the flow of digital currency in the economy, the country will be able to attract huge amounts of foreign investments. A huge boost will be delivered to the FinTech sector which will propel the Indian economy forward.
As per the Budgetary report 2022-23 the government proposed the creation of a single officially recognized Indian crypto currency. The digital currencies present today are all foreign based. The official cryptocurrency will be completely developed in the country itself. This will help the government fulfil their goal of ‘Atmanirbhar Bharat’. The Finance Ministry had imposed a 30% fixed tax rate on all income generated through crypto trading while also aiming to introduce the Digital Rupee in 2022–23. In “Cryptocurrency and Budget 2022 – Everything you need to know” India's Finance Minister Nirmala Sitharaman outlined that all crypto transfers above a certain monetary threshold will be liable for a 1% TDS deduction, which will help the authorities keep track of the movement of such currencies in the economy.
Source:- https://cepr.org/voxeu/columns/tokenomics-cryptocurrency-valuation-and-roles-tokens
The Budget ensured India’s conviction to forge a technology-driven and progressive future. Although cryptocurrencies are not recognized as a legal tender, the introduction and acceptance of the same in India is a big move. In the previous year, the government's stance on cryptocurrency has undoubtedly improved.
In the worlds of banking and technology, cryptocurrency is a fresh and fascinating development. It is a viable alternative to traditional financial systems due to its decentralisation, security, and rapid transactions. It will only be a matter of time before these cryptocurrencies make their way into our lives, changing them for the better and promoting economic progress. Because of the numerous possibilities that cryptocurrencies provide, millions of individuals will be able to invest, save money, and conduct cross-border payments.
Article by:- Natasha & Urishita Gambhir
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