Cryptocurrency has gained immense popularity in recent times all over the world. The Indian population has been showing great interest in it. It has been in the news for a long time and is still unregulated in India.
The RBI has been raising concerns related to the growing issues and recently the central government acknowledged them. This article explains the basics and possible future of Cryptocurrency in India through the recent government discussions.
What is Cryptocurrency?
Cryptocurrencies are digital currencies. They can be used to exchange to buy products and services. Also, like other investments, they can be used for trading purposes in order to earn a profit.
Cryptocurrency is a person-to-person exchange which means that it does not require a bank or financial institution for the transaction verification. There are over 10000 Cryptocurrencies in existence as per CoinMarketCap.
You might have heard of ‘Bitcoin’. Bitcoin (CRYPTO: BTC) is the first cryptocurrency and the most famous one. It was developed in 2009 by an anonymous person with the pseudonym Satoshi Nakamoto.
Various reasons for the popularity of Cryptocurrencies are as below:
- The decentralized mechanism and technology through the blockchain.
- The increase in the value of the cryptocurrency.
- It is considered the currency of the future.
- Peer-to-peer transactions with no requirement of any central bank or any third party. Due to this, the value of the currency won’t be affected.
How cryptocurrency works
It is a digital currency and so it is stored in a digital wallet consisting of a public key and a private key. The encryption is used for the purpose of verification.
The transaction appears as a record in the form of digital entries in a public ledger known as the Blockchain. Blockchain prevents duplication and solves the problem of ‘double spending’ through its mechanism. Also, makes it secure from unauthorized and fraudulent transactions and hackers. Let us understand how it works.
Blockchain comprises ‘Blocks’. A Block stores the data of the transactions and would form a chain like this with each transaction. The next block would include the reference to the previous Block. This ensures its security because in order to hack the complete chain of Blocks needs to be duplicated.
There are two consensus mechanisms used for the verification of the new transactions, adding them to the blockchain and creating new tokens, namely, proof-of-work and proof-of-stake.
Investing in Cryptocurrency
It is essential that you consider various aspects before you invest in cryptocurrency. Ensure that you safely invest due to its high volatility nature. As per the forecast, the global cryptocurrency market shall grow from $910.3 million in 2021 to $1,902.5 million in 2028 at a CAGR of 11.1% in the forecast period, 2021-2028.
- The cryptocurrency is highly volatile. Your investment plans must consider the unexpected huge change in the prices of cryptocurrencies.
- The study of various cryptocurrencies is highly essential with the available data, insights, forecasts, and reviews.
- Ensure that you safely invest by planning your investment portfolio with diversification. There are a variety of cryptocurrencies and so you must invest in the right one wisely.
- Safe storing of digital currency is highly essential. Consider the best options for your digital wallet for the same.
Future of Cryptocurrency in India and Possible Regulations
Here’s an overview of the possible decisions regarding the cryptocurrency that would be made in the future in India:
- On 15th November, a parliamentary meeting was conducted for the discussion regarding cryptocurrencies in India. This was the first official meeting to discuss crypto between the government officials and the crypto representatives & experts in India.
- The experts informed that Cryptocurrency is not going anywhere and the challenge lies in looking for the methods for its regulation.
- PM Narendra Modi expressed his concern that it is unregulated and it may be a threat and source for money laundering and financing for the terrorists.
- Earlier it was to be banned but now it will be allowed.
- As per a source, the previously approved cryptocurrencies would be allowed for listing and exchange. The holding of unapproved ones will result in a penalty.
- In the Sydney Dialogue, the virtual keynote address held on 18 November, PM Narendra Modi said that the government wishes to evolve with the everyday changing world.
- His concern is that cryptocurrency should not fall into wrong hands and spoil our youth. To prevent this, all democratic nations should come together.
- The Government aims to pass the cryptocurrency law.
- Upcoming laws would take into consideration the taxation on cryptocurrencies, possibly 1%. The cryptocurrency trading platforms would be classified as eCommerce platforms.
- They may be allowed as an asset and not as a currency.
The high volatility nature of the cryptocurrencies makes it essential that the investors take their decisions with great caution and after proper research. The blockchain technology and encryption mechanism of the crypto exchange make it highly secure. Cryptocurrency has been in the news but with recent discussions, it is evident that soon the laws and regulations shall be passed.
Be a part of this digital revolution. Accept online payments for your business through cards, net banking, wallets, UPI, QR code, and EMI with the PayKun payment gateway. Sign up now!