CRYPTOCURRENCY AND ITS BASIC KNOWLEDGE ABOUT IT

What is Cryptocurrency?

Cryptocurrency is nothing but a digital currency or digital asset which are created using networking software. Gaurav Dahake, CEO & Founder of Bitbns, a leading cryptocurrency in India, states that “It is a collection of binary data which is anonymous and secure. Cryptocurrency works on the model of Cryptography wherein data is converted into codes”. 

The most common process of creating a cryptocurrency is called mining. It is performed using sophisticated hardware that solves an extremely complex computational math problem. This is used to verify the validity of transactions on the network. 

Mr Ankur Chandrakant on Cryptocurrency

Ankur Chandrakant is a well-known Cyber Security and Forensic Expert with a deep understanding of Blockchain, NFT, Crypto, and the Metaverse. He is an Advisor and Expert Consultant to a number of law enforcement agencies in India, with 38 certifications and affiliations with companies such as Microsoft, Google, IBM, and HCL. With over 2000 seminars, conclaves, and workshops under his belt, he has established himself as a mentor and friend to everybody, no matter how inexperienced or tech adept they are.

He began advocating for crypto and tokenization at various conclaves and advisory boards in early 2017, and he hasn’t stopped since. He highlighted the technology behind virtual coins, how they relate to traditional investments, and what prospective investors should do before entering the realm of cryptocurrencies as a cryptocurrency specialist. He believes that money may be used to help people grow as people. He actively endorsed and supported the use of Blockchain Technologies, as well as the role that crypto currencies play in advancing inclusivity. He stated, “I believe technology can do great things for humanity, and that DeFi (Decentralized Finance) can leverage tech to bring about stronger economic systems, supported by a greater part of the populous than ever before.” He added, “The radical point of investing in crypto is to actually diversify your existing portfolio and not put all your eggs in one basket. Crypto is emerging as a new-age asset system and investors are always there, looking to expand, experiment and transform. Having a very small share or chunk of their portfolio in crypto has helped people get good overall returns”.

When the RBI banned crypto currency transactions through banking channels, Ankur joined the #IndiaWantsCrypto movement until the prohibition was overturned by the Supreme Court, which ruled it illegal. He routinely produces articles comparing and discussing various sorts of crypto currency. Ankur is bullish about the future of cryptocurrencies in India, citing the fact that millions of millennials are already actively investing in the field. While he remains hopeful, he believes that investors should first learn about the new asset class that has exploded in popularity as a result of the epidemic.

How does Cryptocurrency work? 

Cryptocurrency markets are decentralised, which suggests they’re not issued or backed by a central authority. Instead, they come across a network of computers. However, cryptocurrencies may be bought and sold via exchanges and stored in ‘wallets’. When a user wants to send cryptocurrency units to a different user, they send it thereto the user’s digital wallet. The transaction isn’t considered final until it’s been verified and added to the blockchain mining.

Kshitij Purohit, Lead Currency & Commodities at CapitalVia Global Research, says “Blockchain technology is used to create most cryptocurrencies. The method transactions are recorded, and time-stamped in is described by blockchain. A two-factor authentication method is also required for transactions. To begin a transaction, for example, you may be requested to enter a username and password. You may next be required to input an authentication code sent to your personal cell phone through text message”. 

How to buy Cryptocurrency?

To buy cryptocurrency, you ought to have a virtual account or a Demat account. It’ll be your blockchain wallet to form safe and legal exchanges and payments. It is often considered to other available digital wallets like Paytm and PhonePe, that you simply can use just for cryptocurrency. 

Download any cryptocurrency exchange application on your mobile phones and create digital crypto wallets. In order to create a crypto wallet, you need to complete your KYC in the app. After the KYC is completed, you can add funds in INR to your wallet. Then comes the important part where you have to invest in crypto. Analyze and choose a cryptocurrency, then place the order. In your wallet, the INR funds will be converted to the purchased cryptocurrency.

Pros of Cryptocurrency

  • Crypto Enthusiasts see cryptocurrencies as the currency of the long run and are racing to shop for them now, conceivably before they become more valuable.
  • Crypto Enthusiasts are just like the proven fact that cryptocurrency removes central banks from managing the cash supply since, over time, these banks scale back the worth of cash via inflation.
  • Other exponents just like blockchain technology are after cryptocurrencies, as the transactions are decentralized.
  • Certain traders like cryptocurrencies because they’re intensifying in value and have no interest in the currencies’ long-term adoption to move money.
  • Certain cryptocurrencies give the opportunity to earn passive income through staking.

Cons of Cryptocurrency

  • Many cryptocurrency projects are untested, and blockchain technology has yet to get wide adoption. If the fundamental idea behind cryptocurrency doesn’t reach its potential, long-term investors may never see the returns they hoped for.
  • There are other risks for shorter-term crypto investors. Its prices alter rapidly, and while this means that several people have made money quickly by buying in at the correct time, many others have lost money by buying before a crypto crash.
  • The sudden alteration in value might also cut against the fundamental ideas behind the projects that cryptocurrencies supported.
  • The circumstantial impact of Bitcoin and other cryptocurrencies that use similar mining protocols is critical.
  • Governments around the world haven’t yet fully estimated a way to handle cryptocurrency, so regulations coming up can affect the market.

Budget 2022 on Cryptocurrency

New and gripping regulations for digital assets were introduced in Budget 2022 in the Indian parliament. The government has been postponing the introduction of the Cryptocurrency Bill in the parliament. However, two interesting steps were introduced related to digital currency by the government in Budget 2022.

First, Central Bank Digital Currency or Digital Rupee will be issued by the Reserve Bank of India (RBI). Nirmala Sitharaman, Finance Minister of India, said, “Introduction of Central Bank Digital Currency (CBDC) will give an enormous boost to digital economy. Digital currency will also lead to a more efficient and cheaper currency management system. It is, therefore, proposed to introduce Digital Rupee, using blockchain and other technologies, to be issued by the Reserve Bank of India starting 2022-23”. 

Furthermore, 30 per cent of tax will be imposed on income from transferring digital assets. Besides this, a TDA of 1 per cent will be charged on the transactions of digital assets. The Finance minister said, “There has been a phenomenal increase in transactions in virtual digital assets. The magnitude and frequency of these transactions have made it imperative to provide for a specific tax regime. Accordingly, for the taxation of virtual digital assets, I propose to provide that any income from transfer of any virtual digital asset shall be taxed at the rate of 30 per cent”.

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Dr. Sanjay Lunia

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