CRYPTOCURRENCY AND BASIC KNOWLEDGE ABOUT IT.
What is Cryptocurrency?
Cryptocurrency is nothing but a digital currency or a digital asset created using networking software. Gaurav Dahake, CEO and Founder of Bitbns, one of the leading cryptocurrencies in India, says that “it is a collection of anonymous and secure binary data. Cryptocurrency works on the model of cryptography in which data is converted into codes”.
The most common process of creating a cryptocurrency is called mining. It is made using sophisticated hardware that solves an extremely complex mathematical calculation problem. This is used to verify the validity of transactions on the network.
Mr. Ankur Chandrakant on Cryptocurrency
Ankur Chandrakant is a well-known cybersecurity and forensics expert with deep understanding of Blockchain, NFT, Crypto and Metaverse. He is an expert advisor and consultant to a number of law enforcement agencies in India, with 38 certifications and affiliations with companies including Microsoft, Google, IBM and HCL. With over 2000 seminars, conclaves and workshops to his credit, he has established himself as a mentor and friend to everyone, no matter how inexperienced or tech savvy they are.
He started advocating for crypto and tokenization in various conclaves and advisory boards in early 2017, and he hasn’t stopped since. He outlined the technology behind virtual coins, their connection to traditional investments, and what potential investors should do before entering the cryptocurrency space as a cryptocurrency specialist. He believes that money can be used to help people grow as people. He has actively endorsed and supported the use of Blockchain Technologies, as well as the role cryptocurrencies play in promoting inclusivity. He said: “I believe that technology can do great things for humanity and that DeFi (decentralized finance) can leverage technology to create stronger economic systems supported by a larger portion of the population than never before.” He added, “The radical point of investing in crypto is to diversify your existing portfolio and not put all your eggs in one basket. Crypto is becoming a new era asset system and investors are still here, looking to grow, experiment and transform. Having a very small or very small portion of their portfolio in crypto has helped people get good overall returns.”
When the RBI banned cryptocurrency transactions through banking channels, Ankur joined the #IndiaWantsCrypto movement until the ban was overturned by the Supreme Court, which declared it illegal. He regularly produces articles comparing and discussing different types of cryptocurrency. Ankur is optimistic 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 investors should first educate themselves on the new asset class that has exploded in popularity in the wake of the outbreak.
How does cryptocurrency work?
Cryptocurrency markets are decentralized, which suggests that they are not issued or backed by a central authority. Instead, they encounter a network of computers. However, cryptocurrencies can be bought and sold through exchanges and stored in “wallets”. When a user wants to send cryptocurrency units to another user, it sends them to the user’s digital wallet. The transaction is not considered final until it has been verified and added to blockchain mining.
Kshitij Purohit, Lead Currency & Commodities at CapitalVia Global Research, says: “Blockchain technology is used to create most cryptocurrencies. Method transactions are recorded and timestamped are described by the blockchain. A two-factor authentication method is also required for transactions. To begin a transaction, for example, you may be required to enter a username and password. You may then need to enter an authentication code sent to your personal mobile phone via text message”.
How to buy cryptocurrency?
To buy cryptocurrency, you must have a virtual account or a Demat account. This will be your blockchain wallet for making safe and legal exchanges and payments. It is often seen as other available digital wallets like Paytm and PhonePe, which you can simply use for cryptocurrency only.
Download any cryptocurrency exchange app 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. Once the KYC is completed, you can add funds in INR to your wallet. Next comes the important part where you need to invest in crypto. Analyze and choose a cryptocurrency, then place the order. In your wallet, the INR funds will be converted into the purchased cryptocurrency.
Benefits of Cryptocurrency
- Crypto enthusiasts see cryptocurrencies as the currency for the long haul and are rushing to buy them now, perhaps before they become more valuable.
- Crypto enthusiasts like the proven fact that cryptocurrency prevents central banks from managing the supply of liquidity because, over time, these banks reduce the value of liquidity via inflation.
- Other exponents, like blockchain technology, are looking to cryptocurrencies because transactions are decentralized.
- Some traders like cryptocurrencies because they escalate in value and have no interest in long-term adoption of currencies to move money.
- Some cryptocurrencies offer the ability to earn passive income through staking.
Disadvantages of cryptocurrency
- Many cryptocurrency projects are untested and blockchain technology has not yet been widely adopted. If the fundamental idea behind cryptocurrency fails to reach its potential, long-term investors may never see the returns they were hoping for.
- There are other risks for short-term crypto investors. Its prices change quickly, and while that means several people made quick money buying at the right time, many others lost money buying before a crypto crash.
- The sudden change in value could also go against the fundamental ideas behind cryptocurrency-backed projects.
- The circumstantial impact of Bitcoin and other cryptocurrencies that use similar mining protocols is critical.
- Governments around the world have yet to fully consider a way to manage cryptocurrency, so upcoming regulations may affect the market.
2022 budget on cryptocurrency
Exciting new regulations for digital assets have been introduced in the 2022 budget of the Indian parliament. The government has postponed the introduction of the cryptocurrency bill in parliament. However, two interesting steps were introduced regarding digital currency by the government in the 2022 budget.
First, the central bank digital currency or digital rupee will be issued by the Reserve Bank of India (RBI). Nirmala Sitharaman, Finance Minister of India, said: “The introduction of Central Bank Digital Currency (CBDC) will give a huge boost to the digital economy. Digital currency will also lead to a more efficient and cheaper currency management system. It is therefore proposed to introduce the digital rupee, using blockchain and other technologies, which will be issued by the Reserve Bank of India from 2022-23”.
In addition, 30% tax will be imposed on income from the transfer of digital assets. Additionally, a 1% TDA will be charged on digital asset transactions. The Minister of Finance said: “There has been a phenomenal increase in transactions in virtual digital assets. The scale and frequency of these operations have made it essential to set up a specific tax regime. Accordingly, for the taxation of virtual digital assets, I propose to provide that any income derived from the transfer of any virtual digital asset will be taxed at the rate of 30%.
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