Cryptocurrencies are a phenomenon known to many people. These are the digital assets which act as a medium of exchange. In most developed as well as developing countries, these types of virtual currencies are used for many purposes. In India, there are many types of cryptocurrencies used, most commonly in the forms of Bitcoins, another type includes Lite coins, Ripple, etc. As the Reserve Bank of India has still not recognized these cryptocurrencies, people are trading on their own risk. Many Indian startups like Zebpay, Unocoin, Coinsecure, etc. are making money by opening wallets as well as trading platforms for these cryptocurrencies.
Cryptocurrencies are challenging because it is a violation of Foreign Exchange Management Act (F.E.M.A) and Anti Money Laundering provisions as there is a smart contract, with improper KYC (Know Your Customer) guidelines and improper cross border transfer.
“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” Don & Alex Tapscott, authors Blockchain Revolution (2016)
The key features of a block chain are:
Decentralized accuracy: The validation and verification of a transaction is sourced to members, called miners in the cryptocurrency . Verification usually involves trying different algorithms to find the unique one that matches the transaction block, and the successful miner is rewarded with the cryptocurrency.
Complete and open public records: Every transaction, once validated and verified is converted into a block of data that is recorded in the block chain ledger, which is accessible to everyone in the network.
Not susceptible to corruption: A block chain, once recorded and shared, cannot be changed since those changes are visible to everyone in the network . Thus, the ledger, once created, becomes almost non susceptible to corruption.
Around the world, people are using software programs that follow a mathematical formula to mine Bitcoins. The scripts that calculate the mathematical formula are freely available so that anyone can get in on the action. Bitcoins are finite number. The formula only allows a limit of 21 million Bitcoins to be mined and so far, nearly 16 million of Bitcoins have been mined.
While the upper middle class are the strongest supporters for Digital currencies, it is also helping the poor people. These types of currencies provide people to get connected with internet and to improve their financial circumstances which help the potential people to grow. Bitcoins are now around $5000 but it’s defined as having 8 decimal places as you can purchase a bitcoin worth $50 as per your budget. Koinex India is the best crypto exchange as it also allows users to deposit or withdraw money via purchasing or selling their Bitcoins.
Trading in cryptos are as easy as trading in shares as there are many facilities given by the trading platform which includes lightning fast, solid security, highly competitive transaction fee, user-friendly interface and multiple payment options, etc. Many companies in India like Paypal, Subway, Microsoft, Expedia, etc. are accepting these types of cryptocurrencies.
But, there are also some challenges while using Bitcoins or any other cryptocurrencies in India. Due to lack of legislation regulating cryptocurrencies, there is lack of consumer protection which leads to hacking attacks and improper investment protection. Recently many people are losing money due to hacking activities, it is also impossible to get funds back.
There have been several media reports regarding Bitcoins and other cryptocurrencies for illicit and illegal activities in several jurisdictions
The unpredictable change of prices also undermines the potential of bitcoins as a currency. Demonetization of Indian currency notes was one of the main reason for the drastic increase in the price of cryptocurrencies.
Cryptocurrencies and Bitcoins could compete with government currencies which can thrive the use of cryptocurrencies in India. But for now, the Reserve Bank of India has troubles classifying cryptocurrencies as an assets, tokens or commodities. The problem for thriving such digital currencies include power of greed that corner the market and finally into collapse. Nobody know that will there be an end for Bitcoins or not, according to many me they are going nowhere because Bitcoins are shaking Global Economy on daily basis that why they are nowadays are compared with gold.
By: Saksham Goel