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Cryptocurrency in India

About the situation of crypto in india


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Mridul Garg

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Advertere- The Marketing Society of MSI

a year ago | 2 min read

Origin

The concept of cryptocurrency was shared with the world bySatoshi Nakamoto, a pseudonym, more than a decade ago in the year 2008. Nakamoto published a white paper called“Bitcoin: A peer-to-peer electronic cash system”on the internet. The first cryptocurrency known as Bitcoin came into existence in the following year. The basic idea behind digital currency was to exclude the third party from the electronic transaction and let the sender and receiver have complete control over their money.

Since the inception of Bitcoin, a lot of cryptocurrencies have surfaced in the digital financial system. Currently, there are around 9000 different cryptocurrencies around the world like Ethereum, Tether, Dogecoin, Solana etc. Among all these cryptocurrencies Bitcoin remains the most famous and valuable one.

Technology Involved

Cryptocurrency is a virtual currency that is encrypted by codes using Blockchain technology. The encryption process makes the currency secure against counterfeit. At the moment cryptocurrencies are legal financial assets but they are not recognized as legal tender by countries except El Salvador which means, these assets hold value but cannot be used for the sale or purchase of commodities yet. Finance Minister Nirmala Sitharaman clarified in an interview that since cryptocurrency is not issued by a centralized authority it does not have the intrinsic value that makes a currency acceptable as a medium of exchange. So,cryptocurrency is an asset, not a currency.

How secure is cryptocurrency?

The security that cryptographic proof provides to digital asset transactions is not easy to break. Every transaction that gets initiated in the crypto-financial system needs to be verified by the majority of the ledger network distributed across the internet. The transaction gets rejected if this does not happen. Also, transactions are verified through mining, a process of solving complex algorithms. This process consumes a lot of energy making it expensive and takes a significant amount of time to get noticed if anything is fishy.

Any user from any part of the world able to access the web can transfer crypto, there is no geographical barrier or conversion fee. The utility of digital money has been recently witnessed by the world amid the ongoing Russia-Ukraine war. People from all around the world extended their support to Ukraine by making cryptocurrency donations. Ukraine’s Deputy Digital Transformation minister, Alex Bornyakov confirmed that the country has raised around $100 Million to withstand the Russian invasion.

The supply of the currency is limited because new currency only comes into circulation when blockchain miners verify any transaction. The demand for cryptocurrency is increasing each passing day because more people are getting aware of the potential of this asset. Limited supply and more demand for cryptocurrency make the crypto market highly volatile and risky.

Conclusion

Acceptance of the digital currency system by the Indian state is a prudent move considering the pace at which the crypto financial system is expanding itself. Although, it would be a challenge for the state to devise a mechanism that lets cryptocurrency function without losing its essence.

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Mridul Garg

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Advertere- The Marketing Society of MSI


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