Instagram reels, browser ads, and your peers are everyone around, suggesting you to invest in crypto, these days? But you are confused with its concept and working. Wait, isn’t it going to be banned in India? Yes, a lot of questions unanswered? Here is a quick read for you to clear up all your doubts about the crypto world and its virtual existence in India.
Understanding Cryptocurrency first
Let us get started with what is cryptocurrency. In simplest terms, it is a virtual medium of exchange and a non-fiat currency. Fiat currencies are generally government-issued which does not depend on any other kind of security; while non-fiat currencies are those that are backed by other commodities, like cryptocurrency derive their value from its blockchain. When an investor requests a transaction in crypto, a new (virtual) block is created, which is then added to the network of the existing blockchain of that respective cryptocurrency.
There is also an option two, if one does not wish to invest their money in this crypto market. It is called the mining of cryptocurrency. It can be done via advanced computers, which solve complex computational math problems. The crypto miner who finds the solution first is awarded with a block, i.e., an entry ticket in the market without investing their own money directly.
Utility of Cryptocurrency
Today, owing to its increasing popularity in the consumer market, one can purchase numerous things from cryptocurrency. Either the consumer can directly trade with marketers who allow crypto transactions for their demanded goods in crypto, or they can approach an exchange, which will convert their cryptocurrency into fiat currency. The introduction of newer technologies and advanced concepts like NFT or Non-Fungible Token has further boosted the utility of cryptocurrency in the consumer market.
However, there are countries like Russia, Morocco, Bangladesh, and China, which have banned the use of cryptocurrency. On the other hand, some economies, like that of El Salvador are progressively moving forward becoming crypto-friendly.
|Companies accepting CryptoCurrency||What you can buy|
|Microsoft||Microsoft currently accepts cryptocurrency as payment for games, apps, and other digital content for platforms like Windows Phone and Xbox.|
|PayPal||One can use crypto on select purchases at the time of checkout|
|Tesla||You can buy a Tesla using bitcoins, ( In Q4 of 2020 Elon Musk purchased $1.5 billion worth of Bitcoin. )|
|Etsy||One can buy different types of things using bitcoins|
|Starbucks||you can buy gift cards in some regions in the US|
|Rakuten||One can exchange Rakuten Cash with Bitcoin, Bitcoin Cash, and Ethereum|
|Twitch||Twitch streaming app Streamlabs has added a cryptocurrency option for tipping broadcasters with either BTC, ETH, LTC, or BCH|
|AT&T||AT&T will accept online bill payments using BitPay|
Indian context of the Crypto World
Crypto is a 3 trillion-dollar market today, with about 100 million Indians investing 600 billion in it, making India one of the biggest crypto markets in the world. In the ongoing winter session of the Parliament of India, a bill called “The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021” is to be proposed. It offers to ban all private cryptocurrencies and introduce a new RBI-regulated official digital currency. To understand the consequences better, let us consider two extreme perspectives.
First is the traditional or conventional opinion, believing that investment in cryptocurrencies should be banned, for the reason that it does not hold any credibility and therefore is not in corresponding interest with the investor. Fearing the issues of social engineering, this purview is majorly based on the fact that the crypto world is virtual, and a thing that can’t be seen, cannot exist. Thus, this opinion suggests that there should be a ban so that gullible investors could be saved from frauds and to keep the developing Indian economy safe, away from the “black hole” of the crypto world.
Coming to a contradicting opposite view, of those who support the sustenance of the crypto market, there are people believing that if the crypto world is a “black hole”, then there exists the Big Bang theory, and this “black hole” is going to burst, producing an entirely new world of opportunities. This opinion strongly refutes the ban on cryptocurrencies and perceives this move as a setback to the growth of the Indian market and economy. They believe, both, the sellers and the buyers, were exposed to the perks of digitalization too late in India, since the concept of Digitalisation came here way too late.
Similarly, if cryptos are banned now in India, there would be a lot of consequences Indians would have to face in the future.
The feared “Ban”
Recently, the capitalist economy, China, banned cryptocurrency. Chinese investors who invest in crypto were disappointed in the government, although they didn’t stop trading in the crypto world. They used VPN or virtual private networks and continued to trade as investors from different countries. The Chinese government also lost the taxes, it could have gained, on that cryptocurrency. A similar behavior could be expected of investors in India if there would be a complete ban on cryptocurrencies.
In 2019, the Indian Parliament imposed such a ban on cryptocurrency, following several warnings by the Reserve Bank of India and Finance Ministry, and a few public interest litigations. However, this ban was overturned by the Supreme Court of India in March 2020. Moreover, the biggest donation that India received in the Covid times was in cryptocurrency. It is yet to be seen, whether this time, the government will impose a complete ban on cryptocurrency or only on the private blockchains. Private blockchains are networks, that are owned and regulated by private authorities or organizations, and are not decentralized. Decentralized networks are safe to trade in, as they provide more transparency.
Scope of Crypto in India
As of now, the forex rate of the Indian Rupee is far lower as compared to US Dollar. Still, the majority of international transactions of India happen in US dollars. Although, the value of all cryptocurrencies is uniform for everyone in the market. Hence, if we replace those transactions with cryptocurrency instead of the dollar, the demand for the US dollar would not rise as high.
Ashish Singhal, the co-chair of the Blockchain and Crypto Assets Council, proposed a suggestion, on Al Jazeera, “Cryptos should be classified as an asset class investment in India”. This would facilitate the crypto world to enter the Indian market, not as a competition to Rupee, but as an ally. This would further help in retaining the country’s money within the country itself.
Therefore, it can be said that cryptocurrency could be the future currency if dealt with rationally and carefully. The future is unexpected, yet it holds a lot of prospects. It cannot be determined now, whether the bill will become an act or not. Also, your viewpoint about the crypto world cannot be framed by this article, directing you to which is the best. Ultimately, it is you who should decide what is best for you. A well-informed investor can only survive in such markets. So, choose rationally, choose wisely! Do check out 5 habits that help to reduce carbon footprints while using the internet blog also. Thanks for Reading.
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