You have probably wondered lately what Cryptocurrencies are and what all the buzz is around them. Well wonder no more because we are here with a simple explanation about all things crypto!
Cryptocurrencies are digital currencies. Their transaction data is stored on Blockchain, which is a digital ledger. They do not have any regulating body like a Central Bank or a government.
Blockchain is a decentralized network which spans over many computers that manage and keeps records of all the transactions. The most important feature of this technology is its security.
Are there several Cryptocurrencies?
As per latest data released by CoinMarketCap , there are around 5,130 different cryptocurrencies traded across more than 200 exchang platforms.
Cryptocurrencies raise money through initial coin offerings, or ICOs just like companies raise money via IPOs in Stock Markets.
What makes them so popular?
Cryptocurrencies are popular amongst traders for several reasons, but here is an unexhaustive list just to name a few.
- Cryptocurrency is considered to be the future of Finance; hence people want to buy them before they get more valuable.
- Cryptocurrency eliminates central banks. Hence they are favored by many.
- The security provided by Blockchain is also favorable. They are a decentralized recording system and are more secure than traditional payment systems.
- Cryptocurrency is also popular because they’re going up in value. Some investors have no interest in the currencies’ long-term acceptance as a way to move money
Where and how to buy Crypto-currencies?
Some cryptocurrencies like Bitcoin are available for purchase with national currencies. National currencies like US Dollars, Yuan, Indian Rupees, Euros, etc. While others require that you pay with bitcoins or some other cryptocurrency.
To buy crypto-currencies, one would need a “wallet” which is an online app that can hold currency. Usually, one has to create an account on an exchange. Then they can transfer real money to buy cryptocurrencies such as Bitcoin or Dogecoin or Ethereum, etc.
There are several Indian exchanges like CoinDCX, WazirX, CoinSwitch Kuber, Unocoin, etc on which people can buy and sell cryptocurrencies.
Are crypto-currencies legal in India?
Cryptocurrency exchange regulations in India have become exceedingly stringent. Though technically legal, in 2018 the Reserve Bank of India (RBI) put a ban on banks and any regulated financial institutions from “dealing with or settling virtual currencies.” On 14 Jan 2018, RBI confirmed that it had not given any licenses or authorizations to any entity or company to operate a scheme or deal but had issued warnings about dealing in virtual currencies and introduced requisites for firms to unwind or exit their present positions. RBI had also confirmed that new prohibitory rules were being planned. The sweeping regulation stopped the trade of cryptocurrencies on domestic exchanges and gave existing exchanges until 6 July 2018, to wind down.
In 2020, a landmark decision the Supreme Court of India pronounced the ban unconstitutional, reversing the prohibition and allowing exchanges to reopen.
Lately, by the end of the year 2021, there have been several rumours flying around that the Indian government is going to regulate these transactions but no information has been released by reliable and credible sources yet.
To get a better idea of what Cryptocurrency is and how they function, follow Coin Crunch India and check our latest series, Crypto101.