Not just your currency but your whole cash ledger is about to go FULLY VIRTUAL! How? With the advent of cryptocurrency, we are looking at the future of money and how we trade it.
So, what is cryptocurrency?
A cryptocurrency is a digital currency, which is an alternative form of payment created using encryption algorithms. The use of encryption technologies means that cryptocurrencies function both as a currency and as a virtual accounting system.
To USE this currency you need a cryptocurrency wallet that is stored in a cloud and on your devices. These wallets are encrypted to protect your identity and information. Cryptocurrencies work using a technology called a blockchain. Blockchain is a decentralized technology spread across many computers that manage and records transactions.
What are the main types of cryptocurrency?
Bitcoin: This is the most common type of cryptocurrency and what one understands when referring to DIGITAL MONEY. They were also the first type of cryptocurrency.
Altcoin: These cryptocurrencies are very similar to Bitcoin except they work in a different function and format.
Token: These are cryptocurrencies for decentralized apps. Eg. Civic, Bitdegree.
There are currently around 16,000 cryptocurrencies being traded right now, publicly.
How does cryptocurrency work?
Cryptocurrencies use what is known as Blockchain technology to function. Blockchain is essentially multiple computer networks that monitor transactions. This is a shared database.
People invest in cryptocurrencies for a variety of reasons. Here are some of the most popular:
Supporters see cryptocurrencies such as Bitcoin as the currency of the future and are racing to buy them now, presumably before they become more valuable.
Some supporters like the fact that cryptocurrency removes central banks from managing the money supply, since over time these banks tend to reduce the value of money via inflation.
Other supporters like the technology behind cryptocurrencies, called blockchain, because it’s a decentralized processing and recording system and can be more secure than traditional payment systems.
Some speculators like cryptocurrencies because they’re going up in value and have no interest in the currencies’ long-term acceptance as a way to move money.
How does one BUY or SELL cryptocurrency?
There are applications and portals on the internet that allow for the purchase and sale of cryptocurrencies. Once the apps have been downloaded, the user KYC needs to be authenticated and then trading can begin. The user also needs to set up a wallet WITHIN the application to transfer money from their existing bank account into this wallet.
Crypto in India and the taxation of the same:
Cryptocurrencies are still unregulated in India which means there’s no statutory body or a set of guidelines to monitor the trade of cryptocurrencies. This means risk and reward are unlimited for the time being. Experts say to ensure that the cryptocurrency is well protected and comes from a legitimate company or source. With a lack of regulation, almost anyone can print and circulate their own cryptocurrency.
Only as recently as 2018, the BAN on cryptocurrency was lifted in India. But it is dire to note that although it is not BANNED, there is currently no regulation of the same. However, there are new reports that hint that SEBI might start regulating cryptocurrencies and there may be a levy of tax at the rate of 1% on crypto transactions under the GST regime.
Crypto and its Future:
There are many who believe that this is just a “trend” in the market and a bubble that is soon to pop whereas others, such as the president of El Salvador, went on record to say that the American Dollar is not the future but crypto is. Depending on how beneficial non-regulation, transparency and many players in a market prove to be, cryptocurrency could pave the way to how we see money minted and being traded.