Everything You Need To Know About Cryptocurrency in India!

There was a barter system of exchange in the early stages of human evolution that eventually faded due to its inherent flaws, and since then, many types of research have been conducted to create Digital money, and gradually, paper and coin currency have been introduced and have become popular all over the world. Without a question, cryptocurrencies are becoming a big force in the world of investments today, thanks to the Supreme Court’s recognition of cryptocurrencies in India. It began as an experimental technical effort several years ago and has since grown into a big, global trend with the potential to generate significant returns for investors.

 Cryptography is a decentralized version of digital currency, with no servers involved in transaction processing and no central authority to oversee it.

What is Cryptocurrency?

Cryptocurrency is a type of digital currency that is utilized in transactions and trade. It’s similar to paper money, except it’s not actual. Cryptocurrencies are a decentralized form of money, which means they are not and cannot be regulated by any nation or collection of governments. Cryptocurrency is based on the concepts of cryptography, which is a means of protecting information and communications by utilizing codes that only the intended recipients can read and process. The word ‘crypt’ denotes ‘hidden’ or ‘vault,’ while the suffix ‘graphy’ means ‘writing.’ It is impossible to have duplicate transactions or use counterfeit coins with this approach.

Many cryptocurrencies are decentralized networks based on blockchain technology; a blockchain is a continuously expanding collection of records. They’re called blocks, but they’re what link and secure each type of cryptocurrency. Then there’s mining, which is a single network where all the money is kept. To put it another way, a process by which the cryptocurrency is validated is called mining.

How Cryptocurrency Is Purchased And Are They Taxed?

So, in order to purchase a cryptocurrency, you must first create a digital wallet. This is the place where you can change your currency for goods or services. In general, we prefer to link the term cryptocurrency with Bitcoin anytime it is mentioned. Bitcoins were the first and most popular cryptocurrency, followed by Ethereum, Litecoin, Dark coin, Dash, among many others.

Bitcoin originally arrived on the market in 2009, and it has since flooded the commercial sector. Its value climbed so dramatically in 2017 that it went from $1000 to almost $19,000. This was the earliest and most widely used type of cryptocurrency. 

In reality, according to another source, the price of Bitcoin is around Rs 30 lakhs, 2 per coin. However, because of these prices, a number of potential investors have thought they won’t be able to participate in such high-value goods. Investors aren’t aware that they can buy Bitcoins in fractions as well.

Another cryptocurrency, Ethereum, was launched, and its distinguishing feature is that it allows for the use of smart contracts and decentralized applications without any glitches or scams. It also restricts third-party contact and does not allow for downtime.

Another cryptocurrency, Litecoin, debuted in 2011 and has since risen to become the silver to bitcoin’s gold. This is owing to the fact that it is quite similar to bitcoin, with the exception that it has a faster transaction rate.

Why Are Cryptocurrencies So Popular In India?

In India, the demand for and popularity of cryptocurrencies has constantly increased, and here are some of the reasons behind this:

  1. No Involvement of Human

Cryptocurrencies are the best option for international internet transactions because there are no errors. Because Bitcoin is a decentralized digital currency, it does not require the use of a government entity to conduct international financial transactions. Any business interactions can be promoted without the involvement of any government entity, which may have concerns with international business.

All of the concerns about being denied access to some funds owing to government rules do not apply with cryptocurrency. As a result, it has become a kind of global currency to be reckoned with.

2. Ease of use and transparency

Cryptocurrency has the same monetary market characteristics as stocks. Because cryptocurrency prices are exchanged on the market, anyone may be able to make investments and participate in arbitrage using blockchain technology at some point in the future.

When compared to other investments, this provides superior returns, allowing individuals to take advantage of the benefits of crypto.

3. Secured transaction

Cryptocurrencies and the blockchain, according to many experts, are actually unhackable. Because cryptocurrency is based on the blockchain, one of the most widely recognized benefits of cryptocurrencies is the prevention of fee scams, as data is open to everybody, fostering transparency.

Cryptocurrency fosters immunity to tampering by using a shared ledger, and all data exchanged is correct and updated in real time. As a result, the risk of fraud is minimized. Furthermore, unlike credit cards, which may be hacked, once a bitcoin transaction has been validated, it cannot be reversed.

4. Speed of transaction

The transaction speed of cryptocurrency is as quick as light! It can also perform numerous transactions at once without any issues. As a result, professionals have embraced this transactional method because it allows firms to move as swiftly as feasible. With the massive increase in bitcoin popularity, it has soared to the point that it is now considered the ideal means of transaction in our digital age.

Are Cryptocurrencies Legal In India?

As the popularity of bitcoin grew in China and extended throughout Asia, India became one of the most active users of cryptocurrency as a key means of online transaction. India’s federal government planned to prohibit cryptocurrency trading at a time when the currency’s acceptability was at an all-time high in the country. 

In 2018, the RBI prohibited commercial banks from providing crypto services to traders and exchanges; however, in March 2020, India’s Supreme Court overturned the restriction after extensive petitioning, and this occurred just as the world was hit by the coronavirus pandemic. Most of India was put under lockdown as a result of the pandemic, and movement was restricted. As a result of this measure, the use of cryptocurrencies has increased dramatically in the country once again.

How To Protect Yourself While Purchasing Cryptocurrency?

If you’re thinking about buying a cryptocurrency in an ICO, it’s a good idea to study the prospectus carefully for the following information:

  • Who is the company’s owner? When the company is owned by a well-known and recognized person, this is a good sign.
  • Are there any other significant investors who want to get involved? If other well-known investors want a piece of the same currency, it’s a good sign.
  • Will you have a share in the firm or will you only have access to the money or tokens? This is a crucial distinction to make. Purchasing tokens, on the other hand, just states that you will be entitled to use them, as if you were purchasing chips in a casino.
  • Is the currency already built, or is the company looking to gather funds to do so? The less dangerous a thing is, the further along it is.

Reading through a prospectus with all the data at length can be difficult, but that’s a good indication because it reveals how legitimate it is. However, legitimacy does not guarantee that the currency will succeed; this is a distinct topic that necessitates a great deal of market knowledge.

How To Avoid Cryptocurrency Scams

Scammers are constantly looking for new ways to steal money from people utilizing cryptocurrencies. When someone tells you that you have to pay in cryptocurrencies, you know it’s a scam. As a result, it’s safe to assume that anyone who suggests paying with a gift card, wire transfer, or cryptocurrency is a scammer. There are a few cryptocurrency scams to be aware of:

Investment and business opportunity scams

  • Various businesses will guarantee you the possibility to earn a large sum of money in a short period of time, allowing you to reach financial independence.
  • Scammers may ask for payment in cryptocurrencies in exchange for the right to recruit others into a program. If you do, they will tell you that you would receive recruitment bonuses in cryptocurrency. As a result, the more bitcoin you pay, the more money they predict you will earn. Keep in mind, however, that they are all phony promises and guarantees.
  • Few scammers are likely to start with free offers from ostensibly “investment managers.” These con artists will claim that if you give them the bitcoin you purchased, they can help you grow your money. However, once you log in to the “investment account” that they set up for you, you’ll notice that you can’t withdraw your funds until you pay specific fees.
  • Scammers will occasionally send unsolicited job offers to sell cryptocurrencies, mine cryptocurrency, recruit cryptocurrency investors, or assist with bitcoin conversion.
  • Scammers can also post fake job postings on several job portals. They’ll promise you a job in exchange for a charge, but then take your money or personal information.

What is the Future of Cryptocurrency?

Cryptocurrency is going to be around for a long time. It remains to be seen whether Bitcoin will always reign dominant. While Bitcoin is currently the most popular coin, its mining constraints and investor hoarding may affect its value in the future. Serious investors should consider diversifying their cash across a few of top cryptocurrencies while there is still plenty of chance to make money in the meanwhile, and be ready to sell if things appear to be taking a turn for the worst.

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