Whats Is Cryptocurrency? Know Everything About The Indian Crypto Market

what is cryptocurrency
Image Courtesy: Analytics India Magazine

More or less everyone now has an idea about Bitcoin, thanks to social media. However, not everybody is familiar with the term cryptocurrency! So, whats is cryptocurrency exactly? To put it in simple words, cryptocurrency mean is a form of payment that can be used for online purchases. However, unlike any other currency such as Rupee and Dollar, crypto must be exchanged for a physical currency. Similar to casino chips.

There are over 10,000 different cryptocurrencies in the crypto market right now, according to CoinMarketCap.com. These online currencies use a technology called the blockchain. It is a decentralized technology that uses an insane amount of computers to manage and record crypto transactions. The reason why cryptos became so famous is the security level of this blockchain technology. Trading in cryptocurrency means you’re in the safest place on the internet.

Whats is Cryptocurrency Market?

The cryptocurrency market is similar to the share market, also known as the stock exchange. Just like the trading of shares, you can also buy and sell cryptocurrencies depending on the ups and downs of the market and make a profit. A market report shows that the total valuation of all cryptocurrencies was more than $1.7 trillion, as of May 27, 2021. However, CoinMarketCap has reported that the total value was $2.2 trillion.

Now, let’s come to the king of cryptocurrencies, Bitcoin. It’s what the sensation is all about. This cryptocurrency alone pegs a massive $735 billion in market cap currently. Although, it was at its record high in April with a valuation of $1.2 trillion. The freefall from $65,000 valuation in April came down below the mark of $40,000 since it’s a volatile market. External factors affect it on a huge level. This downfall came following the comments from the World’s second richest man, Elon Musk. He said that Tesla won’t be accepting Bitcoin as payment.

The Crypto market trend depends on the mood of Bitcoin. Hence, when Bitcoin goes down, everything else is bound to follow suit. Right now, the market is in a dip. As for the Indian crypto market, about 7 million Indians have invested in cryptos that are valued at $1 billion. However, the government of India has been kind of skeptical about cryptocurrencies stating safety concerns.

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The Legal Status Of Cryptocurrencies In India

Let’s just be completely clear on this. Cryptocurrencies are not illegal in India, nor is trading in it. Yes, back in 2018, RBI asked banks not to accept cryptocurrencies since it was not recognized as a legal currency. However, in March 2020, after India’s Supreme Court ruled out this notice by RBI, cryptocurrency trading and accepting has been allowed here.

After withdrawing the previous notification, RBI issued another notice that read: “In view of the order of the Supreme Court, the circular is no longer valid from the date of the Supreme Court judgment, and therefore cannot be cited or quoted from.” This notice was issued to every Indian bank, government, and non-government.

The RBI issued notice read further: “It has come to our attention through media reports that certain banks and regulated entities have cautioned their customers against dealing in virtual currencies by making a reference to the RBI circular dated April 8, 2018. such references to the RBI circular by banks and regulated entities are not in order as this circular was set aside by the Supreme Court on March 4, 2020, in the matter of writ petition (Civil) No.528 of 2018 (Internet and Mobile Association of India vs Reserve Bank of India).”

Indian Government on Cryptocurrency

Going back and forth on the decision to whether legalize or ban cryptocurrencies, the Indian government has finally decided to regulate digital currencies. After the Supreme Court ruled out the previously imposed ban on Crypto trading in India, the Ministry of Corporate Affairs (MCA) took an encouraging step. They decided to make it mandatory for companies dealing with cryptos to submit trading/investments during the financial year to the government. Many experts have seen this move as a positive move and expect the taxation rules to follow through.

Cryptocurrency means it uses blockchain. Hence, the security level in trading crypto is unparalleled. Hence, accounting of the digital currency will solely focus on preventing illegal activities. It will also help hugely in stopping the circulation of black money. If the government will also start dealing in cryptos, the more transparent disclosures it will get. As of now, the Central government has assured the crypto traders that India won’t ban digital currencies completely. The Indian government is, however, still formulating its descriptive opinion on what is a cryptocurrency to the Indian market. In fact, finance minister Nirmala Sitharaman said that the Centre is open to experimentation with new technologies. Hence, the doors are open for digital currencies.

Whats Is Cryptocurrency In India’s Future?

On June 9, El Salvador became the first country to recognize Bitcoin as legal tender. It is not something that will bring a tidal wave in the world economy but it’s a start. It’s a sign that slowly but steadily, governments, economists, and investors are accepting the future potential of a financial system that is based on blockchain – the most secure technology for digital transactions. But whats is cryptocurrency for India?

India was reluctant at first. However, if the Indian government can overlook it and start accepting digital currencies, there’s a lot that can change. With global trade moving towards a decentralized currency i.e. cryptocurrency, it will ensure that India won’t be dependent on the US Dollar anymore. Better predictability can be expected with international trade and payments, for both individuals and the government. With proper regulation, India has the potential to be the center of future innovations in the blockchain space. It can lead to more job creation and overall economic growth.

Currently, there are several blockchain projects with global implications that are being developed in India. India’s Polygon (You’ll find it on the crypto market named as Matic Network) is building a protocol and framework that will connect blockchain-based networks. It is a close competitor of Ethereum and has the potential to overcome the network issues Ethereum faces frequently. The world is evolving, so is India. It’s time, you join the ride as well.

 People also ask

Is Tax Applicable On Cryptocurrencies?

Minister of State for Finance, Mr. Anurag Singh Thakur clarified on 28th March 2021 that India will not consider cryptocurrencies as a currency. Hence, it will be exigible to tax. The income will be taxed as business income in case the seller is a trader himself. However, if it is not business income, the income must be taxed in the nature of capital gains.

Is The Indian Government Working on Its Own Digital Currency?

Previously, the Indian government had its issue with digital currency. However, things are now less hostile now. In fact, the Indian government is working on its own digital currency. Reason? The government doesn’t want to be left out in this new world where blockchain and cryptocurrencies are dubbed as the future of everything.

Reserve Bank of India’s (RBI) Governor, Shaktikanta Das said in February that the government is currently working on its own currency. “The time has come to leverage its applications while at the same time strengthening the digital infrastructure.

How Can One Buy/Invest In Cryptocurrencies?

So, now that you know whats is cryptocurrency, it’s time you start investing. The first thing you need to buy cryptocurrencies is to get yourself a digital wallet. You can start anytime and all you need to do is download an application from the app store! If you’re a beginner, CoinDCXGo will be an excellent choice. WazirX is also a good option. Now for the currencies, Bitcoin, Dogecoin, Ethereum, Binance Coin, Bitcoin Cash & Polkadot are worthy to be on your watchlist.

Bear in mind, investors should always remain cautious while trading in the crypto market, It’s a volatile place. You have to understand the trends, follow big names and their activities, announcements, etc, especially Elon Musk. He has the biggest influence on the cryptocurrency market right now. Be patient. Don’t panic when your portfolio goes down following the sudden market crashes. Stay optimistic, wait for the right opportunity and you can make a fortune out of cryptos. Cryptocurrency means your fortune for the future!