WE are growing in an era where digital platforms are growing currency. The digital mode of technologies are also growing with us, at a very fast rate, and one among the technologies that’s taking over the world is Cryptocurrency, also known as “Crypto”. Records of transactions are stored in a computerised database known as a ledger. Cryptocurrencies make the transfer of funds easier as there is no third party involved in the transaction such as a bank or a credit card company. In 2008, the pseudonymous \ Satoshi Nakamoto posted a white paper describing an implementation of a digital currency called Bitcoin that used blockchain technology. More than ten years later, hundreds of Cryptocurrencies and innumerable other applications of blockchain technology are readily available. This time, there are more than 1000 different Cryptocurrencies that are traded publicly and Bitcoin is the most famous one. The Concept of cryptography is used to secure the records of the transaction, to control the creation of new coins and also for the verification of ownership. Such currency follows the concept of decentralisation, meaning no involvement of a third party. All the transactions can be tracked publicly and not a single individual or entity can change the data making its security safe for use.
Cryptocurrency is gaining popularity in the Indian online market. One of the reasons is that traditionally, in India, the main source of savings was gold, and with increasing technological ease, crypto is emerging as a kind of digital gold. The advanced currency has democratized the currency and opened up avenues for international transactions.
Cryptocurrencies save money and time for both the sender and the receiver because they are conducted entirely on the Internet and they use a mechanism with very low transaction fees and are almost instantaneous. The rise of Cryptocurrencies can cause threat to many traditional functions in finance. For example, no bank account or credit card is needed to transact in the world of Cryptocurrencies. Indeed, a Cryptocurrency “wallet" serves the same function as a bank vault. India has a lot to gain if Bitcoin and blockchain become mainstream and are not restricted by strict regulatory constraints. Bitcoin can or cannot be money.
What may appear as a straightforward question turns out to be anything but clear. If we want to know how Bitcoin can be money, we must first gain clarity on what we mean by money. Any individual or entity presently which are ready to work with Cryptocurrencies or we can say with Bitcoin needs to have clear understanding of all the processes, laws of the digital currencies and its usage and should consultant the financial / accounting professionals for guidance. Since various people and professionals from J&K have started investing in Cryptocurrencies, the education about digital currencies has become need of the hour.
Especially individuals presently working with Bitcoin and other Cryptocurrencies may have a clear understanding of the information technology, its databases and other technologies involved in process, storing, execution, transfer of digital currencies.
Let’s talk about what Blockchain actually is? Blockchain is a type of shared database that differs from a typical database in the way that it stores information; blockchain stores data in blocks that are then linked together via cryptography. As new data comes in, it is entered into a fresh block. Once the block is filled with data, it is chained onto the previous block, which makes the data chained together in chronological order. In Bitcoin’s case, blockchain is used in a decentralized way so that no single person or group has control, rather all users collectively retain control. Decentralized blockchain are immutable, which means that the data entered is irreversible. For Bitcoin, this means that transactions are permanently recorded and viewable to anyone. If I talk about the security of the Blockchain, Blockchain technology achieves decentralized security and trust in several ways. To begin with, new blocks are always stored linearly and chronologically. That is, they are always added to the “end” of the blockchain. After a block has been added to the end of the blockchain, it is extremely difficult to go back and alter the contents of the block unless a majority of the network has reached a consensus to do so. That’s because each block contains its own hash, along with the hash of the block before it, as well as the previously mentioned time stamp. Hash codes are created by a mathematical function that turns digital information into a string of numbers and letters. If that information is edited in any way, then the hash code changes as well.
The security is excellent but the attacks of hackers, malwares etc. can’t be avoided at any point of time when it’s all about the cyber things whether its digital currency, banking transactions, shopping or personal data.
If I talk about the various Cryptocurrencies in India, there are many.
Let's have small text look overview on India Govt’s Plans on Cryptocurrency & RBI. The government will move a bill to frame rules for Cryptocurrencies aimed at prohibiting private coin while providing a framework for the creation of an official digital currency to be issued by the Reserve Bank of India (RBI).
The bill is listed among 26 items of legislation for consideration in the winter session of parliament, according to a bulletin issued by the Lok Sabha on Tuesday. The crypto industry is hopeful there won’t be a complete ban on Cryptocurrencies. “The bill also seeks to prohibit all private Cryptocurrencies in India. However, it allows for certain exceptions to promote the underlying technology of Cryptocurrency and its uses,” the bulletin said with regard to the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021. It also seeks “to create a facilitative framework for creation of the official digital currency to be issued by the Reserve Bank of India.” Crypto Bill: Centre all set to ban private Cryptocurrencies in India, allow RBI digital coin (The Economic Times)
- Author is IT & Management Professional, Khalid Mustafa, Can Be Reached On [email protected]
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