What Is Cryptocurrency? Is Crypto legal in India in 2022?
What Is Cryptocurrency? Is Crypto legal in India in 2022: Many of you might be asking yourselves this one question over the past few months since Bitcoin hit above $60,000 and then dropped down to almost half of it. A lot of us don’t understand the concept behind Cryptocurrency in general till now. So, what exactly is Cryptocurrency? What is Blockchain technology? How do these two work together? We shall discuss all these questions and come up with some answers.
Investing in cryptocurrencies is one of the most trending topics among traders. I would like to say that investing in cryptocurrency is good for beginners and potential investors. So let’s first understand what Cryptocurrency is?
What is CryptoCurrency?
Cryptocurrency, in short form Crypto is also known as a digital asset or currency, is secured by cryptography built on blockchain technology that exists only online. It works as a peer-to-peer system that empowers anyone anywhere to send and receive payments online. The transaction of crypto uses encryption to authenticate.
The majority of the cryptocurrencies in the world works without the support of the Central banks and Government. At present, there are currently over a thousand different cryptocurrencies in the world, and out of this very few are successful and profitable. The first cryptocurrency that was introduced to the public was Bitcoin, which was launched in 2009 by an individual or group known under the pseudonym, Satoshi Nakamoto.
Understanding Blockchain Technology, how it’s related to Cryptocurrency?
Blockchain is a digital, decentralized distributed ledger technology (DLT) that was conceptualized in 1991 by Stuart Haber and W. Scott Stornetta, two researchers who wanted to implement a system where document timestamps could not be tampered with. This allows participants to keep track of information in a secure way. Every ten minutes, all transactions are recorded in a “block”. When it is full, the block is added to the chain and can never be changed again. Thus, it becomes immutable to any other block on the blockchain.
It was described for the first time in an October 2008 paper authored by Satoshi Nakamoto—the name used by the still-unidentified person or people who designed bitcoin—titled Bitcoin: A Peer-to-Peer Electronic Cash System. In February 2009, Nakamoto released the first bitcoin software that launched the network and the first units of the bitcoin cryptocurrency, called bitcoins.
Bitcoin’s success has inspired a range of other cryptocurrencies that have evoked technical, economic, and political interest, ranging from those seeking a replacement for traditional payment systems to those hoping to create new foundations for our economic and social systems. By design, a blockchain is cannot be modified of its data. This is because once it is recorded, the data in any given block cannot be modified retroactively without the alteration of all subsequent blocks
Is Crypto legal in India?
Cryptocurrency is legal/illegal or banned in India is a controversy. The Indian authorities are looking at cryptocurrency as a disruptive instrument on the country’s economy. There are many companies that have been evading tax and money laundering using cryptocurrencies, which is a cause of concern for the government of any country. While cryptocurrency may not be illegal or banned in India, there can be no doubt that it has caused concern among the regulators and the government of India.
India’s government has remained silent on the legality of Bitcoin, but it is still very much alive in other areas of the country. Cryptocurrency exchanges are even more common here. India will not be banning bitcoin, as some had feared, with the Reserve Bank of India (RBI) recently releasing statements insisting that cryptocurrency is not illegal.
In the 2022 Union Budget speech, many investors and exchanges had viewed an announcement made by FM to impose a 30% flat tax rate on any profit made from transferring Cryptocurrencies and Non- Fungible Tokens (NFTs). FM Nirmala Sitharamn however later clarified that taxing crypto does not make it legitimate and that the government has a sovereign right to tax income irrespective of whether it is generated by legal or illegal means. Regarding the future of Cryptocurrency in India, FM said no decision has been made on banning or legalizing crypto.
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