It is also referred to as crypto and it works as an exchange medium. It is available only in digital form, where the coin ownership records are maintained in a logbook which is stored in a secure database using state-of-the-art cryptography. This enables secure transactions, controls creations of additional crypto, and acts as a verification for the transfer of ownership of the coin. No central bank or any central authority does not issue these currencies.
Similar to how a physical currency is minted, even the cryptocurrency is “minted” or created, before it can be issued to someone. At the time of its first issuance, it is a centralized market. However, when the crypto comes into circulation, it moves into a decentralized control of the operation, with each crypto working through dedicated distributed ledgers, such as a blockchain to serve as a database for all financial transactions. The first decentralized crypto is Bitcoin, however, many more crypto providers have emerged in this lucrative market in a very short period.
Many countries, including India, are against the idea of accepting virtual market-based currency such as crypto. Lack of market regulations and fraud activities are major reasons why many countries have not legitimized the trade of crypto. However, there are also many countries that have accepted the challenge and introduce crypto as a legitimate means of trading.
Few major reasons, which have been hindering the legitimization of crypto across the world, can be explained as follows,
- As many countries still do not recognize crypto such a BITCOIN, thus there is no regulation to regulate either the transaction or the control of such currency.
- There is a belief that cryptocurrency markets attract people with a criminal bent of mind and people who are into money laundering and tax evasions.
- As everything about crypto is available only in a digital form, thus it might be assumed to be a safe place. However, there is a growing threat that terrorists might use this to their effect, by trading in it to pay for their arms supply.
- Crypto is a currency, albeit, in a digital state, it requires a huge amount of investment on an individual level.
- Cryptocurrencies are touted to be a major danger to the method of banking as we know it. There is a growing belief that the adoption of crypto, it will seriously jeopardise the banking system in India. It is for this reason that barely a few governments have ever bothered about introducing change.
- Crypto, such as BITCOIN, will affect the government earnings as it removes the need to create a marketplace for trading.
- Some countries have permitted the use of crypto as tradeable security, and its operations are restricted. In such countries, banks and financial institutes do not give financial services for crypto. Exchange of cryptos is not done in banks.
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