Introduction: Digital currencies have recently gained a lot of traction as a result of the industrialization and use of technology. Bitcoin is without a doubt one of the most widely used digital currencies, as it was the first cryptocurrency to be found in 2009 by the anonymous creator Satoshi Nakamoto. As a result, those who are familiar with cryptocurrencies and their concepts are at least familiar with bitcoins.
The worldwide cryptocurrency market was valued at $910.3 million at the end of 2021, and it is predicted to increase at a CAGR of 11.1 percent to $1902.5 million by 2028. Though specific figures are still unavailable, the overall number of cryptocurrency investors in India is expected to be between 15-20 million, with total crypto holdings valued at 400 billion rupees ($5.37 billion).
Though cryptocurrencies and the money earned by Indians from them were previously tax-free, Indian Finance Minister Nirmala Sitharaman recently proposed a 30 percent tax on the income earned from the transfer of virtual digital assets starting February 1, 2022. Sitharaman went on to say that no discounts or exclusions would be granted in this case. The crypto tax, which is set to be implemented at a rate of 30%, is the country’s highest tax bracket to date. The crypto business, as well as its founders and entrepreneurs, are ecstatic at this tax news.
Types of Crypto Currencies: Following are the types of crypto currencies:
- Bitcoin (BTC)
- Litecoin (LTC)
- Bitcoin Cash
- Ethereum Classic
- Ethereum (ETH)
- Zcash (ZEC)
- Bitcoin Satoshi’s Vision (Bitcoin SV)
- Stellar Lumen (XLM)
Advantages of Crypto Currencies: Following are the pros of crypto currencies:
- Protection from inflation: It’s one of the most significant advantages of cryptocurrencies, as inflation has caused the value of many currencies to depreciate over time. Almost every cryptocurrency is released with a fixed amount at the moment of its inception. The amount of any coin is determined by its source code; for example, there are only 21 million Bitcoins available in the globe. When a result, as demand grows, its value rises, keeping pace with the market and, in the long term, reducing inflation.
- 24 hours accessibility: You can spend or buy anything you want from anyplace, and you don’t even need a system to do so. Everything can be done from your mobile device, indicating that even persons with low technological knowledge may invest and make decisions in real time. This ease of use is a key characteristic of bitcoin, and it is being used all around the world to provide chances for those who would otherwise struggle to become online customers.
- Self-governed and managed: Any currency’s governance and preservation are drivers of its evolution. Miners collect cryptocurrency transactions on their hardware and are rewarded for doing so with a transaction fee. Because miners are compensated for their work, they keep transaction records accurate and up to date, ensuring the cryptocurrency’s integrity and decentralised records.
- Secure and Private: Cryptocurrencies have always placed a premium on privacy and security. The blockchain record is made up of a series of difficult-to-solve arithmetic problems. As a result, cryptocurrency transactions are more secure than traditional electronic transactions. Cryptocurrencies employ pseudonyms that are unrelated to users, accounts, or recorded data that may be linked to a profile for improved security and privacy.
- Ease in currency exchange: The US dollar, European euro, British pound, Indian rupee, and Japanese yen are all examples of currencies that can be used to purchase cryptocurrency. A currency can be converted into another by trading in cryptocurrencies with the use of several cryptocurrency wallets and exchanges, with minimal transaction costs.
Disadvantages of Crypto Currencies: Following are the cons of crypto currencies:
- Used for illegal transactions: Because cryptocurrency transactions are reliable in terms of privacy and security, it is difficult for the government to trace down each user by their wallet address or maintain track of their data. Bitcoin has been used to exchange money for a variety of unlawful contracts throughout history, including the purchase of drugs on the dark web. Some people utilise cryptocurrency to convert their illegal money through a trusted intermediary in order to conceal its source.
- No security in case of loss: As with growing technology, some people take advantage of incompetence to defraud, deceive, and steal your hard-earned money. Because this has been a concern with digital currencies, it is critical to be aware of the security threats. With a few basic security measures in place, the chances of creating irreversible loss are reduced.
- Prone to market fluctuations: Cryptocurrencies can be used in a variety of ways, but the majority of people who utilise them right now are doing so exclusively as an investment. While the enthusiastic users spend their virtual money on sporting event tickets, online gambling, or waiting for market volatility to work in their favour. Treating bitcoins like if they were any other product could help to foster a greater understanding and trust in the new currency.
- No refund or cancellation policies: The sender cannot recover funds if there is a dispute between the parties involved, or if someone transfers funds to the wrong wallet address. Because there are no rebates, a transaction can be created for a product or service that was never obtained.
