The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 seeks to ban all private cryptocurrencies in India and make way for an official digital currency to be issued by the Reserve Bank of India (RBI).
A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend.A cryptocurrency is a digital currency, which is an alternative form of payment created using encryption algorithms. The use of encryption technologies means that cryptocurrencies function both as a currency and as a virtual accounting system. To use cryptocurrencies, you need a cryptocurrency wallet
- Many cryptocurrencies are decentralized networks based on blockchain technology.
- A defining feature of cryptocurrencies is that they are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation
- The word “cryptocurrency” is derived from the encryption techniques which are used to secure the network.
- Blockchains, which are organizational methods for ensuring the integrity of transactional data, is an essential component of many cryptocurrencies.
Difference between private and public cryptocurrencies
The best-known cryptocurrencies like Bitcoin, Ether, Dogecoin, Shiba Inu and others are public as their transactions are completely transparent. Although these cryptocurrencies offer some degree of anonymity to users as they allow them to operate under pseudonyms, all transactions on the blockchain can be viewed by any person who has access to the said blockchain.
By design, transactions of these cryptocurrencies are linkable and traceable.
Fiat Money Vs Crypto:
- Traditional currency is maintained in paper or metal form, such as notes and coins, or in electronic form in account entries made by banks.
- Cryptocurrency is also a form of electronic money.
- The difference is that the record of cryptocurrency is maintained simultaneously by thousands of computers instead of a centralized entity such as a bank.
- Thus, the record of cryptocurrency can’t be tampered with by any person or authority. Cryptocurrencies such as bitcoin also tend to have limited supply
Advantages of using cryptocurrency
Using cryptocurrency could offer opportunities for some businesses. The benefits may include:
- A cryptocurrency transaction is generally a quick and straightforward process.
- Every cryptocurrency transaction is recorded in a public list called the blockchain, which is the technology that enables its existence. This makes it possible to trace the history of Bitcoins to stop people from spending coins they do not own, making copies or undoing transactions.
- Blockchain aims to cut out intermediaries, such as banks and online marketplaces
Disadvantages of using cryptocurrency
There are some business disadvantages to us
- It is possible to lose your virtual wallet or delete your currency.
- There have also been thefts from websites that let you store your cryptocurrency remotely.
- The value of cryptocurrencies such as Bitcoins can change significantly, so some people don’t feel it is safe to turn ‘real’ money into Bitcoins.
- Not Regulated by Central Bank.
- If companies or consumers move to a new cryptocurrency from you or stop using digital currencies entirely, it could lose value and become worthless.
- Cryptocurrency exchanges are vulnerable to cyber attacks and scams
- Blockchain is a specific type of database.Blockchain is a technological system that is used for maintaining records in a manner that they cannot be easily tampered with.
- It differs from a typical database in the way it stores information; blockchains store data in blocks that are then chained together.
- 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.
- Different types of information can be stored on a blockchain but the most common use so far has been as a ledger for transactions.
- 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