In a barter economy, someone requiring meat needed to locate a person who not only wanted some object for intake but also had surplus meat. Such challenges were done away with when money became the universally accepted medium of exchange. However, since 2009 a brand new set of virtual currencies, referred to as cryptocurrencies, has seen prolific growth.
Cryptocurrency refers to binary data, in which coin possession information is saved on a computerized database with sturdy encryption so as to secure transaction information, control the introduction of extra coins, and validate the switch of coin possession. Cryptocurrency does not exist physically and is not always issued with the approval of financial institutions. It uses decentralized control, unlike a central bank digital currency.
The first decentralized cryptocurrency, Bitcoin, was developed by the presumed pseudonymous person, Satoshi Nakamoto, in 2009 by using SHA-256 — a cryptographic hash function — in its proof-of-work scheme. Another digital forex, Namecoin, emerged in April 2011; followed by Litecoin in October 2011 and Peercoin as well. The cryptocurrency marketplace’s cap was above $2 trillion in August 2021. There are some 21 million Bitcoins that can be mined and 18.77 million Bitcoins have already been mined as of August 2021. Numerous organizations across the world, such as Wikipedia, Microsoft, ATT, Burger King, KFC, Twitch, Pizza Hut, Norwegian Air, Alza, Travala, MIT Coop Store, Famsa and so on, have agreed to accept Bitcoin as a valid currency.
As far as the legality of cryptocurrencies is concerned, there is a significant deviation globally. While many nations see the use of Bitcoin as lawful, regulatory implications differ from nation to nation. Bitcoin was categorized by the treasury of the United States of America as a convertible, decentralized digital currency in 2013 and the Commodity Futures Trading Commission declared Bitcoin a commodity in 2015. As of 2017, authorities in the United Kingdom said that Bitcoin would be treated as overseas currency for most purposes. In early 2018, the Reserve Bank of India banned the sale or purchase of cryptocurrency for entities regulated by the RBI. In 2020, the Supreme Court revoked the RBI ban on cryptocurrency trade. In September 2021, China issued a blanket ban on all cryptocurrency transactions and mining. Cryptocurrencies are lawful in Russia, but it is unlawful to buy things with currency other than the Russian ruble. In the bill on digital financial assets, Bitcoins are categorized as belongings and are not considered legal tender.
Countries all over the world are dealing with demanding situations when it comes to accepting and regulating cryptocurrencies because of money laundering and extortion that are made effortless with the use of such currencies given that they do not leave behind any hint of the source of the financial transactions. Several activities like drugs, human trafficking, buying weapons, and so on are probably being carried out with the aid of cryptocurrencies.
The Indian Parliament allegedly hopes to table a bill in the upcoming winter session that will ban cryptocurrencies. While it is true that cryptocurrencies are actually out of the control of regulatory authorities, making it perfect for criminals to access painlessly, they are also gaining ground at a remarkable pace as many people are showing an interest in investing in digital currency like Bitcoin, Ethereum, Litcoin and so on. The government should thus take critical steps to formulate suitable policies to regulate cryptocurrencies and activities undertaken with them effectively instead of planning a blanket ban.