Using cryptocurrency as a medium of exchange for online purchases is a novel idea. The use of cryptography is a key component of cryptocurrency’s operation. Let’s take a quick look at how cryptocurrency works. The database of all transactions is maintained by Distributed Ledger Technology (DLT) for each coin. This database is used by the general public to keep track of bitcoin transactions. Blockchain is also the name given to the database containing all of the records of cryptocurrency transactions. The records in this list are called blocks, and they are linked together via cryptography.
The RBI’s restriction on cryptocurrency trading was abolished by the Supreme Court in March 2020, making it permissible to trade cryptocurrencies since then. With the removal of the restriction, you may now deal in cryptocurrencies, but you must take all the necessary safeguards. Over the past several years, Bitcoin adoption has increased in India, despite some people’s opposition to the money. In addition, the government is contemplating the introduction of its cryptocurrency as a replacement for the Indian Rupee, as reported in the study Impact of Demonetization on Bitcoin. The economy would not be affected as much if there is any value-degradation.
Cryptocurrency Laws & Regulations in India
The lack of a legal framework for cryptocurrencies deprives investors of protection from a wide range of dangers, including currency manipulation. We’ve outlined the dangers here, including:
- Retail investors may suffer losses.
- This might harm a developing country’s economic growth.
- If technology is misused, it can be used to pay organisations that engage in terrorism, human trafficking, and other illegal activities.
Cryptocurrencies must now be subject to regulation following the Supreme Court’s decision to remove the ban on their usage earlier this year. Cryptocurrencies are already being planned for regulation in India, and the Supreme Court is expected to rule soon on the matter. India will then make a final judgement on market regulation. Even if cryptocurrencies are regulated, their usage of them in a payment system remains a question mark. This is mostly due to a lack of familiarity with virtual money.
There are some things you should and shouldn’t do.
Given the apprehensions surrounding the usage of cryptocurrencies and the crypto market, it is critical to be informed of the Dos and Don’ts to maximize our returns on our investments.
India’s Cryptocurrency Future
Since cryptocurrencies gained momentum following the Supreme Court’s recent decision to overturn the prohibition, there appears to be a bright future for the crypto sector. This judgement is favourable to cryptocurrency trading, such as Bitcoin and Ethereum. However, full implementation of crypto trading may take some time as the RBI’s formal notification is anticipated.
Due to the resurgence of crypto, all the digital currency and financial technology organizations are resurrecting their ambitions to develop their operations in India. The Supreme Court has overturned the RBI’s 2018 ban on bitcoin, ruling that the prohibition was not proportionate. This shows that the RBI lacked balance in its dealings with cryptocurrency businesses. The Supreme Court’s backing, in the form of its ruling, has restored India’s third-largest economy’s faith in Bitcoin.
A new technology-based method of doing business has emerged in the form of cryptocurrency. As a result of the market, many new buyers have entered the market, making it easier for businesses to conduct business across borders. There is still a long way to go before bitcoin becomes the de facto standard for all forms of payment.
When it comes to cryptocurrency, India has emerged as a major player despite the government’s ongoing efforts to regulate it. Coincidence or not, residents in the country are putting their money into the new financial instrument known as Bitcoin.