Crypto currency is a digital or virtual currency. It is also called “Virtual Currency”. Actually it is a set of binary data. The word Crypto currency is made up of 2 words, “Crypto” which is a Latin word and “Currency” which means currency. The literal meaning of ‘Crypto’ is “hidden”. Usually all the currencies of the world are issued by some country or the other, and the central governments of the country also control them with the help of their banks. But the government or bank of any country has no control over the crypto currency and neither can any institution decide the price of the crypto currency. This currency is completely controlled by the market. It is an imaginary or virtual currency and only online transactions can be done through this currency. It cannot be in our pocket in solid form like a coin or note. Bitcoin, Ether, Litecoin (LTC), Dogecoin, Faircoin (FAIR), Dash (DASH), Peercoin (PPC), Ripple (XRP), Litecoin, Shib (INU) and Monero are some of the popular cryptocurrencies. In this article, we will discuss various aspects related to cryptocurrency. Readers can find information about IAS Hindi in the linked article.
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What is Blockchain?
Blockchain is a type of digital public “ledger”. Cryptocurrency is bought, sold and operated through this digital ledger. Every transaction of crypto currency is recorded in this public ledger. The specialty of blockchain technology is that once a transaction is recorded here, it can neither be deleted nor any changes can be made to it. Blockchain technology is used through software. Instead of securing the entire information of blockchain exchange at one place, it is simultaneously secured in many computers which can be accessed by anyone. Through this, the digital currency used in transactions is encrypted i.e. coded which is managed through a decentralized system, that is, it is controlled by the market and not by any government or institution. The purchase and sale of currency done through this is called crypto-mining because a digital database of every information has to be prepared. Those who do this mining are called ‘miners’. Today it has become very easy to buy and sell crypto currency. There are many applications through which crypto currency can be bought and sold.
India’s stance
Governments of many countries of the world, including India, view crypto currency with suspicion and consider it a threat to traditional currency and even government sovereignty. The Government of India had constituted a committee on this issue in the year 2017. This committee had proposed to ban crypto currency. Based on the suggestions of the committee, the Banning of Cryptocurrency & Regulation of Official Digital Currency Bill – 2019 was presented by the Ministry of Finance, Government of India in 2019. According to this bill, trading and accumulation of all types of crypto currency in the country will be banned and illegal. Trading in cryptocurrency is punishable with imprisonment of up to 10 years and fine/finance (fines up to three times the profit earned by the guilty person or loss caused by financial irregularities (up to Rs 25 crore). After this, the Reserve Bank of India (RBI) also banned banks from dealing in crypto currency. But that order of RBI was quashed by the Supreme Court in 2020. The current situation is that there is no government ban on cryptocurrency transactions in India. However, at present there is no legislation to regulate cryptocurrency in India. The Union Budget 2022-2023 proposes to introduce a crypto currency in the coming financial year and plans to introduce an RBI-backed crypto currency by the Government of India by banning all types of private cryptocurrencies. It was also provided in Budget 2022 that an income tax of 30 percent will be levied on income from transactions of any kind of “virtual/digital asset”. Even for transferring (trading) such virtual digital assets, 1 per cent TDS will have to be paid. Even a person receiving virtual currency as a gift will have to pay tax.
Many countries are now familiar with cryptocurrency. Among them, El Salvador is one country that has adopted cryptocurrency as a currency. In El Salvador, cryptocurrency is also used as a transaction item. In recent times, some universities in Switzerland, Germany, the United States, etc. have accepted cryptocurrency as education fees on their official websites.
