What is Cryptocurrency? What is the current status of cryptocurrencies in India?

What is Cryptocurrency

A cryptocurrency, also known as crypto-currency or crypto, is digital money that functions as a means of an exchange over a computer network and is not supported or maintained by any central authority, such as a government or a bank. Validators are used in several crypto schemes to keep the cryptocurrency running.

A cryptocurrency (or “crypto”) is a type of payment that can circulate without the intervention of a central monetary authority such as a government or a bank. Cryptocurrencies, on the other hand, are created using cryptographic processes that allow users to purchase, sell, and trade them safely.

Cryptocurrencies can be used to buy and sell goods and services, but they are most commonly employed as investment vehicles. Cryptocurrency is also a crucial aspect of the operation of some decentralized financial networks, where digital tokens serve as a transactional tool.

Bitcoin, the most popular cryptocurrency, has a history of price volatility. It reached an all-time high of over $65,000 in 2021 before reversing course. While some cryptocurrencies, such as Bitcoin, can be purchased with US dollars, others require bitcoins or another cryptocurrency to be purchased. You’ll need a “wallet” — an internet tool that can store your cryptocurrency — to buy cryptocurrencies. In general, you open an account on a cryptocurrency exchange and then use real money to purchase cryptocurrencies like Bitcoin or Ethereum.

There are a few online brokers that give access to both cryptocurrency and equities if you’re used to standard brokerage accounts. Robinhood, Webull, SoFi Active Investing, and TradeStation are among the online brokers analyzed by NerdWallet. Look for pure-play cryptocurrency exchanges if you’re seeking for an exchange that only deals with cryptocurrencies. These platforms, such as Coinbase, Gemini, and Kraken, do not provide access to core assets like as equities and bonds, but they do provide access to a variety of other assets.

If you’re interested in purchasing a cryptocurrency through an ICO, examine the fine print in the company’s prospectus for the following details:

• Who is the company’s owner? A well-known and recognised owner is a good sign.

• Are there any other large investors interested in it? If other well-known investors want a piece of the currency, it’s a good indicator.

• Will you have a share in the company or will you only have access to dollars or tokens? This is a crucial distinction to make. Owning a stake entitles you to a share of the company’s profits (you’re an owner), whilst purchasing tokens entitles you to utilise them like chips in a casino.

If you’re interested in purchasing a cryptocurrency through an ICO, examine the fine print in the company’s prospectus for the following details:

• Who is the company’s owner? A well-known and recognized owner is a good sign.

• Are there any other large investors interested in it? If other well-known investors want a piece of the currency, it’s a good indicator.

• Will you have a share in the company or will you only have access to dollars or tokens? This is a crucial distinction to make. Owning a stake entitles you to a share of the company’s profits (you’re an owner), whilst purchasing tokens entitles you to utilise them like chips in a casino.

Should I buy cryptocurrency?

Cryptocurrency is a highly speculative and volatile investment. Investing in known firms’ stocks is often safer than investing in cryptocurrencies like Bitcoin.

What is the current status of cryptocurrencies in India?

There is currently no rule or prohibition in place in the country regarding the usage of cryptocurrencies. The Supreme Court of India overturned the Reserve Bank of India’s (RBI) ruling prohibiting banks from enabling crypto transactions in March 2020.

The government’s stance on digital assets has shifted dramatically over the last several years, from an outright ban in 2016 to an impending Bill for regulation. The impending Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 differs from the previous one, which was titled “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019.”

While the previous law intended to outlaw all crypto-related acts such as mining, purchasing, holding, selling, and dealing, the new one will seek to distinguish between it and its commonly used classification as a currency.

It’s no longer a question of if, but when. In India, cryptocurrency will almost certainly be regulated. It will be interesting to see when and how they are introduced. Who will govern cryptocurrencies was the most talked-about topic during the parliamentary panel hearing. The experts have totally delegated the appointment of a body to the government. The RBI was highlighted during the discussion as being able to handle cryptocurrencies, yet it has previously stated that cryptocurrencies should be prohibited. So, only time will tell if a new body will be established to regulate cryptocurrencies or if the government would appoint an existing entity to do so.

It’s now a question of when, not if. In India, cryptocurrency will undoubtedly be subject to restrictions. It’ll be interesting to observe how and when they’re introduced. Who would govern cryptocurrencies was the main topic of discussion during the parliamentary panel hearing. The experts have totally left the government in charge of appointing a body. The RBI was cited during the discussion as being able to deal with cryptocurrencies, but it has previously suggested that they should be prohibited. So, only time will tell whether a new authority will be established to regulate cryptocurrencies, or if the government would appoint an existing entity to do so.

Following the news, cryptocurrency prices on Indian exchanges plummeted by up to 25% compared to their worldwide counterparts due to widespread selling. After the Supreme Court overturned the ban on digital currencies, the cryptocurrency mania has exploded in India. Despite being very unpredictable and dangerous, the high rate of return is tempting many people to invest in cryptocurrency. The enthusiasm is not restricted to metros; young people in tier-II and tier-III cities are also showing an interest. Bloomberg reported, citing people familiar with the situation, that the administration is exploring a proposal to recognise cryptocurrencies as financial assets while protecting small investors.

Best Cryptocurrency to invest 2022

  • Bitcoin (BTC)
  • Ethereum (ETH)
  • Solana (SOL)
  • Yearn.finance (YFI)
  • Dogecoin (DOGE)
  • Cardano (ADA)
  • Polygon (MATIC)

Bitcoin (BTC)

Bitcoin is the largest cryptocurrency by market size and the most well-established store of value in the asset class, making it a must-have for any crypto investor. The coin, which celebrated its 13th birthday on Jan. 3, has a market capitalization of about $900 billion. It is the only digital asset with a U.S. exchange-traded fund that tracks its fluctuations and accounts for approximately 40% of the total value of the cryptocurrency market. BTC is the most mature cryptocurrency in its class and a mandatory investment for the crypto-curious. Companies like Tesla Inc. (ticker: TSLA) and MicroStrategy Inc. (MSTR) have BTC on their balance sheets.

Ethereum (ETH)

Despite being a distant second to Bitcoin in terms of market capitalization, Ethereum, which accounts for roughly 20% of the global market, is arguably on the verge of overtaking Bitcoin in terms of prominence. That’s because it serves a purpose other than just a store of money, with the Ethereum network easily claiming the title of most widely used blockchain on the planet. Ethereum’s native currency, Ether (ETH), is one of the finest cryptocurrencies to buy because it supports smart contracts, nonfungible tokens, and even other cryptocurrencies. When it switches from the proof-of-work to the proof-of-stake protocol, ETH will become significantly more energy-efficient than Bitcoin, removing the far more energy-intensive need to validate transactions on the blockchain through complicated computing operations.

Solana (SOL)

While Ethereum will soon handle some of Bitcoin’s energy difficulties, Solana has tackled one of Ethereum’s main problems: transaction costs. Small Ethereum transactions are financially untenable due to these “gas fees,” however Solana’s fees are a fraction of ETH fees. Solana, like Ethereum, was designed to be a top-tier platform for decentralised finance, or DeFi, which eliminates financial middlemen, traditional financial gatekeepers, and organisations such as banks, brokers, and centralised exchanges. Solana, which was launched in 2020, has a tiny but growing market share, with the coin’s value rising from $1.51 at the start of 2021 to more than $160.

Cardano (ADA)

Cardano is one of the largest blockchains to successfully operate the more energy-efficient proof-of-stake protocol, having been founded in 2017 by Ethereum co-founder Charles Hoskinson. Cardano intends to create a developer-friendly decentralised application (dApp) environment. Cardano, unlike Ethereum, has a hard limit on the amount of coins that can ever exist, which is set at 45 billion. Fortunately for investors, 33.5 billion, or roughly 74%, of that supply is already in circulation, implying that the amount of dilution left is both predictable and limited. Cardano has risen from 22 cents to almost $1.30 in the previous year, making it one of the finest cryptocurrencies to invest in right now.

Dogecoin (DOGE)

Dogecoin is well-known as a meme-inspired cryptocurrency that started off as a joke. But, first and foremost, being a meme token is far from an indictment in the crypto world, where Dogecoin and Shiba Inu both rank in the top-15 in terms of market valuation. However, there is a serious reason why Dogecoin is one of the best cryptocurrencies to invest in right now: Elon Musk is a true believer, not just an ironic fan, as he was rumoured to be during Dogecoin’s epic rally in 2021, and the Tesla CEO stated as much in an early January podcast with Lex Fridman. Given Musk’s clout in the cryptosphere, it’s surprising that there hasn’t been a price reaction yet. Dogecoin could see some short-term increases if mainstream media takes up on Musk’s enthusiasm with the currency again soon – or if the unpredictable billionaire makes his adoration for the currency more public once more.

Yearn.finance (YFI)

Yearn.finance, the hottest coin you’ve never heard of, is a $1.4 billion token with a lot of volatility: Prices have varied from $18,566 and $93,435 in the recent year. Yearn.finance is the 80th-largest cryptocurrency by market capitalization, currently selling for over $38,000. It also has a noble goal: to open up the DeFi arena to non-technical investors and users by allowing for optimal yield farming profits. Decentralized finance as a whole is very certain to increase over time, but the area remains technically tough, so technologies like Yearn.finance, which promise to make onboarding users easier, have a bright future. In the short term, YFI outperformed most other cryptos in late December and early January, gaining more than 20% as most others sank.

Polygon (MATIC)

Polygon has gone parabolic in the last year, increasing by about 100-fold. MATIC, which has a market cap of $17 billion and is now a top-15 coin, is still one of the finest cryptocurrencies to buy as 2022 begins. Polygon aims to achieve mass acceptance in a similar way to Yearn.finance, but in a different way: by making blockchains more scalable. The technology was created with the goal of scaling Ethereum and allowing for the creation of theoretically endless dApps to operate on top of it. Approximately 72% of Polygon’s total quantity of 10 billion tokens is already in circulation.