Cryptocurrency is a digital currency or virtual currency that is managed using a decentralized system. Crypto currency in India is banned i.e Indian government has not yet been declared legal in India. In 2018, RBI banned all the functions and entities related to sale and purchase of crypto currency in India. In 2019 the inter ministerial panel recommends the ban on all cryptocurrencies.
As per Cryptocurrency and Regulation of the official Digital Currency Bill 2021, the Indian government wants to prohibit all other private digital currencies in India.
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Problems of crypto currency in India
In spite of ban on any private digital currencies or cryptocurrencies, Indian investors are taking interest in cryptocurrency & this trend could be dangerous.
Being a highly populated country, the young generation who are tech savvy are more adaptable to crypto saving. But the growth in Indian cryptocurrency is happening in the absence of any stringent guidelines from the central bank or the government. This is one of the most problematic cause. So it makes harder for RBI as well as the government to manage the monetary policy.
As the transaction are anonymous, some persons may use cryptocurrencies for illegal activities like selling drugs,weapons,etc.
Uses of Cryptocurrency in India in daily life
- One of the most well-known uses of cryptocurrency is for sending and receiving payments at low cost and high speed. Low fees transaction associated with digital currencies makes them excellent payment system for international money transfer.
- You can make transactions at any time of the day or night, and there are no limits on purchases and withdrawals. And anyone is free to use cryptocurrency, unlike setting up a bank account, which requires documentation and other paperwork.
- Because they are based on cryptography and blockchain security, decentralized cryptocurrencies tend to make for secure forms of payment. This might be one of the most certain benefits of cryptocurrency.
- The cryptocurrency industry has been one of the fastest growing markets. The total market cap of the cryptocurrency market in 2013 was about $1.6 billion. By June 2021, it rose to over $1.4 trillion.
- Cryptocurrencies have no regard for national borders. An individual in one country can send coins to someone in a different country without any added difficulty. With traditional financial services, getting funds across international borders can take a long time and come with hefty fees.
- One of the great benefits of cryptocurrency is that it can be used to exchange value between two parties. This can be done independently of any third-party, making the transaction freer
Disadvantages of Cryptocurrency
- Since the privacy and security of cryptocurrency transactions are high, it’s hard for the government to track down any user by their wallet address or keep tabs on their data. Cryptocurrency can be used as a mode of exchanging money in illegal deals.
- Although cryptocurrencies are very secure, exchanges are not that secure. Most exchanges store the wallet data of users to operate their user ID properly. This data can be stolen by hackers, giving them access to a lot of accounts.
- There is no refund or cancellation policy. If someone mistakenly sends funds to a wrong wallet address, the coin cannot be retrieved by the sender.
Future of crypto currency in India
The cryptocurrency Bill to be introduced in the winter session is likely to prohibit all the private crypto currency in india. The government has also revealed plans to introduce an official digital currency. The Reserve Bank of India (RBI) is expected to issue the digital coin that will be regulated by the central bank. The RBI is expected to use the underlying technology of cryptocurrency, which is blockchain, to issue digital currency.
RBI will introduce a central bank digital currency (CBDC) that isn’t exactly a cryptocurrency. The major difference between a CBDC and a cryptocurrency is that the former is regulated by states while the latter is decentralized.