BITCOIN - THE CRYPTO-CURRENCY

 

BITCOIN  -  THE CRYPTO-CURRENCY

Bitcoin is a digital or virtual currency created in 2009 that uses peer-to-peer technology to facilitate instant payments. 

Cryptocurrency, sometimes called crypto-currency or crypto, is any form of currency that exists digitally or virtually and uses cryptography to secure transactions. Cryptocurrencies don't have a central issuing or regulating authority, instead using a decentralized system to record transactions and issue new units.

 

 

The most alluring fact of Cryptocurrency is that its "get rich quick" promise it propagates.

 

 

 

 

 

 

 

Before inventing currency, there existed barter exchange.  Goods being exchanged need based on demand without proper valuation of the goods.  There was no balancing act about the supply and demand.  

 

Barter system was used in ancient times for the exchange of goods.

Barter, the direct exchange of goods or services—without an intervening medium of exchange or money—either according to established rates of exchange or by bargaining. Barter is common among traditional societies, particularly in those communities with some developed form of market.

A few centuries ago paper currency was introduced against the deposit of Gold.  Nowadays, the Central Bank of a country started printing  currency against the security of Gold. The Gold is a common deposit across the globe.  

India has the Reserve of Bank as a centralized banking system to regularize the printing of currency against the sufficient gold deposit.  

Digital currency is designed to work as a medium of exchange. There are many different types of cryptocurrency, but these nine are among some of the more well-known currencies.

1. Bitcoin (BTC)

One of the most commonly known currencies, Bitcoin is considered an original cryptocurrency. It was created in 2009 as an open-source software. The author of the whitepaper that established this digital currency was under the pseudonym Satoshi Nakamoto.

Bitcoin works using blockchain technology, Bitcoin allows users to make transparent peer-to-peer transactions. All users can view these transactions; however, they are secured through the algorithm within the blockchain. While everyone can see the transaction, only the owner of that Bitcoin can decrypt it with a “private key” that is given to each owner.

 

Unlike a bank, there is no central authority figure in the Bitcoin. Bitcoin users control the sending and receiving of money, which allows for anonymous transactions to take place throughout the world.

 

2. Litecoin (LTC)

Litecoin was launched in 2011 as an alternative to Bitcoin. Like other cryptocurrencies, Litecoin is an open-source, global payment network that is completely decentralized, meaning there are no central authorities.

What’s the difference between Bitcoin and Litecoin?

Here are a few differences between these digital currencies:

• Litecoin is believed to feature faster transaction times.
• The coin limit for Bitcoin is 21 million and Litecoin is 84 million.
• They operate on different algorithms, Litecoin’s being “scrypt” and Bitcoin’s is “SHA-256.”
  

 

3. Ethereum (ETH)

Created in 2015, Ethereum is a type of cryptocurrency that is an open source platform based on blockchain technology. While tracking ownership of digital currency transactions, Ethereum blockchain also focuses on running the programming code of any decentralized application, allowing it to be used by application developers to pay for transaction fees and services on the Ethereum network.

 

4. Bitcoin Cash (BCH)

Bitcoin Cash is a type of digital currency that was created to improve certain features of Bitcoin. Bitcoin Cash increased the size of blocks, allowing more transactions to be processed faster.

 

5. Ethereum Classic (ETC)

Ethereum Classic is a version of the Ethereum blockchain. It runs smart contracts on a similar decentralized platform. Smart contracts are applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interface. Like Ethereum, it provides a value token called “classic ether,” which is used to pay users for products or services.

 

6. Zcash (ZEC)

Zcash is a digital currency that was built on the original Bitcoin code base. Conceived by scientists at MIT, Johns Hopkins and other respected academic and scientific institutions, it was built on a decentralized blockchain. A core feature and differentiation of Zcash is an emphasis on privacy. While not a function available to investors on Equity Trust’s platform, users can send and receive Zcash without disclosing the sender, receiver, or the amount transacted.

 

7. Stellar Lumen (XLM)

Stellar lumen is an intermediary currency that facilitates currency exchange. Stellar allows a user to send any currency they own to someone else in a different currency. Jed McCaleb founded the open-source network Stellar and created the network’s native currency in 2014.

 

8. Bitcoin Satoshi’s Vision (BSV)

Bitcoin Satoshi’s Vision (BSV) is the result of the 2018 split, or hard fork, of Bitcoin Cash. It is intended to more closely resemble the original purpose of Bitcoin, particularly decentralization and using cryptocurrency as payments.

 

9. Chainlink (LINK)

Launched in June 2017, the Chainlink was designed to incentivize a global network of computers to provide needed external data to smart contracts (agreements programmed to execute when certain conditions are met) running on top of blockchains.

 

Cryptocurrency with tax advantages?

Did you know you can invest in these cryptocurrencies within your IRA, potentially paying zero taxes on any profits.

 

The Government of India's Finance Ministry has taxed the crypto trading transactions in the country with a 30% tax implications.

 

The Cryptocurrency is legal in the developed countries such as USA,UK, Canada and Japan.

However, there are some countries in which the cryptocurrency is illegal. 

 

Algeria, Bangladesh, China, Egypt, Morocco, Nepal, Qatar and Tunisia are the countries in which cryptocurrency is totally banned.

India Government's Finance Ministry clarified that cryptocurrency is not a legal tender in India.  In the absence of legal backing for cryptocurrencies, there is no investor protection mechanism like for stock market investors, who are protected by Sebi's (Securities and Exchange Board of India)  regulations. 

Cryptocurrency investors need to know that virtual assets are a high-risk bet not just because of extreme price volatility but also due to the record number of scams targeting newbies.

 

Globally, crypto criminals made a record $14-billion haul in 2021, up nearly 80% from about $8-billion in the previous year, according to blockchain data platform Chainalysis.  Just over half of the $14-billion illicit crypto transactions were attributed to scams, while theft, ransomware attacks and money laundering made up the rest.  Even if you have proceeded with caution and avoided scamsters, there is still a risk of the digital wallet, where you stored your Bitcoin or a NFT (non-fungible token), getting hacked.

 

At present the cash is in minimum usage as plastic money is order of the day.  The Debit Card, Credit Card, ATM (Automatic Teller Machine) Card and Smart Card are swiped to make payments without involving paper currency or cash.    

 

The UPI QR Codes of any Apps can be scanned to make payments against purchases. More than often we find ourselves either running short of cash or having bigger currency notes that sometimes even vendors refuse to accept for low-cost items. In such situations, online payments through QR code scanners came as a great relief. All you need to do is scan the vendor’s QR code and make direct bank-to-bank payments. You can scan the QR codes at shops, restaurants, pharmacies, petrol pumps, groceries, malls, supermarkets, and even street vendors and make easy, hassle-free payments of any amount that you want.

 

The plastic money is in use in many countries of  the world.

The Indian bank notes  are made of 100% cotton whereas the American Dollar Notes are made of 75% cotton and 25% linen.

 

 

The US Dollars are the most commonly and universally accepted currency in the world.

 

 

 

 

 

The Reserve Bank of India is India's Central Bank and regulatory body and is responsible for the issue and supply of  the Indian rupee and the regulation of the Indian banking system.

 

 

 

 

 

 

 

  New Reserve Bank of India building in Mumbai (Bombay)

 

 

The inflation necessitated to cancel small units of money by the Reserve Bank of India.   Many coins of smaller denomination and paper currency  such as one rupee note and two rupees and five rupees notes have gone down to the history and not in use today.

The people stopped carrying fat wallets full of cash and uses plastic money instead.

 

 

The modern technology and new inventions made even cryptocurrency gaining momentum in spite of its drawbacks.  And are popular amongst the world citizens.