Money has been prevalent in the system since mankind, people in ancient times used the barter system for buying and selling their commodities. But with the want of getting an equitable price for the goods and with the increasing needs of livelihood, we shifted to using coins as the standard currency for trading which was widely used for thousands of years. Then came the paper money which made it easier to exchange or trade as it reduced the weight of the coins and was much more convenient to use.
Cryptocurrencies have been invented in this digital era. It is a digital currency that uses a blockchain mechanism in which the crypto coins are divided into thousands of blocks that are digitally designed, thus making the system more secure and safe. It works on a decentralized system thus eliminating the need for a third party.
The first cryptocurrency was made by an anonymous person by the name of Satoshi Nakamoto in 2009.
Digital currency started blooming in India after 2012 when various cryptocurrencies besides Bitcoins like Lite coin, Name coin, Ethereum, etc. came into the market. Small private cryptocurrency exchanges started in the country by name of Zebpay, Unicoin, Koinex, etc. enabling people to deal in crypto coins. With more than fifteen million investors in India, the market saw a rise in cryptocurrency. But in 2018 Reserve Bank of India issued a circular restricting the banks and other financial institutions from providing services to those dealing in cryptocurrencies.
A writ petition was filed in the Hon’ble Supreme court by crypto exchange companies against the circular. The court struck down the circular released by the Reserve Bank stating it to be unconstitutional. Cryptocurrencies saw a rise in the market throughout the world in 2019 when people started investing and trading in crypto coins in huge numbers. Big companies like Tesla, greyscale have also been investing in Bitcoins lately. India with more than fifteen million investors is nowhere behind in exploring the world of virtual currencies.
Even though the crypto market is seeing a rise but the government has been cautious lately as these currencies are not regulated by the government and could be used for criminal activities such as financing terrorism etc. the government is expected to present the bill in the parliament session which would restrict trading, dealing or investing in virtual currencies. Other countries like Japan, The United States of America, United Kingdom have made efforts to regulate these virtual currencies. Countries have come up with new statutes in order to change the law with technology and time.
Disadvantages of Virtual currencies
- Virtual currencies are not accepted widely to facilitate transactions, which would make it less convenient to deal in.
- The risk of wallet crashing is there, if a hard drive crashes or is affected by the virus it could cause huge damage and loss.
- There is no guarantee of its minimum value as there is no central organization governing it.
- Could be used for criminal activities such as terrorism, money laundering, etc.
Even though virtual currencies come with its own set of risks, adapting it to new regulatory laws can help the country economically. More jobs will be created, there will be an increase in foreign investments, transactions will go cashless. Virtual currencies have huge potential in the future and the government should take steps to regulate it.
