Cryptocurrency has captivated global markets, promising financial freedom but sparking debates on stability and regulation. Let’s demystify this digital asset class, from its foundational workings to India’s evolving stance.
Picture a world without banks dictating transactions. That’s crypto’s promise. It leverages blockchain—a tamper-proof chain of blocks containing transaction data, verified by a global network of nodes. No single entity controls it, reducing corruption risks.
The process starts with transactions. When you send Bitcoin, it’s broadcast to the network. Miners compete to bundle these into blocks using proof-of-work (PoW) or newer proof-of-stake (PoS) consensus mechanisms. Successful validators earn crypto rewards, maintaining network integrity.
Ethereum’s upgrade to PoS slashed energy use, addressing environmental critiques. Tokens like Solana prioritize speed, handling thousands of transactions per second.
Wallets hold private keys—your access code to funds. Exchanges facilitate buying/selling, but self-custody is key to avoiding platform failures like FTX’s collapse.
Risks abound: 51% attacks, rug pulls, and regulatory crackdowns. Yet, institutional adoption by firms like BlackRock signals maturity.
In India, crypto thrives amid caution. Post-2020 Supreme Court ruling, platforms like WazirX boomed. But Finance Act 2022 slapped 30% flat tax on gains, plus 1% TDS, curbing high-volume trades. No deductions for losses either, making it punitive.
The crypto bill, pending parliamentary nod, aims for a dedicated framework, possibly banning private cryptos while promoting RBI’s digital rupee pilot. PMLA now classifies VDAs as high-risk, mandating FIU registration for exchanges.
With 93 million global users by 2023 and India leading downloads, potential is huge. Fintech innovations blend crypto with UPI, hinting at hybrid futures.
Navigating this space demands education. Diversify, use hardware wallets, and track policy updates. Crypto’s journey in India is just beginning—position yourself wisely.
