Can you imagine a thing the value of which was zero around ten years back and today its value has touched almost 2.5 million! I’m taking about Bit coin that has recently touched its all time high price point due to which it is being talked about in the market and the media again.
So I thought this would be the right time to make an educational article and explain to you what
Bitcoin actually is what its history?
Merely 12 years ago on 31st October 2008 a person named Satoshi Nakamoto published a paper on the internet, Satoshi main motive was clearly evident from the first line of the paper a version of electronic cash that would allow payments to be sent directly from one party to another party without going through a financial institution.
What is cryptocurrency?
Cryptocurrency is a digital asset over which Central banks or financial institutions have no control or regulation. For instance the US dollar is controlled by the Central Bank of US.
The Indian rupee is controlled by the RBI. But there is no Central Bank or any main financial institution that controls the Bitcoin cryptocurrency, back then cryptocurrency was merely an idea in the mind of that person. But now there is trading worth million and Crores in its crypto exchange.
Just like shares are traded on the normal stock markets in order to understand the paper of Satoshi and the context of crypt o currency, we will have to understand some concepts of our economic history.
Our financial systems are based on trust, the currency notes and coins have value in our society because they are guaranteed by the government and the Central Bank. Take a look at any note in your wallet. For example a 200 hundred rupee notes. It reads I promise to pay the bearer a sum of 200 hundred rupees.
There is a small but interesting story in this context, after the Second World War America became the most powerful Country in the world and the rest of the countries had to align their currency with the US dollar and what was the US dollar aligned with guaranteed by a reserve of gold.
The actual is that of gold or silver. But it is not practical to carry gold or silver around in your pocket. The currency notes were printed for convenience. But US did away with this gold standard rule back in 1971. After that Central banks of the rest of the countries could print their notes as per their wishes.
How does cryptocurrency technology work?
There is one public account in digital form of all the Bitcoin transactions this is called a ‘ledger’ a copy of this ledger exist on all the systems that are a part of the Bitcoin network.
Those that run this system is called miners’ the job of the miners is to verify transactions. A block of transactions gets created and hence the technology is called ‘block chain’.
How to use cryptocurrency and Bitcoin?
It is extremely important understand that as well. Because of one hand some people use Bit coins as an investment while on the other hand, some people use cryptocurrency as an alternate currency.
A lot of people want to replace in with currency and use Bitcoins in place of rupees and dollars but the main use of cryptocurrency at present is like a v investment.
We invest money in cryptocurrency hoping for a higher return in the future and hence get more money in return this then becomes a store of value just like gold.
Just like we don’t use gold in our daily transactions but instead buy it and store it in the bank lockers like a guarantee to get more returns in the future because the price of gold keeps rising gradually, people do the same with Bitcoin and this is why Bitcoin are also called ‘ digital gold’
Why RBI Cryptocurrency not accept?
The reality is that cryptocurrency has some negative points as well that are mainly related with money laundering and security in the dark web on the internet.
The people had started accepting payment in Bitcoin for buying weapons and drugs it became very difficult for the law enforcement agencies to track transactions because they were outside the traditional financial system issues related to hacking also surfaced.
March 2020 the court clearly declared that there is no legal prohibition on cryptocurrency trading and investment, this business is legal and the RBI would have to repeal its banking ban, overall this is good news for all of us.
We can freely invest in crypt o currency, if we wish to we have this opportunity to diversity our financial investment you could invest some money in cryptocurrency as an experiment.
After the decision of the Supreme Court, several exchanges have burgeoned and this process has become extremely straightforward and easy in India. One of these is coin switch kuber, an app on which you can deal in more than 100 cryptocurrencies. bellow link kuber app download
Do not trade by taking loans from banks or others. If there is a need for you to take loans, to invest in cryptocurrency or Bitcoins, do not that then, this is not for you only invest that much money that you are comfortable losing because this is an extremely risky investment.
The price of the cryptocurrency fluctuates a lot and it is extremely volatile. So it is pretty clear that it is both an opportunity as well as a risk.
You risk appetite and investment goals decide whether you want to play a short term or a long term gene.
Overall it can be said that cryptocurrency and Bit coin could play an important role in the future of finance. It remains to be seen whether cryptocurrency can become a medium of exchange that will be subject to widespread use.
Coin dcx app download here