What Is Cryptocurrency? Ten Things You Should Know About The Online Currency

What Is Cryptocurrency? Cryptocurrencies like Bitcoin, Ethereum, Ripple, and Litecoin are getting popular among youth and in terms of their returns. The sudden increase in the price of these cryptocurrencies in the past year has attracted many youngsters to dip their toes in this new intriguing asset.

However, most of the people interested in investing in cryptocurrency do not understand digital currency and the crypto markets fully. This is because when most people think about the word cryptocurrency, "complicated" is probably one of the first things that come to mind.

Cryptocurrency, crypto for short, is a form of payment that can be used to buy goods and services online just like usual currency but uses an online ledger with strong cryptography to secure online transactions. Most of the companies have issued their own currency, often called tokens which can be only traded specifically for the goods and services that the company provides.

Simply put, it is a type of money that only exists electronically. The technology behind cryptocurrency aims to solve some of the most weighty points about traditional banknotes as it eliminates the need of having governing bodies like banks print and issue them.

The transactions with cryptocurrency are done person to person without having to go through an intermediary. A major part of the appeal of crypto is its technology and its security as cryptocurrencies work using a technology called the blockchain.

Cryptocurrency is becoming a stable asset worth investing in the age of e-wallets and cashless payments, here are 10 things you should know about cryptocurrency:

1. It is not illegal

There is a common misconception among people that cryptocurrency is illegal. Although the RBI imposed a ban on banks from facilitating cryptocurrency transactions in 2018, the Supreme Court of India ruled against the ban. The RBI recently announced that it is examining to create a central digital currency to regulate the market.

2. It has swift and cheaper transactions

One of the most attractive traits of digital currency is that there are no unnecessary steps and legalities to go through when sending money to another person like in traditional money. Crypto transactions are relatively simpler and straightforward as there are no agents, brokerage fees, commissions or extra fees needed. This makes the transaction cheap, fast and easy.

3. Cryptocurrency transactions are taxed just like regular currency

Although crypto is not regulated by a central authority, this, however, does not mean that investors of the currency are not required to pay taxes. Like any other investment, profit earned by investing in crypto is also subject to capital gains tax under the Income Tax Act.

4. Cryptocurrencies are not expensive

The price of one Bitcoin in the present-day is about Rs 30 lakhs per coin, this leads people to believe that they cannot invest in such high valued assets. But what most people are unaware of is that you can also purchase Bitcoins in fractions. Many crypto exchanges in India are allowing their users to buy Bitcoin with a minimum investment of just Rs 100.

5. The value of crypto is as real as Rupee or Dollar

The intangible nature of cryptocurrency has led many investors to believe that they are just a set of codes and do not hold a real value. However, it is just as real as any traditional currency like Rupee or Dollar. Cryptocurrency is similarly a valid means of exchange and a store of value.

6. Investing in crypto is easy

A few years ago, investing in crypto was quite complicated but after the Supreme Court ruled out the RBI ban on cryptocurrency, it became a lot easier. Many startups have emerged in India to make it easy for investors to buy and sell online currency.

7. It is secure and confidential

Transactions done with cryptocurrency is safe, encrypted and basically anonymous as no one can get a chance to spy on your financial activities like banks do with traditional money.

8. Financial freedom for unbanked people

About seven million people around the world are unbanked, which means that they have no financial institution or mobile money provider. This usually happens because of the strict application process and requirements that financial institution like banks requires from their depositors. But as cryptocurrency does not have these hindrances, anyone can make their account right away.

9. Quick international trade

Cryptocurrency makes international online transactions very easy as they do not need to be passed from one bank to another, and the waiting time for the money transfer is also reduced.

10. Growing investment opportunity

There are about 5000 altcoins (alternative cryptocurrency) in circulation today worldwide, and the sector will only grow in the future as the world takes on the needs of the post-modern population. Several coins are already in use and will be a great investment for people who want to trade them.