Cryptocurrency: A bright future or a fad?

Is there a bright future for cryptocurrency in India? Experts certainly believe so! However, this was before India's finance minister imposed a steep 30% tax on cryptocurrency transactions in India.

Until the announcement of the Union Budget for 2022, the fate of cryptocurrency in India was largely unknown. Now the big question is, what do the predictions show as a result of India's government's action?

Before we come up with our analysis, let's know something about cryptocurrency.

What is cryptocurrency?

A cryptocurrency is a digital or virtual currency that secures, creates, and controls its transactions using cryptography. In contrast to traditional currencies, which are issued by central banks, cryptocurrency has no centralised monetary authority. Bitcoin was the first cryptocurrency to gain public attention in 2009. Following this, there are a variety of other cryptocurrencies on the market, including Ethereum, Ripple, Litecoin, Cardano, and others. Cryptocurrency can be redeemed for other currencies, goods, and services. In recent months, economists, central bankers, and monetary experts have expressed concerns about the currency's future. Investors and enthusiasts of this currency, on the other hand, are optimistic.

If you're interested in cryptocurrency (or crypto) but don't know where to start, here's a quick rundown of some reasons to get started sooner rather than later.

Reasons for investing in cryptocurrency in India 2022:

1. Protection from inflation: Many people believe that Bitcoin and other cryptocurrencies provide inflation protection. The total number of coins that will ever be minted in Bitcoin is strictly limited. As the money supply expands faster than the Bitcoin supply expands, the price of Bitcoin should rise. Numerous other cryptocurrencies use supply-control mechanisms and can serve as a hedge against inflation.

2. Decentralized: The fact that cryptocurrencies are mostly decentralised is a significant advantage. Many cryptocurrencies are controlled by the developers who use them and those who own a significant portion of the coin, or by a corporation that develops it before it is released to the public. In contrast to fiat currencies, which are controlled by the government, decentralisation aids in keeping the currency monopoly free and restrained because no organisation can determine the flow and thus the value of the coin, which, in turn, keeps it stable and secure.

3. Secure and private: Because you do not need to open an account with a financial institution to use cryptocurrency, you can keep your transactions private. Transactions are pseudonymous, which means you have an identifier on the blockchain – your wallet address – but no specific information about you. In many cases, this level of privacy is desirable (both innocent and illicit). There are several methods for further masking transactions, as well as several coins that are privacy-focused, to enhance cryptocurrency's private nature.

4. Incredible growth: The cryptocurrency industry has been one of the most rapidly expanding markets that most of us have witnessed in our lives. In 2013, the total market capitalization of the cryptocurrency market was approximately $1.6 billion. By 2022, it had risen to more than $1.91 trillion.

5. 24/7 Markets: Stock markets in India are only open during regular business hours on weekdays, from 9:00 a.m. to 3:30 p.m. The majority of traditional financial markets are shut down at night, on weekends, and holidays. In contrast, crypto markets are open 24 hours a day, seven days a week. The only things that could prevent a person from trading cryptocurrency are a power outage, an internet outage, or a centralised exchange outage.

India's step on cryptocurrency transactions:

After years of hesitating, India took a step closer to adopting cryptocurrencies, as the country seeks to keep up with the global shift toward digital assets. Bitcoin increased in value.

According to Finance Minister Nirmala Sitharaman's budget speech on Tuesday, the Reserve Bank of India will launch its digital currency in the fiscal year beginning April 1. She also stated that the country intends to tax income from the transfer of virtual assets at a rate of 30%, effectively removing uncertainty about the legal status of such transactions.

Launching of India's cryptocurrency:

India will now join a small group of countries in launching its blockchain currency. This has far-reaching implications for finance as a whole, highlighting India's dominance in digitised finance.

The central government is also launching a digital rupee to improve transaction efficiency, and the Reserve Bank of India will put it in place to reduce people's reliance on cash.

India is now one step closer to becoming one of the few countries to enact digital currency regulations, adopt blockchain technology, and integrate it into the economy.

Crypto trading and investing are booming in India

Cryptocurrencies and crypto terminology are becoming more popular in India, with more people joining in than ever before. Most people, however, are unaware of the importance of the blockchain technology that underpins Bitcoin.

As the markets continue to soar to new all-time highs, India is quickly establishing itself as a blockchain technology hotspot. Despite policymakers' scepticism about cryptocurrencies, progressive Indian states and businesses are already investigating the various applications of blockchain technology, and several entrepreneurs are stepping forward to put their ideas into action.

Conclusion

With all of the advantages cryptocurrency has over fiat currency and other asset classes, it's difficult to argue that using or investing in crypto has no value. Many people who value fast and secure transactions value the utility provided by many cryptocurrencies. And, with fewer technical hurdles, it will only become more accessible over time.

When the benefits of diversification and the potential to hedge against inflation are considered, the advantages of adding crypto or crypto stocks to your portfolio begin to add up and will be added up in the near future, if you place your investment in the right crypto and best time.

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