The Lok Sabha bulletin was issued on November 23 and the Indian crypto market was in turmoil. The bulletin said that the government would bring a law on cryptocurrency in the parliamentary session. As soon as the news spread, about 100 million crypto investors in India panicked and the crypto market began to collapse. The next day, the most popular cryptocurrency, Bitcoin, fell by 17%.
Bhaskar has spoken to crypto expert Jaskaran Singh Manocha to understand the controversy surrounding cryptocurrency. Jaskaran has been working on cryptocurrencies for a long time.
Understand, what is cryptocurrency? How will the new bill affect crypto investors? What is meant by private cryptocurrency in the bill? Can the government really ban crypto? How is cryptocurrency formed and what is its history? …
Let us first understand what is cryptocurrency?
It’s just like the rupee, dollar and any other currency. The only difference is that it is digital. That means you can’t keep it in your pocket like a note or a coin. Because the whole currency is made up of blockchain technology based on the principle of cryptography, it is called cryptocurrency.
What is a private cryptocurrency?
A private cryptocurrency is a currency whose transaction information is not disclosed. That means you can’t check what’s going on with the currency and its background.
A public cryptocurrency is one whose transaction information is publicly available. For this reason its background can be checked and it is more reliable.
However, the bill to be introduced by the government will also have to understand how private cryptocurrency will be defined. The government can privatize all types of cryptocurrencies if it wishes.
Also, look at the potential for cryptocurrencies in the bill
- Reserve Bank of India (RBI) may issue a new digital currency. This will be a government or public cryptocurrency.
- The government should separate the private and public cryptocurrencies and completely ban the private and bring some rules for the public. We do not have much private cryptocurrency in the market, for this reason the market will not be affected much.
- The government can regulate and tax cryptocurrencies in a very general way. Long term, short term or how many cryptocurrencies you are buying / selling can be taxed.
- The government can bring its own wallet. This wallet will be issued by RBI and through it you will be able to buy / sell cryptocurrency. This will maintain a record of all transactions involving cryptocurrency. It will also increase the confidence of cryptocurrency investors in the government.
Can’t the government completely ban cryptocurrency?
The control of any government is limited to its country but the world of internet has no boundaries. No one realizes what the server is doing on the Internet. At the same time crypto is in encrypted form and has a lot of value in the international market. Hence the government can never completely ban. Even if the government imposes a ban, people can still trade it in their own way. One of the characteristics of crypto is that it is not controlled by any government, bank or individual.
At the same time, most of the cryptocurrency exchanges are not registered in India. Even if the Indian government makes a law, it is possible that it will not make much difference to them.
How is cryptocurrency prepared?
Cryptocurrencies are mined. This is virtual mining. In which one has to solve a very complex digital puzzle to get cryptocurrency. Solving this conundrum requires its own algorithm (programming code) as well as a lot of computing power. So theoretically we can say that anyone can create a cryptocurrency but in practical terms it is a very difficult task to create.
Why is cryptocurrency considered risky?
When you talk about rupee, dollar, yen or pound, it is controlled by the central bank of the issuing country. How much and when this currency will be printed is decided by looking at the economic situation of the country but no one has control over cryptocurrency. It is a completely decentralized system. No government or company can control it. For the same reason it is also dangerous.