A Cryptocurrency is a digitalized or virtual currency that is crypted by algorithms which makes it almost impossible to counterfeit or double spend. It is an internet based medium of exchange which uses algorithmic functions to conduct Financial transactions. Cryptocurrencies can be transferred between two parties using private and public keys. These transfers are done with minimal processing fees allowing the users to let go the steep processing fees charged by financial institutions.
The defining feature of Cryptocurrencies is that it is not issued by any Central Authority which means that Cryptos are abstained from Government Interference and manipulation.(Note - In contradiction to the above statement, cryptocurrencies have been in the Global News just because of its drastic leap to $11500 per unit).
Cryptocurrencies have been criticized for a number of reasons such as their use for illegal activities, volatile exchange rates, vulnerabilities of the infrastructure underlying them . However they have also been praised for their profitability, divisibility , resistance to inflation and transparency.
David Chaum- A developer back in the 1980s had an innovative idea to digitalize the traditional practice of transacting via the physical currency notes into a virtual mechanism. This is when the seeds for the concept of Cryptocurrency was sowed.
During the Great Depression of 2008 a person named Satoshi Nakamoto whose identity is yet a high profile secret wrote a paper named "Bitcoin: A Peer to Peer Electronic Cash System". Around this time someone also registered the domain Bitcoin.org; while a software allowing Bitcoins to be mined for the first time was also published by Nakamoto. In 2009 Nakamoto sent some bitcoins to a friend and the world's first digital currency was born.
As Bitcoins were never traded, they were only mined it was difficult to assign a monetary value to them. In 2010, someone decided to sell theirs for the first time by swapping 10,000 of those for two Pizzas. If the buyer would have capitalized those bitcoins it would have been worth more than $100 million today.
Considering the popularity of cryptos; rival cryptocurrencies started emerging in 2011.
2013- Bitcoin prices started crashing down considerably from $1000 to $300 fearing the minds of investors.
2014 - Scams and Thefts related to cryptocurrencies started cropping up.
2017- Bitcoins at its peak at $10,000 and continual growth.
2018 - RBI had issued a circular which barred Banks and other financial institutions from facilitating transactions involving cryptocurrencies. Therby declaring transactions involving cryptos as illegal.
Supreme Court has quashed RBI ban on cryptocurrency trade. The Top Court's judgement came after hearing several petitions challenging RBI's order in 2018 imposing a ban on financial firms and individual's in India from trading in cryptocurrencies. The order upholds the principle of fairness and equal opportunity and secondly it raises questions on how our regulators understand themselves and their role and the jurisdiction.
To conclude with; Cryptocurrency can now be traded legally in India without any restrictions.
LAWKHART LEGAL -(Adv Raghavendra Mehrotra - Founder Partner)