Cryptocurrency As Legal Currency

Hello Steem Alliance Community

Today is a new day and here comes a new informative cryptocurrency post . There is a lot to discuss today so just let's dive in now .

Today we will discuss about working of cryptocurrency, blockchain technology, new market examples of cryptocurrency(BCH , XRP , LTC , BTC , ETH) , legal status of cryptocurrencies in different countries and digital currencies of India.

Introduction

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Cryptocurrencies are a digital currencies that uses cryptanalytics for security.It is a decentralized currency, meaning it is not controlled by any government or entity.

Some of the cryptocurrencies include

-Bitcoin
-Ethereum
-Litecoin

Working Of Cryptocurrency

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All the transactions that are made with cryptocurrencies digitally , are recorded in a public ledger is called blockchain. This public ledger is regulated by a network of computers all over around the world .

Each and every transaction is checked and added to the blockchain by these systems. This dispersion and use of cryptanalytics makes it hard for anyone to easily exploit the currencies or the recorded transaction data .

For if anyone wants to use cryptocurrencies, they must firstly have a digital wallet . Digital wallet is basically a virtual software that stores private and public keys .

These keys are used to send and receive cryptocurrencies and to record transactions on the blockchain. It is also used to verify information. Users can obtain cryptocurrencies through a process called "mining" which involves using a computer's ability to solve complex mathematical equations, which validates and records transactions on the blockchain in exchange for a certain amount of cryptocurrency.

What is Blockchain Technology?

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Blockchain Terminology states that blockchain is a deconcentrated , virtual ledger that stores all the transactions across the network of computers.
There are many block in the blockchain and each one contains of multiple transactions. Every time a new transaction is made , then it is verified and listed immediately to the ledger of participant.

The decentralized nature of the technology ensures that no single entity can alter or delete previous transactions, providing a high level of security and transparency. Blockchain is the foundation of cryptocurrencies such as Bitcoin, but it has many potential uses beyond digital currencies.

Some examples of cryptocurrencies

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Bitcoin (BTC):

It is the first and most well-known cryptocurrency, created in the year 2009. Satoshi Nakamoto had a group of unknown people who invented bitcoin and released it as open-source software .

There are no single administrators in Bitcoin , and the currencies are sent digitally by users from colleague to colleague with any mediators .

Ethereum (ETH):

Ethereum is a segregated, public blockchain technology that offers a free space for development of productive contracts and decentralized applications (dApps). It's cryptocurrency Ether works as a mode of payment of transaction fees on ETH network. Its built-in programming language allows developers to create and destroy their own applications on ETH network.

Litecoin (LTC) :

It is inspired by and almost identical to bitcoin (btc), but takes less time to confirm transactions and with a different hashing algorithm. It is designed to process small transactions faster and more efficiently than bitcoin. Ripple (XRP):

Ripple (XRP):

It is a cryptocurrency asset made to fasten and cheapen the transfer of money internationally
It is based on the Ripple protocol It is built on Cryptocurrency, a decentralized open-source protocol to facilitate cross-border payments.

Bitcoin Cash (BCH):

Bitcoin Cash (BCH) is a cryptocurrency created from bitcoin(1mb) in 2017.
Has a 8mb size limit more than bitcoin which is why many call it to be a "pure" version of Bitcoin.

What is the legal status of cryptocurrencies?

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In India:

The legal status of cryptocurrencies in India is in a process of constant change.The Reserve Bank of India (RBI) has issued several warnings against the use of cryptocurrencies, stating that they pose risks to investors and are not legal tender.

In 2018, the Supreme Court struck down a RBI circular that prohibited financial institutions from trading in digital or cryptocurrencies. In the year 2022, the Government of India mentioned in the Union Budget 2022-23 that states - Transfer of any virtual currency/cryptocurrency asset will be subject to 30% tax deduction.

Legal Currency

The government has also set up a panel to explore the possible use of blockchain technology and the possibility of issuing Central Bank .
Digital Currency (CBDC)Currently El Salvador and the Central African Republic (CAR) are the only two countries in the world where Bitcoin serves as a legal currency. However, countries around the world have taken steps for the regulation of certain cryptocurrencies like bitcoin.

Some countries such as Japan and South Korea have issued regulations for cryptocurrency exchanges. Countries such as Germany and Switzerland have recognized Bitcoin as a "legal means of payment". Other countries such as China and Russia have taken a more cautious approach and have banned the use of cryptocurrencies.

What is India's Central Bank Digital Currency?

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The Central Bank Digital Currency (CBDC) pilot launched by the RBI in the retail segment has components based on blockchain technology.CBDC is a digital form of paper currency .

It is similar to fiat currency and is one-to-one interchangeable with fiat currency. Digital currency refers to the digital version of the Indian rupee, also known as digital rupee or e-rupee.

ChallengesVolatility:

Cryptocurrency prices are highly volatile making it difficult for businesses to accept it as payment.

Regulation:

There is a lack of clear regulation of cryptocurrency making it difficult for businesses and individuals to know how to use it legally.

Conclusion

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Cryptocurrencies are considered as safe and secured platform by some countries whereas some don't find it worthy enough to be considered as legal currency. Also some are struggling to decide yet . Cryptocurrencies these days is expanding and many new currencies are in light.

Cryptocurrencies are an open-source software, henceforth they are open to everyone. One must contain right knowledge and approach towards it if comfortable.

Thankyou

India, 15.05.2024
@moyeon