A cryptocurrency is a virtual or digital currency which is designed to act as a mode of exchange wherein ownership records pertaining to individual coin are kept in a digital database.


The ledger is maintained using cryptography so as to secure the transactions, to validate the transfer of coin ownership and put a check over creation of extra coins. It makes it impossible to counterfeit. Once a cryptocurrency is created or minted it remains in centralized form unless it is further issued. As and when it is implemented with decentralized control, every cryptocurrency has to go through a chain of distributed ledger technology which in most of the cryptocurrencies is Blockchain which act as a public financial transaction database.

How cryptocurrency differs from paper money ?

  • It doesn’t exist in physical form.
  • It is not issued by any central authority.
  • It uses decentralized control.
  • It’s use theoretically immune to government manipulation or interference.

The first cryptocurrency based on block chain was Bitcoin which is still the most popular and the most valuable. Its value have risen over past years steeply and underwent high ups and downs since its creation in the year 2009. Initially there was no such volume in using it as a currency. In July 2010 its first real price increase occurred when the per bitcoin valuation went from $0.0008 to $0.08 and it was the first rally. The value of single bitcoin has gone to the maximum of $19,497 in December 2017. If anyone has invested 10,000 INR prior to July 2010, it valuation would be 25,000 Crore in December 2017 (Ignoring the translation effect of Dollar and Rupee). It crashes after reaching the peak to $3200 approximately in December,2018 and is currently having valuation of $11,515 per bitcoin.

Advantages of Cryptocurrency :

  • Transactions : It is more easier to use it as compared to traditional options. Moreover, it eliminates any third party like Banks and their associated cost as well.
  • Asset Transfers : Many financial analyst believes that the scope of block chain technology in cryptocurrency is not limited and it can be used as large property rights database which can on level be used in transferring of asset like automobile or real estate.
  • More Confidential Transaction : Each transaction between two parties are unique exchange which has to be agreed every time and may be negotiated.
  • Individual Ownership : One having cryptocurrency is the sole owner of the corresponding public key and private key which makes it more secure.
  • Protection Against Inflation : Inflation has diluted the value of many currencies. Most of the cryptocurrencies are launched with pre defined amount i.e. the quantum of coins are fixed through the source code. For example there are total 21 million bitcoins launched in the world and this number will be intact. What will vary is the price per bitcoin which will be controlled by the demand. With increase in demand, it’s value will increase and thus preventing from inflation in long run. 

Disadvantages of Cryptocurrency :

  • Illegal Transactions : The transactions of cryptocurrency are very secured which makes it tougher for the government to track the users on the basis of their wallet address. Bitcoin is seen in past involved in modes of illegal transactions like purchase of drugs in dark web etc.
  • No Refund or Cancellation : If some one by mistake send funds to wrong parties or there is a dispute among the parties involved, the same cannot be cancelled or retrieved back by the sender.
  • Financial Losses : If any user forgot it’s wallet private key, he won’t be able to get it back and his coin balance will remain in his wallet which will result in financial loss to the user.
  • Adverse Effect on the Environment : The mining of cryptocurrencies involves the use of lot of electricity input and computational power. It requires lot of power and cannot be performed in normal computers. Major mining of bitcoins is done in countries like China which uses coal for production of electricity and increasing the carbon footprint.


The market price of cryptocurrencies depends on the demand and supply which makes it highly volatile because many cryptocurrencies are designed in a way to ensure scarcity. The block chain technology in it is highly secured but the other aspects in its ecosystem like wallets or exchanges are prone to threat of hacking. It is praised for it’s divisibility, portability, transparency and inflation resistance.

Are Cryptocurrencies Legal in India ?

On March 2020, the Supreme Court has ruled that the RBI circular which prohibits banks on providing crypto businesses is unconstitutional. Now the government is thinking to introduce a law which will ban the cryptocurrencies. The government is of the view that the legal framework will be more effective compared to a circular issued by RBI. Contrary it is also heard that government is asking to develop the software to regulate it as the blanket ban is useless. After the RBI ban the peer to peer approach of lending has become the solution for buying and selling it.

Some commonly used Cryptocurrencies :

  • Bitcoin
  • Ethereum
  • Ripple
  • Litecoin
  • Tether
  • Libra
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