What Is Cryptocurrency How It Works All Details You Need To Know About Crypto

Cryptocurrency still remains a mystical subject for many keen investors in India. While cryptos are slowly gaining recognition from investors and regulators alike, with countries and leading brands adopting it as an official tender, there are still a sizeable number of people who wish to invest in crypto, but don’t have a sound idea of what it exactly is. Our guide is here to help you get down to the basics: what is a cryptocurrency and how does it work?

What is a blockchain? What is cryptography?

Before we get into cryptocurrency, it is important to understand what a blockchain is. In a nutshell, a blockchain is a distributed public ledger that helps keep a record of all transactions made by holders of currencies.

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Now, we must also understand what is cryptography. It is a process that helps secure data and protects it from unauthorised access, by using different kinds of encryption. Cryptography is the primary reason why cryptocurrencies and crypto transactions are considered to be secure.

What is cryptocurrency?

A cryptocurrency is a digital coin that runs on a blockchain, using cryptography to help secure transactions.

Unlike other currencies which are issued and regulated by a central authority of each country, cryptocurrencies use a decentralised method to keep a score of transactions and mint new coins.

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Cryptocurrencies are essentially borderless. Since it is based on a peer-to-peer system, anyone sitting anywhere in the world can exchange crypto coins with another person as needed.

How is a cryptocurrency created?

If you are exploring cryptocurrencies, chances are you may have heard of cryptocurrency mining. As the name suggests, it is the process of creating new cryptocurrencies into circulation. A highly competitive process, crypto mining uses a proof-of-work method to verify and add new transactions to the blockchain.

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The process of crypto mining is extremely power consuming, as you need to run powerful PCs which need to constantly solve complex mathematical problems to generate coins.

How do you store cryptocurrencies?

You store cryptos in digital wallets. These wallets primarily store your private keys, which you need to access your digital assets.

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There are two kinds of crypto wallets — hot and cold. A hot wallet is connected online, making transactions faster and easier, but is prone to hacks. A cold wallet, on the other hand, is not connected to the Internet and hence is the safest method to store your cryptos.

What is the oldest cryptocurrency?

Arguably the most popular crypto coin in the market, Bitcoin is not only the oldest but also the highest valued crypto. Created in 2008 by an unknown person (or a group of anonymous people) who goes by the pseudonym Satoshi Nakamoto, Bitcoin went into circulation in 2009.

At the time of writing, Bitcoin price stood at $29,571.45, as per CoinMarketCap data. On Indian exchange WazirX, Bitcoin price in India stood at Rs 24.13 lakhs per coin. Bitcoin has a maximum supply cap of 21 million coins, out of which 19.06 million are currently in circulation.

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Apart from Bitcoin, there are several other crypto coins to consider, from Ethereum to Tesla CEO Elon Musk’s favourite Dogecoin.

Where can you buy cryptocurrencies?

Cryptocurrencies can be purchased via individual currency owners who are looking to sell, brokers, and crypto exchanges. Out of these, exchanges offer the safest and easiest way to buy cryptos. There are several exchanges to choose from in India, including the likes of CoinSwitch Kuber, Mudrex, and Unocoin.

How can you use cryptocurrencies?

Once purchased, you can use cryptocurrencies to trade, exchange for cash, or buy goods and services with them.

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If you decide to invest in crypto, keep in mind that the value of crypto coins is extremely volatile. Sometimes, it can grow by leaps and bounds, while at other times, it may lose all its value within a matter of days, as was recently seen in the case of LUNA. 

So, it is advised that investors must research thoroughly and understand the price movement and market trends clearly before deciding to invest in crypto.

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Want to invest in Cryptocurrency? Know the basics about Bitcoin, Ethereum and Cardano

If you are planning to invest in any cryptocurrency in June 2022, then know a little about Bitcoin, Ethereum, Cardano and more.

Have you invested in any cryptocurrency? Ideally, it should be a part of your asset allocation strategy as well as for diversifying risk. However, do not forget that it is one of the riskiest assets to invest in. As can be seen, it is running in huge loses and any entry should be carefully considered and experts should be consulted before doing anything. RBI has so far frowned on anything associated with crypto. So, in case you are planning to invest in any of the cryptocurrencies and are confused about which one you should pick then you can consider this. Before starting, you need to know what a cryptocurrency is. 

Cryptocurrency is a digital currency secured by cryptography and can be used as a form of payment. According to the Reserve Bank of India (RBI), the defining characteristics of cryptocurrencies are- they are decentralized systems where transactions are authenticated by participants themselves by consensus. They are anonymous and borderless that is, they work over the internet without any physical existence. That is where all the risk lies. Also Read: Apple AirPods Pro vs Sony WF-1000XM4 vs Sennheiser Momentum TWS 3: After Review, we pick our WINNER

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RBI further in the month of February 2022 informed that, until 5 years ago, total market capitalisation of all cryptocurrencies was only USD 20 billion (February 2017). This went up to USD 289 billion in February 2020 and thereafter exploded to reach a peak of USD 2.9 trillion in November 2021. As of February 09, 2022 it stands at USD 1.98 trillion. Bitcoin accounts for 42% of this market capitalisation, the top two cryptocurrencies account for 61% while the top five account for 71%. The total number of cryptocurrencies is at 17,436 and the total number of crypto exchanges is 458. Also Read: Apple WWDC 2022: What gifts will iOS 16 bring for the iPhone 12 and iPhone 12 users?

So for those who are interested in cryptocurrencies, here are the top 3 that have been making news for the right, or wrong, reasons recently.

1. Bitcoin: According to RBI, Bitcoin started more than a decade back in 2008. It is said to be the world’s largest and most popular cryptocurrency. Bitcoin reached its all-time high of USD 68,990 per token in November 2021, and has decreased subsequently in the past few months, according to a report by analyticsinsight.net.

2. Ethereum: After Bitcoin, Ethereum is the most popular cryptocurrency and is the second-largest cryptocurrency in the world. In the month of August 2022, developers will be launching Ethereum 2.0. Ethereum 2.0 will transform the proof-of-work protocol into a proof-of-stake protocol.

3. Cardano: Cardano (ADA) is a cryptocurrency which can be seen as a tough competition for Bitcoin and Ethereum. Cardano has increased the number of smart contracts based on its blockchain after updating its network in late 2021. It has also released other features like token creation.

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Cryptocurrency Price: Bitcoin, Ether, Shiba Inu, Solana, Dogecoin Rise Up To 7%

Cryptocurrency price today: Major cryptocurrencies have registered decent gains in last 24 hours, especially after the US Fed meeting last night. Among top 10 crypto assets Bitcoin, Ethereum, Terra, Dogecoin, Solana, Shiba Inu, etc. have logged up to 7 per cent rise in last 24 hours. Crypto assets had tumbled on Wednesday after the surprise RBI’s repo rate and CRR hike.

Among major cryptocurrency in India, Bitcoin price today is 31,66,065, adding 1,00,787 or 3.29 per cent in last 24 hours. Current market capital of Bitcoin is 56.3 trillion whereas current market volume of Bitcoin is 2.5 trillion.

Another crypto major Ethereum price today is quoting 2,35,297 per coin, 9,536 or 4.22 per cent higher from the price it was quoting 24 hours ago. Currently, market capital of Ether is 26.2 trillion and its current trade volume stands at 1.1 trillion.

Solana is selling at 7,480.73, around 504 or 7.23 per cent higher from its selling price it quoted 24 hours ago. Its current market valuation is 2.2 trillion and its current trade volume is 83.4 billion.

Cryptocurrency major Shiba Inu is selling at 0.001731, adding 0.000055 or 3.28 per cent to its price it was quoting 24 hours ago.

Dogecoin price today is 10.95, which is 0.41 or 3.89 per cent higher from its price 24 hours ago. Currently, its market capital is 1.3 trillion and trade volume is 52.2 billion.

Likewise, Terra price today is 7,005.42, around 321.70 or 4.81 per cent higher from its selling price 24 hours ago. Currently, market valuation of Terra is 2.2 trillion and its trade volume is 111.8 billion.

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Government To Soon Finalise If Cryptos Are Goods Or Services To Bring Them Under GST

New Delhi: To provide clarification on taxation on cryptocurrency, the government is working to classify the digital assets under Goods or Services. According to reports, it would make it easier for the government to bring cryptocurrencies under the ambit of Goods And Services Tax (GST). Currently, 18 per cent GST is levied on the entire value of transactions of cryptocurrency by crypto exchanges. It is classified under ‘financial service’.Also Read – CBIC Reminds Taxpayers To File GST Returns For February By Sunday

The report further stated that GST officers are of the view that cryptocurrencies, by nature, are similar to lottery, casinos, betting, gambling, horse racing, which have 28 per cent of GST on the entire value. For gold, a GST of 3 per cent is levied. Also Read – ‘Oregano Toh Free Rahega Na?’ Netizens After AAAR Rules 18% GST on Pizza Toppings

“There is a clarity needed regarding levy of GST on cryptocurrencies, and whether it has to be levied on the entire value, We are seeing whether cryptocurrencies can be classified as goods or services and also removing any doubt on whether it can be called an actionable claim,” an official said. Also Read – GST Council Likely to Increase Lowest Tax Slab to 8% in Next Meeting Later This Month: Report

Another official said that if the GST is levied on the entire transaction of cryptocurrencies, then the rate could be 0.1 to 1 per cent. “Discussions are in a nascent stage on the rate of tax, whether it would be 0.1 per cent or 1 per cent. First, a classification decision will have to be finalised, and the rate will be discussed,” the official told PTI.

The Goods and Services Tax (GST) law does not clearly state the classification of cryptocurrency. In the absence of a law regulating such virtual digital currencies, the classification has to consider whether the legal framework classifies it as an actionable claim.

An actionable claim is a claim that a creditor can make for any type of debt other than a debt secured by a mortgage of immovable property.

Taxation On Cryptos Proposed In Budget 2022

The 2022-23 Budget had clarified the levy of income tax on crypto assets. From April 1, a 30 per cent I-T plus cess and surcharges will be levied on such transactions in the same manner as it treats winnings from horse races or other speculative transactions.

The Budget 2022-23 also proposed a 1 per cent TDS on payments towards virtual currencies beyond ₹ 10,000 in a year and taxation of such gifts in the hands of the recipient. The threshold limit for TDS would be ₹ 50,000 a year for specified persons, including individuals/HUFs who are required to get their accounts audited under the I-T Act.

The provisions related to 1 per cent TDS will come into effect from July 1, 2022, while the gains will be taxed effective April 1.

The government is working on legislation to regulate cryptocurrencies, but no draft has yet been publicly released.

(With inputs from PTI)

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Ed Investigating 7 Cases Of Cryptocurrency Usage In Money Laundering, Attaches Rs 135 Cr

The Enforcement Directorate is investigating seven cases in which cryptocurrency has been used for money laundering and has so far attached proceeds of crime worth Rs 135 crore, Parliament was informed on Monday.

Law enforcement agencies have flagged usage of cryptocurrency by cybercriminals and cases investigated by the ED under the Prevention of Money Laundering Act (PMLA)reveals that the accused have laundered proceeds of crime (PoC) through the virtual currency, Minister of State for Finance Pankaj Chaudhary said in a written reply to the Lok Sabha.

“Directorate of Enforcement (ED) is investigating 07 cases under PMLA, 2002, in which cryptocurrency has been used for Money Laundering,” he said. So far, the ED has attached PoC amounting to Rs 135 crore under the PMLA in these cases, the minister added. To a query on whether the government has identified people involved in such activities in the country, Chaudhary said investigations conducted by the ED so far, revealed that some foreign nationals and their Indian associates have laundered the PoC through cryptocurrency accounts at certain exchange platforms.

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In one of the cases, an accused has been arrested by the ED in 2020 for facilitating the foreign-related accused companies to launder the PoC by converting money generated out of crime into cryptocurrency and thereafter transfer to foreign countries. A prosecution complaint has been filed in this case before the PMLA Special Court.

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What Did RBI Governor And FM Sitharaman Say On Cryptocurrency Today? Read Here

New Delhi: In a press conference today, RBI Governor Shaktikanta Das and Finance Minister Nirmala Sitharaman said that the government and RBI are discussing the cryptocurrency matter internally and there is complete harmony between them. Das also cleared the air around Monetary Policy Committee’s inflation projections. He was addressing a press conference after the central board meeting.Also Read – LIC IPO: What We Know So Far

On cryptocurrency, FM Sitharaman said, “With RBI & Ministry, not just on crypto but on every other thing as well, I think there’s complete harmony with which we’re working, respecting each other’s domain also knowing what we’ve to do with each other’s priorities & in interest of the nation. There’s no turfing here.” Also Read – When Will RBI Launch Digital Rupee And How Will it be Different From Normal Currency? Shaktikanta Das Answers FAQs

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Das added, “Like several other issues, this particular issue is internally under discussion b/w RBI & Govt. Whatever points we have, we discussed with Govt. Beyond that I think I will not like to further elaborate.”

‘Inflation On A Downward Slope’

Since Thursday, various media reports have emerged that have questioned the MPC’s stance to keep the interest rates unchanged and decrease the inflation projection for the next year amidst rising crude oil prices and geopolitical tensions.

The RBI projected an inflation rate of 4.5 per cent for the year 2022-23. The repo rate has been kept unchanged since May 2020 at 4 per cent. On the other hand, the crude oil prices touched $95 per barrel on Monday.

Das, however, was confident about the projections. “As far as India is concerned, if you look at the momentum of inflation right from last October onward, it is on a downward slope. It’s primarily the statistical reasons, the base effect, which has resulted in higher inflation especially in Q3”, he said.

He further stated that RBI has taken inflation into account before calculating the projection. He added, “The same base effect will play in different ways in the coming months. Today’s inflation print is expected to be close to 6%. That should not surprise or create any alarm because we have taken that into consideration.”

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