What is cryptocurrency? How does it work? Is it legal in India? Learn all the basic aspects of What is cryptocurrency? How it’s used and How to buy cryptocurrency in India legally in the year 2021.
A simple definition of cryptocurrency or cryptocurrency meaning: A Cryptocurrency is a virtual currency that is meant to be a medium of exchange, A money which is virtual and is meant for doing transactions, such as sending money or receiving money. But we can’t hold this currency with our hands as it’s virtual and will send money from A to B.
As a normal currency has many types such as INR, Dollar, Pound same way a digital currency or called as a cryptocurrency has many types, Below are quite popular digital currency trending all over the world.
There are almost 4 Famous types of Cryptocurrency used all over the world:
How was cryptocurrency created?
Before we begin with the question lets understand a short process of how a normal currency worked in the old times?
Let’s rewind our clock for many years, At the time of Stone age, there was a Barter system, meaning an If A want’s apples and B want’s oranges, they both will exchange it without any valuation of the product.
But this method had many flaws as they realised that not every-time exchanges work equally, So in 110 BC, an official currency was created and transactions were done using gold coins.
In 160 AD paper currency was created and it was popular worldwide, as of 2021 we use both real cash as well as online transactions.
What is cryptocurrency? and Why cryptocurrency was created?
As mentioned above in the first paragraph it’s just a digital currency with no paperwork or hard cash. Money is been sent from one account to another account. As an example, all our online transactions done via the internet are technically also known as digital currency, But here through a bank we can withdraw the cash and can use it for transactions whereas in cryptocurrencies there’s no bank, no document, no employee to solve your query ( customer support ). Just the sender and the receiver.
As the current process is fine and rather than paying with real cash it’s quite easy to do an online transaction to send money from one place to another.
So Why cryptocurrency was created?
The money that we use is created and well handled by the government of a particular country. And in every country, a particular government handles its currency.
Now here there are chances that your money can easily be modified if the government wants.
But it’s not same with cryptocurrency the real purpose why cryptocurrency was created was that no one in the world should control the money and it should be equal for everyone.
No bank, employee, politician, president or anyone should have no access to anyone’s money no matter what the reason is. This is one of the strong reason why cryptocurrency was created.
Now as we’ve written above that there are no officials in this process, so what if I met with fraud, or my money is hacked? How can I deal with this?
Learn How the Cryptocurrency works? Or the mining process of bitcoin
Suppose there are 1000 users of bitcoin in a network, As you being user Suppose character A wants to transfer bitcoins to B, Now while this process is done, There are some users who verify the total amount of transaction which is done by both the parties that are 1 bitcoin in this scenario. So once the verification is done “they” approve it.
Now in the above para I’ve written they, here the word they refers to miners, Mining a cryptocurrency is a huge process so let’s understand it in short.
Suppose there is a transaction of 10 bitcoin from A to B, Now the work of a miner is to verify and approve the transaction with a particular set of protocols. Here the mining is fully anonymous and you won’t know who is mining your transaction data.
Let’s understand it more clearly, Suppose a new transaction is in place there will be a lot of miners who want to mine this data. Now mining will have a puzzle to solve if you solve the puzzle you have successfully mined the bitcoin. Remember more the miners available harder the puzzle will be so the average time of generating a new puzzle as well as new bitcoin is 10 minutes.
Once the data is mined, the user will send it to the network and it will be verified by other miners once it’s done it will be added to the blockchain list. Remember a new block contains almost up to 2500 transaction data.
What will miners get if they mine a bitcoin successfully?
The fixed average ratio they get of mining the data is 12.5 % of the transaction. This percentage falls every year. More the transaction value more money the miners make. But the mining process is not that easy as of now. Mining a bitcoin takes a lot of power and high-performance components so that the mining process can be quick.
What are the power components required to mine a bitcoin quickly?
This is the most important part of the mining game, Previously in the year a normal laptop or a computer was quite sufficient to mine a bitcoin as there were fewer miners and it didn’t take any time. Then afterwards as the boom of bitcoin increased in 2016 users started to use GPU (Graphics processing unit) Which was 30 times more efficient than a normal CPU.
Now in 2020 and 2021 ASIC miners are used which are more powerful than a GPU and are only made for mining bitcoin.
So after all this process, a new bitcoin is mined, The mining limit for bitcoins is 21 million and after that, there won’t be any new bitcoins in the system. Yes, they can be added only if certain conditions are met. Till now 18.5 million bitcoins have been successfully mined.
So this was a quick intro to mining process if you wan’t to dig deep you can learn it from 99Bitcoins.
What is the Status of Cryptocurrency in India in 2021?
In India, the cryptocurrency trend was a bit active in the year 2012 – 2016 but in 2017 – 2018 it saw a huge rise in cryptocurrency investment. Probably there was a restaurant in India (Bengaluru) who is accepting bitcoins in India. There are many online sites in India who are accepting transaction is bitcoin.
Is cryptocurrency legal in India?
In April 2018 the government of India banned bitcoin, In 2019 Also a notice was served to banks by RBI that no payment must be approved from bank accounts or an e-wallet to make any transactions. In 2019 a bill was passed to ban digital currency and all its operations in India
However, in 2020 a request was passed by many users to reconsider the bill and to start investing in bitcoins. It was expected that in 2021 budget there will be some changes in the bill allowing users to freely accept transactions and payment via bitcoin but there was no such confirmation in the budget.
However, there was some news that the Indian government may introduce an Indian digital currency that will be same as bitcoin but will be taxed by the Indian Government.
Which are the best crypto exchange in India?
Remember, before investing your money in these company read the terms and condition as well as consider the transaction fees. Also, read reviews in quora about the above five companies and then choose a platform to invest money in Digital currency in India. An article from Gizbot will explain to you in short about the above 5 bitcoin transaction process.
Can we buy a cryptocurrency in India in 2021?
Yes, you can buy as well as sell cryptocurrency in India via the above famous bitcoin exchange platforms written above. You need to do the KYC and you need to submit your Pan card details to them so that they can verify your identity.
It is purely safe and legal as of now, but remember the government clearly states that any fatal error occurs during transacting in bitcoin or you’ve been duped by a company as a fraud.
The bank, e-wallet company nor the government of India will be responsible for all the problems faced.
So it totally depends upon you either to transact or wait for an Indian cryptocurrency which is managed and handled by the Indian Government.
So That was all on What is cryptocurrency? How does it work? How the mining process works? Is it legal to buy Bitcoins in India? Which are the best crypto exchange in India?
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