Current financial system exacerbates wealth inequality. In grasp of highly centralised authorities and individuals, access to financial services, credit and investment opportunities are not evenly distributed which leads to wealth gaps between rich and poor. Often on higher levels to certain countries with high resources control the flow of money according to their convenience raising challenges for underdeveloped and developing countries. There is also lack of transparency, leading to fraudulent activities and market manipulation.
In response for such problems a new form virtual or digital of currency has been developed, termed as cryptocurrency.
What is a cryptocurrency and how does it work?
Cryptocurrency is a virtual currency which does not have any form in real world like dollar or rupee. It rather operates on a decentralised network such as blockchain which is protected by cryptography for security. A ledger system, such as blockchain, tracks all transactions across a network of computers that ensures transparency and security.
Unlike traditional currencies which are printed and controlled by government, cryptocurrency is mined over a network of secured systems by solving complex problems giving any individual to mine them.
Advantages of cryptocurrencies over traditional money
In modern financial system, government run institutions control the currencies. Unlike this, cryptocurrencies operate in a decentralised manner, which provides it assurance against manipulation by individuals, and transactions can occur directly between users without the need for intermediaries.
Currently, cryptocurrencies also offer lower transaction fee and accessibility to all. Blockchain also provide immutable ledger of every transaction which can be viewed by anyone with internet access assuring transparency for any user.
India’s stance and future of crypto
As of now regulations and environment for use of cryptocurrency use varies from county to country. Currently Indian government has banned any tractions via any form of cryptocurrency due to its volatile market and security concerns against cybersecurity threats. Although a 30% tax is imposed over any financial gain by investment and trading of currencies like bitcoin and others.
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