Everything you need to know about Cryptocurrency
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You must’ve heard about Cryptocurrency. How people earned lakhs by investing just some amount of money. But what is ‘Cryptocurrency’? And why are people so excited about it? Should you invest in Cryptocurrency? So, before investing let’s understand what exactly is Cryptocurrency and some facts which will help you in investing.
What is Cryptocurrency?
Cryptocurrency
is ‘Digital’ and ‘Decentralized’ currency so it exists only in electronic form.
We can store it in our computer’s hard drive or the wallet on your internet.
The Central Bank controls the currencies of other countries. The Central Bank
decides how much money should be printed. But Cryptocurrencies don’t have any
regulators. All other Cryptocurrencies other than Bitcoin are known as Alt
Coins. In 2021, as of today, over 9000 Cryptocurrencies are present all over
the world.Who made Cryptocurrency?
Actually no one knows. The credit of inventing Bitcoin and Cryptocurrency goes to a person named ‘Satoshi Nakamoto’ as per published research papers but no one knows if he is a person or an entire group because no one has met him. No one has taken the responsibility for the software of Bitcoin and Cryptocurrency to date. Satoshi had contacted the developers working on this project in April 2011 for the last time and eventually he also removed his name from the software.
For normal currencies, either big countries or their Central Bank
can issue the currency. But in Cryptocurrency, there’s no such process. Any
person can make his Cryptocurrency and people also make currency through memes
such as Dogecoin. Just as there are IPOs for the new companies listed in Stock
Market, similarly there are ICOs, i.e. Initial Coin Offerings for
Cryptocurrencies. Any company can make a new Cryptocurrency and offer it to
investors who can buy this currency with their money. But wherever there’s an
opportunity of making money, there are also scams. Because Cryptocurrency is a
new concept, purely digital, and it is decentralized, so it doesn’t have any
central power or authority. That is why there have been many scams in Cryptocurrency
too. Many companies launch their Cryptocurrencies, make big promises about
returns also raise money through investors by ICOs but after their launch, they
leave the project and also take the money with them. In India, a company named
‘GainBitcoin’ raised money through investors also promised monthly returns of
10% for 18 months. But eventually, it turned out to be a scam of $300 million.
What is the mining of Cryptocurrency?
Just as
Central Banks print currency, similarly there’s the mining of Cryptocurrencies.
Mining maintains the entire system of Cryptocurrency. And through this mining
verifies the transactions happening in Cryptocurrency. For this work of
maintenance, whatever Cryptocurrency you’re mining, they give a small part of
it to you as a reward. For mining, you need a powerful computer. That is why in
today’s world, a lot of electricity is consumed for the process of Bitcoin
mining. Last year, for this process of Bitcoin mining, electricity more than
the entire country of Argentina was consumed! And for the mining of another
currency ‘Ethereum’, electricity more than the entire country of Peru was
consumed! And 75% of the world’s Crypto mining is done in China.Today, people see Crypto from the perspective of investment. But
in many countries, Crypto is also used for daily expenses. For example, in
Venezuela, where inflation has increased up to 3000% there, ranging from Pizza
Hut to Airlines, everyone accepts payment in Bitcoin. And finally, if you’re
earning money from Cryptocurrency then you’ll also have to pay tax for it. In
India, no final regulation or law regarding Cryptocurrency has been
implemented, yet. But if you’re earning money by trading Cryptocurrency, then
you’ll have to pay Capital Gains Tax just like stocks, depending on the time
you hold this Cryptocurrency, you’ll have to pay Short or Long Term Capital
Gains Tax.
Should you invest in crypto?
Cryptocurrencies
are risky, but if you are careful and understand the market, they can also make you
profitable.
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