Cryptocurrency, a fusion of "crypto" and "currency," is a form of digital money.
"Crypto" signifies secrecy, while "currency" pertains to money. It is shapeless
and cannot be seen. Unlike traditional money, cryptocurrency is not controlled
by banks or governments, offering a unique and decentralized payment system. It
operates outside the bounds of conventional monetary regulations, accessible
globally. Terms like digital coin, virtual money, crypto, coin, virtual
currency, electronic coin, digital token, and blockchain token refer to the same
The technology underpinning cryptocurrency is blockchain, a secure digital
ledger. Using a private key, similar to a password, users can interact with
their cryptocurrency holdings. These keys are stored in digital wallets, and
transactions are recorded on the blockchain.
Cryptocurrency, while digital, holds great value and security. It operates on
complex codes and cryptographic techniques. However, entering the cryptocurrency
realm requires caution and learning. It is not advisable to invest in
cryptocurrency without having deep knowledge of its business.
As an alternative to traditional payment methods, cryptocurrency has the
potential for everyday transactions, surpassing credit cards and cash. To become
widely accepted, it needs increased stability. Mastery of cryptocurrency trading
can lead to rewards, but blind conformity to trends should be avoided.
Cryptocurrency represents a departure from conventional financial systems. Its
value is tied to mathematics and cryptographic principles, making it resistant
to counterfeiting. Prominent examples of cryptocurrencies include Bitcoin and
Cryptocurrency's decentralized structure empowers users, eliminating the need
for central authorities such as banks. Each cryptocurrency operates within its
blockchain, ensuring secure transactions.
Cryptocurrencies are created through mining, a process using powerful computers
to solve complex problems. However, these computers consume a lot of electrical
energy and generate a lot of heat, which may cause environmental pollution.
Miners are people or groups who use their computers, electricity, and space to
find digital coins. They solve complex problems to create new coins or validate
transactions. Miners can also refer to specialized computers made just for this
Bitcoin, the pioneer cryptocurrency, was introduced by Satoshi Nakamoto in 2008.
Its scarcity, with only 21 million available, sets it apart from traditional
Public Key and Private Key
Private keys are essential, akin to personal signatures, providing control over
cryptocurrency holdings. Losing the private key means losing access to the
coins. The private key is paired with the public key, serving as an identifier
within the blockchain. Wallet addresses are linked to public keys. Public key is
like your email address and private key like password. Understanding the
importance of public and private keys is crucial for security. Public keys
identify coins, while private keys enable control. Protecting private keys is
vital, akin to safeguarding passwords.
A cryptocurrency wallet is software that securely stores private and public
keys. It facilitates sending, receiving, and balance monitoring of
cryptocurrencies. Different types of wallets exist, each offering varying levels
of security, including hardware, paper, and online wallets.
Storing cryptocurrency in wallets is safer than exchanges. Wallets can be online
(hot) or offline (cold), based on internet connectivity.
Legal in India
In India, cryptocurrency is legal, but there is no proper regulation for
operation of the cryptocurrency like traditional money. The inception of Bitcoin
marked the beginning of the cryptocurrency era, and it remains distinct from
traditional banking systems. The expansion of cryptocurrencies led to the
creation of alternative coins or altcoins.
Cryptocurrency offers considerable anonymity. Unfortunately, this can be
exploited by criminal elements using cryptocurrency for ulterior motives like
money laundering, terrorism and child crimes, analogous to misuse of
conventional money. Nonetheless, it curbs government tracking of purchases and
preserves personal privacy.
Cryptocurrency offers a means to transact, trade, and invest while evading
government oversight and financial institution tracking. In a globally
destabilized economy, this system can provide stability.
A blockchain is like a digital chain of records called blocks. These blocks are
linked together and kept safe using special codes. Once a block is complete and
has a time stamp, it can't be changed, making it very secure.
Blockchain is the digital system where cryptocurrencies live. It's not
controlled by one group, but by a whole community, which makes it nearly
impossible to change anything without everyone agreeing. It uses blocks of code
to record every single movement or use of a cryptocurrency, creating a complete
Think of a blockchain as a chain made of data blocks. Each block can hold
different information, often transactions. Each block has a unique code that
shows its data. And each block's data includes the code of the block before it.
Cryptocurrency exchanges work like stock brokerage platforms, but they focus on
providing access to various cryptocurrencies. These online services let you buy,
sell, and store different digital currencies in your portfolio.
On these platforms, you can exchange traditional money (fiat) for
cryptocurrencies and also trade between different types of cryptocurrencies.
However, it's not recommended to keep your cryptocurrencies on exchange
platforms due to security risks like hacking. It's safer to transfer your
cryptocurrencies to a personal wallet.
In India, crypto exchanges are popular for buying and selling cryptocurrencies.
They allow you to convert regular fiat currencies into digital assets.
Cryptocurrency is different from fiat money, which derives its value from
government rules. Examples of fiat money include the dollar, yen, rupee, and
Bitcoin, being the first cryptocurrency, has numerous exchanges globally. Bit
Stamp and Coinbase are well-known US-based exchanges, while Bitcoin.de is
established in Europe. If you're interested in trading various digital
currencies, a crypto marketplace is where you can find them all.
In India, several exchanges run by local crypto startups offer trading of
cryptocurrencies like Bitcoin, Ethereum, and Dogecoin. Names like WazirX,
CoinDCX, CoinSwitch Kuber, Unocoin, ZebPay, and BuyUCoin are familiar in this
space. You can create an account on these exchanges without owning any
The registration process with an exchange involves these steps:
Sign up by providing basic details. Activate your account via an email link.
Complete the registration process, which may require more personal information
due to local laws and regulations. This includes your name, address, phone
number, country of residence, and even your date of birth for identity
Investment in Cryptocurrency
Before you invest in cryptocurrency, remember these five important rules:
- Only use money you can afford to lose.
- Keep a small part of your total investments in crypto, maybe 5-10%.
- Use trusted platforms because the crypto industry is not regulated.
- Pick the right coins; out of thousands, many are worthless or scams.
- Most importantly, be ready for the possibility of losing all your money.
In summary, cryptocurrency offers a novel form of digital money, enabled by
blockchain technology. Though it is not illegal in India, it is not regulated.
There is a lot of risk in investment in cryptocurrency. Don't invest in
cryptocurrency without deeply learning the intricacies of its trade and even if
you invest in it, invest a very small amount of your money in hand. It operates
independently of banks and governments, providing security and global
Understanding its intricacies and practicing due diligence are
crucial before venturing into the world of cryptocurrency. Due to its anonymity,
many criminals are using it for money laundering, terrorism activities, tax
evasion and children related crimes etc. Transaction through cryptocurrency can
be done very fast globally.
Written By: Md. Imran Wahab
- Cryptocurrency Investment Strategy, SATO AKIRA
- The Everything Guide to Investing in Cryptocurrency, Ryan Derousseau
- Cryptocurrency for Beginners, Vignessh B
- Cryptocurrency, 50 Expert Secrets for Beginners, Jared Synder
- The Basics of Bitcoins and Blockchains, Antony Lewis
- Cryptocurrency Mining, Devan Hansel
- Blockchain Revolution, Don Tapscott and Alex Tapscott
- Mastering Bitcoin, Andreas M. Antonopoulos
, IPS, IGP, Provisioning, West Bengal
Email: [email protected]
, Ph no: 9836576565