A cryptocurrency is a medium of exchange such as the rupee or the US doller but is digital in format and uses encryption to both control of moneytary units and to verify the
exchange of money .Bitcoin is considered to be the world best known cryptocurrency and is the largest in the world according to market capitalisation followed by ethereum.
A.Blockchain:-
Satoshi nakamoto -the person (or a group of people)who is said to have conceptualised an accounting system in the aftermath of the 2008 financial crisis-had
mooted an idea where the transations and the value of money would be recorded digitally on a publicly available and open ledger that contains all the transations ever made,
albeit in an anoymous and encrypted form.This ledger is called the blockchain.Bitcoin and the thousands of cryptocurrencies are essentially codes recorded on a blockchain
that gets longer and longer as more people use them.There have been voices calling for stablecoins as an alternative to volatile cryptocurrencies.
B.Stablecoins:-
Stablecoins are digital currencies that are backed by a fiat currency such as the US doller thus giving it an intrinsic value.From an investor point of view,
stablecoins become easier to understand considering the underlying reserve asset.There is also a case being made by sovereign government for stablecoins such as tether,
USD coins and diem given that it could increase the reach of their fiat currencies in the digital ecosystem.
How are cryptocurrencies bought ?
There are two ways .First is to buy it from someone and the second is to mine new crypto coins.Buying it from someone usually happens in two ways –an exchange facilitated
transaction or a peer to peer transaction.For indians ,the simplest way to invest or trade in cryptocurrencies has been through one of the many exchanges and trading platforms
operating in india.These include WazierX,CoinDCX,coinSwitch Kuber,Zebpay,Bitbns,Giottus, etc.To be able to trade or invest in cryptocurrencies using INR,users need to
register on one of the exchanges by completing a KYC process.Then a user buying crypto for the first time will need to load INR money in the wallet of their cryptocurrency
exchange.The cryptocurrency wallet is identified by a unique address represented by a randomly generated combination of numbers and letters.There are two ways to load
money into a cryptocurrency wallet -through net banking or through an e-wallet.Here ‘s where first entry barrier arises.Depsite the superme court order that quashed the
RBI directive prohibiting banks from allowing their systems to be used for virtual currency transactions,several large banks do not offer their financial infrastructure for
investment or trade in crypto.Among the e-wallet that operate in the country ,only MobiKwik is supported on platforms such as WazierX and CoinDCX.Once the transation is
through the purchased cryptocurrency holding is reflected in the exchange wallet.
Frequently Asked Question
What is the cryptocurrency and how it works?
Cryptocurrency (or “crypto”) is a digital currency, such as Bitcoin, that is used as an alternative payment method or speculative investment. Cryptocurrencies get their name from the cryptographic techniques that let people spend them securely without the need for a central government or bank.
CONCLUSION
A cryptocurrency is a medium of exchange such as the rupee or the US doller but is digital in format and uses encryption to both control of moneytary units and to verify the
exchange of money .Bitcoin is considered to be the world best known cryptocurrency and is the largest in the world according to market capitalisation followed by ethereum.