Crypto Currency – A Modern Medium Of Exchange

By Abhishek Sharma
Semester – VIII, B.A. LLB
Dogra Law College
A crypto currency is a digital or virtual currency designed to work as a medium of exchange. It
uses cryptography to secure and verify transactions, as well as to control the creation of new
units of a particular crypto currency. They have no intrinsic value, no physical form and are
independent & decentralized.
Cryptocurrency received its name because it uses encryption to verify transactions. This means
that advanced coding is involved in storing and transmitting cryptocurrency data between wallets
and to public ledgers. The aim of encryption is to provide security and safety.

Bitcoin was the first crypto currency which was founded in 2009 and remains the best known
today. Aside from Bitcoin, there are hundreds of other digital currencies out there known as
"altcoins" or alternatives to Bitcoin. Ripple, Doge Coin, Dash, Ethereum, Maker, Stellar, IOTA,
XRP are some of the famous altcoins of the market.

The Technology Behind Successful Crypto currencies:

 Blockchain - As its name indicates, blockchain is essentially a set of connected blocks or

an online ledger. It is a Peer–to–Peer technology that records all transactions on a large
computer network, and is not controlled by a central authority.
 Encryption & Anonymity – Anonymity and transaction security are of the two main
feature of many crypto currencies.

How Does Cryptocurrency Work?

Cryptocurrencies are not controlled by the government or central regulatory authorities. As a concept,
crypto currency works outside of the banking system using different brands or types of coins – Bitcoin
being the major player.

1. Mining

Cryptocurrencies are generated through a process called “mining”. This is a complex process. Basically,
miners are required to solve certain mathematical puzzles over specially equipped computer systems to be
rewarded with bitcoins in exchange.

2. Buying, selling, and storing

You can buy cryptocurrencies from central exchanges, brokers, and individual currency owners or sell it
to them. Exchanges or platforms like Wazirx, CoinDCX are the easiest ways to buy or sell
cryptocurrencies.

3. Transacting or investing
Cryptocurrencies can be easily transferred from one digital wallet to another, using only a smartphone.
On the other hand one can also use them to buy goods or service or trade in them.

Is crypto legal?

Traditionally crypto currencies are independent currencies, which mean that governments have
no direct control in their supply and demand, distribution or security. Focusing on the position in
India technically, there is neither a ban on the use of cryptocurrencies (or crypto assets) in
India, nor a regulation that govern their actual usage. In the Budget session, the Indian Finance
Minister’s recently decided to tax digital assets like cryptocurrencies and non-fungible tokens
(NFT), a 30-percent tax on transfer of such assets as well as a 1-percent tax deduction at
source (TDS) on every transaction.

Advantages and Disadvantages of Cryptocurrency:

There are many advantages and disadvantages in respect of Crypto.

Advantages:

1. They are private and secure: The blockchain technology ensures user anonymity and assures
high levels of security through cryptography.
2. They are decentralized, Independent, and transparent
3. High Profits: Investments can generate high profits. As of May 2022, Bitcoin was valued
at more than $550 billion in crypto markets.

Disadvantages:

1. Newbie in the market: Being a new concept people restrict themselves while investing in
crypto’s.
2. They are prone to high risks: Their highly volatile and speculative nature makes them prone to
sharp downward spirals. Investing in cryptocurrency can be risky for many reasons.
3. Legality: At present 40% counties of the world has made crypto legal and in almost 60% of the
countries cryptocurrencies are banned or their usage restricted in a lot of countries plays out as a
significant risk. India is also one of the country which has take taken Neutral stand on Cryptos.
4. Scalability is a problem: Blockchain is a great technology but is still has some issues when it
comes to transaction speed.

Conclusion:

Thus we can conclude by saying that Crypto Currencies could be the Future medium of exhange. It
would become safer over time and we will be able to use it in our Daily transactions and many other
activities throughout our daily lives.