As the news of Bitcoin prices are rising, this might have left you wondering what Bitcoin is. For the uninitiated, let’s read from scratch to know what it is and if cryptocurrency is the future.
Bitcoin is a type of cryptocurrency, like Ethereum, Ripple, etc. available today. People often ask if crypto is safe to trade.
It is a medium of exchange or a virtual currency that employs the cryptographic protocols which ensure authenticity and safety of transactions.
Bitcoin now as a cryptocurrency works on the blockchain concept.
But, is cryptocurrency illegal? we can understand it by the term that if you want to buy groceries with bitcoin, you won’t be able to do that as it’s not regulated by any authority as the crypto are not taxed.
You can do it through printed currency, as it’s verified and controlled by the Reserve Bank of India, a central authority.
The transactions that made through Bitcoin has done verification by computer clusters.
So, whenever a transaction done through cryptocurrency, the transaction details online will recorded as a “block online” and is then sent to the computer network for verification.
Then the network identifies whether the transaction is valid or not. The verified block is then adding to a chain that’s stored across the internet.
Furthermore, blockchain enables the computer system to distribute the information, but doesn’t allow it to copy.
So, the possibility of that information (which is crypto graphed with maths and called cryptocurrency) being sent twice is decreased to large amounts.
This makes the transactions of cryptocurrency safe and not risky.
Cryptocurrency is still in its inception and mostly misunderstood as it gives rise to numerous myths about Cryptocurrency that are circulated around them.
Here’s the article that focuses on the facts behind myths about Cryptocurrency and blockchain technology.
1. Cryptocurrencies are Illegal Forms of Digital Money
Countries like Algeria, Bolivia, Ecuador, Russia, and Trinidad have banned the cryptocurrency, but the countries like EU nations, G7 nations, and the USA have made it a legal tender. But, is cryptocurrency illegal in India?
The previous Finance Minister of India, Mr. Arun Jaitley highlighted in the Budget of 2018-19 that Blockchain technology will be explored for promoting safe digital transactions.
These cryptocurrency transactions are not ban in India and are flourishing.
2. Cryptocurrency will replace Indian currency
People think that cryptocurrency might replace Indian currency, but it’s not true because the Indian currency is backing up by the sovereign guarantee and is issued by the Reserve Bank of India.
Meanwhile, the cryptocurrency is not issued by any bank. No matter how much popularity it is getting among the investors, there’s no way crypto will replace the dollar or rupee
3. Cryptocurrency is not Taxed
Since there’s no central authority and banks involved in the cryptocurrency, it is easier to say that crypto are not taxed.
But that doesn’t state that digital currency avoids being taxed.
It is just some other transactions, and you will be taxed whenever you sell cryptocurrency or whenever someone pays you in cryptocurrency.
In India, if you trade in cryptocurrencies and gain a profit, when the profit exceeds 10 lakh rupees, you will be required to pay 30% on the profit.
This is done when there are gains for a short-time period to hold the investment.
If it’s a long-term gain where the investment amount will be held for at least 2 years, you will be required to tax the 20% on the profit.
4. It doesn’t have any Real Value
This is the biggest myths about cryptocurrency, that it doesn’t have any real value and crypto is safe to trade; as there’s no material asset that will back it up.
Meanwhile, the people who trade in cryptocurrencies believe in its essential value, that is supporting the digital system since 2008.
As long as there are people who understand and believe in the value of cryptocurrencies, chances are there that it will stay here for a longer time.
5. It is used for Illicit and Criminal Purposes
In 2013, an incident of the Silk Road Raid revealed the use of millions of dollars in Bitcoin for human and drug trafficking. Even after that, cryptocurrency is still regulated.
There are also some criminal cases recorded for the cryptocurrency used to get the money, India has mandatory KYC procedures.
This KYC (Know Your Customer) procedures in place to trade in cryptocurrencies for reducing the change will decrease the chances of unlawful use of this digital currency.
Hence, it can be said that crypto is safe to trade in India.
Also Read: Best Performing cryptocurrencies so far
6. It is Easy to Hack
To use a platform for trading in cryptocurrencies is just like any other platform to trade.
It is required to up the wallet security and allow safe transactions while trading in cryptocurrencies is facilitated.
7. Huge Blockchain Place
People heard the fact that there is only one giant blockchain in place, but there is not. There are so many blockchains.
It is just a technology that leads to several problems that might be a private or public version of blockchain, the source will be closed or open, etc.
Just one type of blockchain might back up the bitcoin, others will support other cryptocurrencies like Ripple, Ethereum, etc.
8. Blockchain is a Ledger
It is important to remember that Blockchain is a cloud-like database. It only keeps records of the transactions.
In its absoluteness, this is the cloud-like database that backs up the cryptocurrencies and ensures that transactions are not repetitive, safe, and are transparent.
It doesn’t store ‘files’. It only contains the code for the transaction to take place.
9. It is not considered as a Payment Option
Cryptocurrencies are not considered as a form of payment. It came in 2008. Steadily and slowly, the investors realize their virtue.
Big companies like Dell, Fiverr, Expedia, and Microsoft have accepted Bitcoin.
Meanwhile, buying the cryptocurrencies is not illegal, it is not recognized as a legal tender in India that means it will not allow the payment option in India.
10. Cryptocurrency Transactions are Anonymous and Untraceable
The blockchain is a public ledger that keeps financial records of everything.
It contains anonymity, but in most of the cases, identifying the users and their details is an easy task. It also contains user anonymity like any other platforms, but it’s not absolute.
11. Blockchains have no Business Use
The fact that India’s previous Finance Minister, Mr. Arun Jaitley stated the requirement for exploring the blockchain for promoting the digital transactions tells a lot about its divinity.
It can also be said that cryptocurrencies might not be the next big thing in the sector of investments.
Japan has legitimated them and has also set up a self-regulatory body.
Blockchains are the perfect cloud+like database that stores the information, keeps them secure, and permanently stores the records and transactions that are easily traceable and not easily hacked.
12. Many Cryptocurrencies are Counterfeit
Not so many cryptocurrencies are counterfeit, but none of them are.
The name “cryptocurrency” comes from the term “cryptography”, a process which makes it impossible for counterfeiting similar digital currencies and Bitcoin.
It eliminates the crime essentially that has been the ban of currency for time immemorial, i.e., counterfeiting.
This ban often tend to think of the fact if cryptocurrency the future.
13. Paid Income can’t be tracked through the IRS
The anonymity myth has given rise to a wholly new genre of the cryptocurrency that if you receive the amount in Bitcoin, the IRS will not be able to track it.
Forbes became the first to report the Operation Hidden Treasure in March.
It was led by the director of the IRS’s Fraud Enforcement division, the program is running by a selected team of the IRS Criminal Investigation professionals who chose their training and background in cryptocurrency.
Their strategies are too complex for describing, but they are not easily deceived by a group of individuals as they crypto are not taxed.
According to Forbes, their leader’s message to those who think their transactions gets anonymous is “we see you”.
14. It is All about Analytical Investing
Another myths about cryptocurrency is more than an analytical investment vehicle and crypto is safe to trade; which occasionally doubles as the exchange medium.
It is not true. According to Blockchain.com, the network of Bitcoin alone settles the transactions of $10 billion every single day.
According to Coindesk, Bitcoin’s daily transactions are of average 305,00p is creeping up towards the volume level reported by Fed wire, the Federal Reserve’s own settlement system of wire transfer.
15. They are Bad for the Environment
This myths is a concern about the impact of cryptocurrency on the environment.
As cryptocurrencies like Bitcoin and others have taken off, so there’s also a number of mining operations worldwide.
The individual mining rigs need a massive amount of computational power, and this, in return, wants a huge amount of electricity.
It tends to think of cryptocurrency, the future. But it’s difficult to replace Bitcoin because the value of it for investors in the upcoming months will increase on a rapid rate.
Summing up the myths about cryptocurrency are also an unexplored avenue in the Indian market.
A little more information in the topic that goes a long way to help the investors whenever they take up the call as they will want to venture into the virtual currency space.