1. Cryptocurrency
A Bane or a Boon?
If you're wondering whether to invest in cryptocurrencies or not, you're not
alone. Let's explore the world of digital assets and see the advantages
and disadvantages of using them.
by Suryansh Upadhyay
2. What is Cryptocurrency?
Decentralization
Cryptocurrencies are decentralized digital
assets that use encryption for security.
Blockchains
Blockchains are distributed ledgers that
record all transactions.
Cryptography
Cryptography ensures secure
communication of information between
parties.
Limitations
Cryptocurrencies have few tangible use
cases and cannot yet be widely used in
day-to-day transactions.
o A digital currency in which transactions are verified and records maintained by
a decentralized system using cryptography, rather than by a centralized authority.
3. Advantages of Cryptocurrency
1 Transparency
Blockchains are transparent, and each transaction can be traced back to the source.
2 No Middlemen
Cryptocurrencies eliminate the need for intermediaries like banks.
3 Global Access
Cryptocurrencies are borderless and can be accessed from anywhere in the world.
4. Disadvantages of Cryptocurrency
Volatility and
Speculative
Nature
The value of
cryptocurrencies can
be highly volatile,
leading to potential
financial risks for
investors.
Lack of Regulation
and Security
As cryptocurrencies
are not regulated by
centralized authorities,
security vulnerabilities
and risks of fraud can
arise.
Potential for Illegal
Activities
Cryptocurrencies have
been used for money
laundering and
financing illegal
activities due to their
pseudonymous nature.
5. Impact of Cryptocurrency on
Traditional Financial System
1 Competition
Cryptocurrencies
introduce competition
to traditional financial
systems.
2 Disruption
Cryptocurrencies can
disrupt the banking
industry and force it to
innovate.
3 Regulations
Many governments
are struggling to
regulate
cryptocurrencies, and
the lack of regulation
can pose a threat to
the traditional financial
system.
6. Regulations and Legal Issues
Legal Status
Cryptocurrency is not yet
recognized as legal tender in
many countries, and
regulations vary widely
across jurisdictions.
Regulatory Challenges
Regulating cryptocurrency
presents a unique challenge
due to its decentralized
nature and the lack of a
central authority.
Cybersecurity Threats
Cryptocurrency is vulnerable
to hacking, theft, and other
cyber attacks, which have
resulted in significant losses
for individuals and
businesses.
7. Security Risks Associated with
Cryptocurrency
Phishing Scams
Scammers can trick people
into giving away their
private keys.
Exchange Risks
Exchanges can be hacked,
and funds can be lost.
Smart Contract
Vulnerabilities
Smart contracts can be
vulnerable to exploitation by
hackers.
8. Government Regulations on
Cryptocurrency
1 Asia-Pacific
Many countries, including China
and South Korea, have banned
cryptocurrency exchanges.
2
Europe
The EU has introduced regulations
to combat money laundering and
terrorist financing. 3 North America
The US has classified
cryptocurrencies as commodities
and requires that they be treated as
such for tax purposes.
9. India’s Government's Stance on
Cryptocurrency
1 2013 - 2017
The Reserve Bank of India (RBI)
issued warnings about the risks
associated with cryptocurrencies.
2
2018
RBI barred banks from dealing with
individuals or businesses involved in
cryptocurrency transactions. 3 2020
The Supreme Court lifted the ban on
cryptocurrency trading, allowing it to
flourish.
10. Impact of the Ban on the Crypto Market in
India
Market Turmoil
The ban caused initial market
turmoil, leading to a decline in
cryptocurrency trading
volumes.
Job Losses
Closure of crypto-related
businesses resulted in job
losses within the industry.
Shift in Investments
Investors turned to alternative
financial instruments and
international cryptocurrency
exchanges.
11. Is Cryptocurrency a Bane or a Boon?
1 The Boon Perspective
Cryptocurrency promises financial freedom, innovation, and
inclusivity, disrupting traditional financial systems.
2 The Bane Perspective
Cryptocurrency is associated with illegal activities, market
manipulation, and a threat to financial stability and privacy.
3 The Complexity
The question of whether cryptocurrency is a bane or a boon doesn't have a
definitive answer. It ultimately depends on individual circumstances,
perspectives, and the evolution of the crypto ecosystem.
The reality lies somewhere in between, as cryptocurrency presents opportunities
and challenges that require careful consideration and regulation.
