Contents

 Introduction
 Virtual Currency & Digital Currency
 Cryptocurrency
 Impact of Cryptocurrency on Indian
Economy
 Statement of the Problem
 Objective of Study
 Features of Bitcoin
 Legal Status of Cryptocurrency in India
 Conclusion
 Introduction

Cryptocurrencies do not rely on either of these institutions. Instead,

cryptocurrency is decentralized. In other words, it is created, exchanged

and regulated by its users. Cryptocurrencies are digitally mined. Mining

precious metals has been used as a means of giving value to money.

The question of how cryptocurrencies have value is complex, and

reveals that any currency derives its worth from faith in its purchasing

power. All currencies require a system that guards against misuse and

fraud.

Today’s economics are all money economies, because all economies

have accepted certain currencies(money) as medium of exchange. The

money supply causes inflation as well as deflation in economies by its

excess supply and contraction in money supply, hence currencies of

different countries are regulated by government in order to combat

inflation or deflation situations. Now a day’s many countries in the world

are focusing on digital currency and transactions even if some one

doesn’t want to regulate their currency and transactions. This brought

greater innovation in new currency that is crypto currency, One of the

most advanced, ambiguities, regulation free currency.

Cryptocurrency is a digital form of payment that is used to purchase

goods and services. It can also be used as an investment tool, and can

be exchanged for other traditional currencies, like cash. For example,

one of the most popular cryptocurrencies – Bitcoin – can be sold and

then redeemed for cash in the form of USD.

What make cryptocurrency different from the standard currency of a

given country is the way in which it is decentralized, meaning how the

ledger of transactions is recorded openly over a computerized system

for the public to see. Everyone has the ability to see the transactions

taking place, however, there is anonymity to each transaction in the

form of digital wallet keys, which are long numerical and letter

combinations that are not outwardly associated with anyone or

anything.

Ethereum Max is a decentralized Cryptocurrency that gives holders

control of their digital assets without the need for an intermediary. Its

self-sufficient and autonomous DeFi community powers a yield based

token that provides a 6% distribution of every transaction to existing

eMax wallet holders just for owning it.

 Virtual currency & digital currency

Virtual currency is neither issued by the government nor is it regulated

by the government. Virtual currencies can be used for transaction in

apps and games and are issued by the developers. They do not hold

any real value and can only be used digitally, i.e, they cannot be

converted to fiat currency (digital or physical form). Virtual currency and

digital currency is used interchangeably, but the difference in the two is

clear from the mentioned facts.

Virtual currency is a type of unregulated digital currency. It is not issued

or controlled by a central bank. Examples of virtual currencies include

Bitcoin, Litecoin, and XRP. Digital currencies are stored in and

transacted through designated software, applications, and networks in

digital form.

Virtual currencies are typically issued by private issuers and used

among specific virtual communities. The security of the software and

networks that virtual currencies stand on is a critical concern.

The traditional regulated currencies are backed by sovereign debts (fiat

currency) or hard assets such as gold. In contrast, virtual currencies are

not backed with no intrinsic value. The value of a virtual currency is

mainly driven by the sentiment of traders. As a result of its unregulated

nature, a virtual currency can experience extensive price fluctuations.

Digital currency is a broad concept, referring to all the monetary assets

that are in digital form. Virtual currency is a subset of digital currency,

and cryptocurrency is a subset of virtual currency.

Digital currency can be either regulated or unregulated. A regulated

digital currency is issued by a country’s central bank and can be

denominated to a sovereign currency. The regulated type of digital

currency is thus subject to a country’s monetary policy. Digital currency

is nothing but the digital representation of the physical currency of a

country. Digital currency can be used for transactions and all other

utilities that normally would be carried out using physical currency.

They are regulated by the government and can be used through

debit/credit cards or online payments.

Types of virtual currency :-

In terms of legal status, there are two major types of virtual currencies –

centralized and decentralized.

1. Centralized :-

A centralized virtual currency has a central administrator or repository.

The central administrator of a virtual currency is typically the issuer of

that currency. The role is similar to a central bank in a regulated

currency system.

XRP is an example of centralized virtual currency.

2. Decentralized :-

Conversely, a decentralized currency does not have a third-party

central administrator or repository. Instead, a distributed system will

authenticate the transactions of a decentralized virtual currency.

Many decentralized currencies are based on blockchain networks such

as Bitcoin, Litecoin, and Ethereum. A blockchain network links a list of

records, which is known as blocks, with cryptography. When a

transaction is requested, the request is broadcasted in the network

consisting of many computers (nodes).

After the transaction is verified by the network, a permanent and

unchangeable block that contains the transaction information is added

to the existing blockchain. The transaction is completed and recorded

accordingly Compared with a centralized virtual currency system, the

decentralized peerto-peer network avoids a central administrator, and

thus avoids a centralized security failure. Also, due to the absence of

intermediaries, decentralization allows for more transparency between

parties and lower transaction costs.

However, the lack of a central authority leads to regulatory concerns.

Money laundering and other illegal transactions can take advantage of

the decentralized setup.

 Cryptocurrency
Crypto currencies are not regulated by any authorities and are a

decentralized form of currency. They are created using cryptography

which makes it even more secure as double spending can be avoided.

Moreover, there are no intermediaries so they can be directly

transferred to the receiver in their digital wallet.

A cryptocurrency, crypto-currency, or crypto is a collection of binary

data which is designed to work as a medium of exchange. Individual

coin ownership records are stored in a ledger, which is a computerized

database using strong cryptography to secure transaction records, to

control the creation of additional coins, and to verify the transfer of coin

ownership.Cryptocurrencies are generally fiat currencies, as they are

not backed by or convertible into a commodity. Some crypto schemes

use validators to maintain the cryptocurrency. In a proof-of-stake

model, owners put up their tokens as collateral. In return, they get

authority over the token in proportion to the amount they stake.

Generally, these token stakers get additional ownership in the token

over time via network fees, newly minted tokens or other such reward

mechanisms.
Cryptocurrency does not exist in physical form (like paper money) and

is typically not issued by a central authority. Cryptocurrencies typically

use decentralized control as opposed to a central bank digital currency

(CBDC). When a cryptocurrency is minted or created prior to issuance

or issued by a single issuer, it is generally considered centralized.

When implemented with decentralized control, each cryptocurrency

works through distributed ledger technology, typically a blockchain, that

serves as a public financial transaction database.

A cryptocurrency is a tradable digital asset or digital form of money,

built on blockchain technology that only exists online. Cryptocurrencies

use encryption to authenticate and protect transactions, hence their

name. There are currently over a thousand different cryptocurrencies in

the world, and many see them as the key to a fairer future economy.

Definations :- According to Jan Lansky, a cryptocurrency is a

system that meets six conditions:-

The system does not require a central authority; its state is maintained

through distributed consensus.

The system keeps an overview of cryptocurrency units and their

ownership.
Impact of Cryptocurrency on Indian Economy

The impact is of cryptocurrencies on the Indian economy is clearly

depicted as the prices of cryptocurrency market are now falling down.

Indian government has made it clear with their stand of not providing a

legal status for cryptocurrency in India. The reason for this kind of a

decision from government hails from first, the challenge of monitoring

the decentralized transactions in cryptocurrencies are difficult to trace

which could be advantageous for the hackers, criminals and also for

terrorist activities. The second reason being cryptocurrency market

could be a leading competitor for the banking service industry.

Cryptocurrency like Bitcoin has become popular in India like other

nations as the volume of Indian rupee being traded in cryptocurrency

have been at the highest post demonetisation. Researches shows that

the volume generated by the rupee dominated cryptocurrency is the

third largest volume traded after American dollar and yen. The

demonetization policy of 2016 may have encouraged the

implementation of cryptocurrencies amongst a substantial share of the

population but realities rapidly began to come out that have subdued

the growth of the market in the country. In spite of its enormous

population, India only contributes two percent of the whole global

cryptocurrency market capitalization. Cryptocurrencies in Indian context

portrays few limitations. They are as follows:

1. Reliability and security:- Cryptocurrency for its

characteristic of be a digital mode of transaction, it has become a

very common platform for hackers, terror finance, drug transaction,

and money laundering. This has brought tiredness among the

population to a larger extent as it brings lesser security and lack of

reliability.

2. Speculative and risky:- There are various types of

cryptocurrencies available in the market and these cryptocurrencies

functions on the speculative market it creates. Not all the

cryptocurrencies may fetch good returns for a cryptocurrency

investor. The price is purely decided upon the demand supply of the

cryptocurrency. Speculation becomes the key player in case of

pricing cryptocurrency and hence the risk factor comes in.

3. Taxing trouble:- The income Tax rules don’t make it clear on

the taxability of cryptocurrency gains. However the income tax

authorities haven’t ruled out the possibility of taxing the gain out of

cryptocurrencies. If an investor makes a capital gain from the

 investments of cryptocurrencies, it invites tax liability as long term

capital gain or short term capital depending upon the period of

holding the cryptocurrency.

4. Lack of regulatory body:- Indian government is following a

wait and watch policy towards cryptocurrencies; where as other

nations of the world have already responded to the use of

cryptocurrency. There are no regulatory body to look after the

transaction of cryptocurrencies. This has led to increased chances of

fraud, threat to investor protection, monitoring of the movement of

money in the economy. Reserve bank of India along with other

central banks of the world was unable to track the activities of

cryptocurrencies.

5. Price Volatility and KYC Norms:- Cryptocurrency is a

highly volatile market as the pricing strategy depends upon demand

and supplies along with speculation, Hence an investor who signs up

for a cryptocurrency transaction have to go under the KYC norms

which may take some time for the approval by the respective wallets.

This approval time taken could vary from wallet to wallet and may

even take a few days time.

 Statement of the problem
World has transforming in to cash less transactions through innovating

and making transactions by digital money. One of the tremendous

innovation in money that is crypto currency it is digital money, not

regulated by any authority and central bank, universal currency, at the

same time there are some problems associated with this new currency

hence many countries step back from its implementation among those

India is one of the country prohibited using and mining cryptocurrencys.

But as per the order of supreme court now trading through

cryptocurrency is no more illegal in India from That’s why it is an

important need to understand about cryptocurrency trading in India,

how its operates, how it was evolved in India, players who are involving

in this transactions.

Statement of the Problem with Rise of Cryptocurrency For the time

being, the widespread adoption of the new payment method poses

asignificant threat to the market's stability. The problem is that

cryptocurrencies such asBitcoin, Ethereum, Dash, Litecoin, and

Monero, like fiat money, have no intrinsic value(Cuardas-Morato, n.d.).

In this regard, the rapid depreciation of this currency can beattributed to

the lack of a specific foundation that can support the coin's long-

termstability in the market (Papp, 2014). There is yet another issue that

needs to beaddressed in relation to cryptocurrency. The fact is that the

anonymity that characterizesall Bitcoin transactions makes it more

difficult for the government to track down financialflows that could lead

to hyperinflation and other problems.

Not many goods and services are priced in and settled by bitcoin (or

other cryptocurrencies). Bitcoin is not universally accepted as a unit of

account and a means of payment. Granted, many cryptocurrency

payment apps have been created in recent years to promote its use.

But none of them has made it to the core of the world’s daily

transactions and payments , except for some underworld transactions.

Crucially, cryptos are priced in USD (or other fiat currencies). So they

are no different from any item priced in USD standing on the opposite

side of money in a transaction. Veteran bitcoin investor Mark Cuban

summarised it succinctly when he said:

“For cryptocurrency to be money, it (bitcoin) would have to be so easy

to use it’s a no-brainer. It would have to be completely friction-free and

understandable by everybody first. So easy, in fact, that grandma could

do it”.

Objective of study
OBJECTIVE OF THE STUDY The result of this study is aimed to

contribute theoretical and practical implication of BITCOIN (BTC) and

most importantly Cryptocurrency, in today's era. It also aims at drawing

conclusion that whether emergence of CRYPTOCURRENCY as a

whole will be success or failure.

The result of this study is aimed to contribute theoretical and practical

implication of BITCOIN(BTC) and most importantly Cryptocurrency, in

today's era. It also aims at drawing conclusionthat whether emergence

of CRYPTOCURRENCY as a whole will be success or failure. So,the

objectives of this study are:

Objective 1

: Is Bitcoin (BTC) (BTC) the best Cryptocurrency?

Examining the rise of Bitcoin(BTC) and analysis as to whether it is the

best form of currency to use block-chain technology.

Objective 2

: W Providing insights as to what’s next in this Cryptocurrency market

and will other currencies provide better usage

application.Cryptocurrency has been the new talk of the town in the

financial sphere. Bitcoin (BTC), whichis allegedly been the first currency

to use Blockchain technology, has its own shortcomingsand is being

eclipsed by various other such currencies. So, is BTC still the best

Cryptocurrencyand if not, what does the block chain currency market

has in stores for futurehat's next for the Cryptocurrency market.

 Features of cryptocurrency

1. Ease of use and transparency:– Cryptocurrency has

the

characteristics as equities in the financial markets. Because the prices

of cryptocurrencies are also exchanged on the market, humans may be

able to make investments and engage in arbitrage using blockchain

technology.

2. No Human Involvement:- Cryptocurrencies are the best

option for seamless online international transactions. There would

be no need to go through any government organisation while

participating in any international financial transaction because it is a

decentralised digital currency.

3. Speedy transaction:- Cryptocurrency has been proven to be

a fast medium of exchange. It can also perform numerous

transactions at once with no errors. The surge in bitcoin

acceptability has been remarkable, and it continues to rise as the

finest means of transaction in the digital age.

4. Secured transaction:- As bitcoin is based on the

blockchain, one of the most widely recognized benefits is the

prohibition of fee scams, as data is open to everybody, fostering

openness. Each second, all data which is provided is accurate and

updated. Duplicate fraud is less likely as a result of this.

 Legal status of Cryptocurrency in India

In Faridabad (India), there is currently no cryptocurrency regulation. In India,

purchasing Bitcoin is completely legal. In India, there is no law forbidding

Indians from purchasing or trading cryptocurrencies. The Reserve Bank of

India (RBI) issued advice in 2018 prohibiting any company from trading or

facilitating transactions in such virtual money. This was overturned by the

Supreme Court in 2020, which was viewed as a step forward in India’s

adoption of cryptocurrency. This is due to the increasing popularity of

cryptocurrency exchanges in India, which has a monthly trade volume of

around Rs 170 crore. In addition, Indians currently own cryptocurrencies

worth Rs 10,000 crore. Earlier in February 2019, it was recommended that all

private cryptocurrencies should be banned, except stateissued virtual

currencies.

The court found that, while cryptocurrency cannot be considered as legal

tender, it can be handled as currency, and if an intangible asset has the

potential to be used as currency in certain situations, the RBI’s scheme of

powers under the RBI Act, 1934 authorises the RBI to deal with it.

Cryptocurrency is viewed as an asset that is underserved by the banking

system, and it is gaining steam in India despite the government’s repeated

attempts to ban it due to factors such as inherent security, lower transaction

fees, lack of banking system interference, ease of access and use, and

universal recognition.

Following a 300 percent gain in the value of Bitcoin in just one year, many

sorts of investors and traders, including newcomers, have begun to exhibit

interest in Cryptocurrency and its trading methods.

Stakeholders in Faridabad(India) have predicted that the use of Bitcoin will

have a primarily negative influence on the country, but that it may have a

favourable influence on Indian citizens who are reasonable and follow

individualistic consumer patterns. Cryptocurrency is a digital asset, Unlike

traditional currency which is issued by a central bank or administrator and has

the involvement of governments in the regulating and issuance,

cryptocurrency is a decentralized digital currency and is issued without a

central bank or single administrator. The usage of cryptocurrency is

recognized worldwide and individuals use it for peer-to-peer transactions for

services and goods. Cryptocurrency is said to be the safest currency in the

world as it is hard to decipher and can't be counterpart due to the usage of

encryption of the codes which are unique and are hard to crack. The

technology used for enabling and existing cryptocurrency is through

blockchain. The details of cryptocurrency ownership records are stored in a

public ledger existing in the form of a computerized database using strong

cryptography to secure transaction records, control the creation of additional

coins, and verify the transfer of coin ownership. Ownership records of the

individuals are private. Cryptocurrency is recognized on par with traditional

currency and its value is influenced by the demand and supply in the market.

Cryptocurrency isn't physical in nature, and the storage of the units is done

online as a digital currency on the digital wallet platforms or through Offline

wallets also know as cold storages which don't have access to the internet

such as drive, USB, computer devices as a measure for hacking or

cybersecurity issues.
 Conclusion
The cryptocurrency market in India is booming and economically, holds a lot

of promise for the future. The future of cryptocurrency laws in India is

uncertain, but there is hope that the government is not rushing into a decision.

The delay in the introduction of regulations is a possible sign that the

government will not enact an outright ban, but instead move towards a

progressive and accommodating regulatory regime. Such a regime would

bring India in lockstep with the burgeoning global cryptocurrency arena.

Recently, the US Federal Reserve Chair Jerome Powell commented in a

congressional hearing that he did not desire to ban cryptocurrencies.

He also indicated that regulation might be apposite for stable coins. Russian

President recently also indicated that he thinks that cryptocurrency has a right

to exist and that it can serve as a mode of payment. The bank of Russia itself,

however, suggests that investors ought to be warned that there is great

volatility in the crypto market and that domestically, digital currencies are not

allowed as a payment method. Their deputy finance minister Alexei Moiseev,

however, also clarifies that they will not completely ban and prohibit

cryptocurrencies.
India’s rampant expansion in the cryptocurrency market is also aiding a region

encompassing central and Southern Asia and Oceania, to be one of the

leaders in the market growth in the cryptocurrency arena, after the Middle

East and Much of Europe. Sandeep Nailwal, Co-Founder and COO of

Polygon, and Kashif Raza, founder of Bitinning, both believe that the

government will not completely prohibit cryptocurrencies, but bring in sensible

regulations. It is reasonable to assume that India requires regulatory clarity to

usher in more innovation in the crypto space. Any outright ban would have

very drastic consequences for the burgeoning crypto market. It seems likely

that the government will not opt for complete prohibition, but a pragmatic

regulatory framework.
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