Cryptocurrency isn’t fringe anymore—it’s a multi-trillion-dollar industry reshaping economies. This deep dive explores its inner workings and India’s regulatory tightrope.
Fundamentally, crypto is software money. Blockchain underpins it: a chronological record of transactions in encrypted blocks, linked cryptographically. Consensus algorithms like PoW (Bitcoin) or PoS (Ethereum 2.0) secure the network.
Transactions flow thus: Sender signs with private key, public key verifies. Pools of txs form mempools; miners prioritize high-fee ones into blocks. Once 6 confirmations hit (Bitcoin), it’s final.
Ecosystems burgeon: DeFi lends without banks, DAOs govern collectively, NFTs tokenize ownership.
Practical entry: KYC on exchanges, fund via bank, secure in wallets like Ledger. Bridges enable cross-chain moves.
Volatility stems from speculation, halvings, ETF approvals. Geopolitics sways too—think El Salvador’s Bitcoin bet.
India-specific: Legal since 2020 verdict, but taxed harshly. 30% gains tax, 1% TDS >₹10k/50k thresholds, annual reporting mandatory. Losses don’t carry forward.
PMLA ropes in VDAs; 29 exchanges registered with FIU by mid-2024. Draft bill eyes 18% GST on ops, privacy safeguards.
CBDC e-rupee tests programmable money, offline viability. Crypto remittances could slash India’s $100B outflow.
With 100M+ users projected, education is vital. Use regulated platforms, DYOR, avoid FOMO.
Crypto’s classroom lesson: Innovation meets caution. India’s rules evolve—adapt to thrive.