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  • Writer's pictureAnushka Trivedi

Crypto is not a technology, It's a story!

History of Cryptocurrency

The history of Cryptocurrency is not similar to the industry. It feels like a founder's story with magical success. It had all started in 1995 with an American cryptographer named David Chaum when he implemented Digicash through ecash. Digicash used to require software to withdraw cash from banks while assigning a specific encrypted key before it can be sent to the recipient of currency.

The software technology made it nearly impossible to trace data from third parties, such as issuing banks and the country's government.

Nicholas Szabo
Nicholas Szabo

In simple words, users have to enter encrypted passwords to withdraw cash from banks. In 1998, Nicholas Szabo, a computer scientist, legal scholar, and cryptographer, designed a mechanism for decentralized digital currency and called it bit gold. But it has never been implemented as a cryptocurrency.

In 2009, a pseudonymous people or group named Satoshi Namakoto released a proposal for Bitcoin, and that is how Cryptocurrency started its journey.

In 2009, its market value was $0, while in April 2022, its more than $40,000.

El Salvador was the first country to accept Cryptocurrency as a legal tender.

How is the world treating Cryptocurrencies?

Recently, the Indian government regulated the Cryptocurrency in the country and imposed a flat 30% of income arising due to the transfer of Cryptocurrency from one person to another without setting off and carrying forward. No deductions, exemptions, and deductible business expenses are allowed in trading or investing Cryptocurrency. In India, cryptocurrencies are treated like speculation. While in other countries like El Salvador, they can be issued as legal tender and medium of exchange.

The world is promoting the brilliant technology behind cryptocurrencies, blockchain. The ecosystem enables the user to transfer their money in the overseas market without third-party intervention, which might be the primary reason for regulation rather than the promotion of cryptocurrencies by the governments.

However, blockchain technology opens up opportunities to enhance productivity within organizations like logistic management, customer data management, and ensuring clients' privacy. However, NFT is a product of blockchain technology, which is drastically promoting art worldwide.

Apart from many regulations in Cryptocurrency, we can see an unpreceded increase in adoption of the investment or speculation products. There were 10 crore traders in India trading in cryptocurrency markets during the pandemic.

Legal or Regulated?

We should not get confused between regulating an investment asset and legalizing such. In India, cryptocurrencies are regulated by the central government by taking taxes on the income arising from such. Still, you cannot register any complaint regarding cryptocurrency fraud as they are not legal in India.

Why do we call it speculation?

The absence of underlying assets could be a prominent reason for calling it speculation.

Let's understand with the comparison with the stock market;

When we invest in equity shares, there is a company with some objectives, vision, and mission to achieve. The company has some assets and liabilities on its balance sheet, as seen in the annual reports. There are some regulatory bodies to protect the interest of shareholders and other stakeholders.

On the contrary, there is an underlying project for which a cryptocurrency is minted. But also, blockchain technology allows the issuer to maintain anonymity. In the case of default, there is no advantage of "lifting or piercing of corporate veil", in which the promotors of the company can be sued in specific cases of fraud.

The true identity of Satoshi Namakoto is unknown till now.

That is how the story of Cryptocurrency is going on.

The moral of the story is to be decided for yourself whether you should trust the process and invest your hard-earned money to stay focused on the existing financial securities market.

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