Issue: The Supreme Court directed the Union government to set up a federal agency to investigate criminal cases involving cryptocurrencies.

Features of Cryptocurrency

• No physical form: Cryptocurrency does not exist in physical form (like paper money) and is typically not issued by a central authority. However, it can be and many governments are working to create a crypto coin version of its respective fiat currency.
• Anonymous: Cryptocurrencies make it possible to lend, sell, buy, or borrow without an identity, credit score, or even a bank.
• Decentralised: Cryptocurrencies typically use decentralized control as opposed to a central bank digital currency. When a cryptocurrency is minted or created prior to issuance or issued by a single issuer, it is considered centralized. When created with decentralized control, each cryptocurrency works through what is called distributed ledger technology, which is typically a blockchain, that serves as a public financial transaction database.
• Cheaper to transfer: Some coins are used to transfer value (measured in a currency like dollars) cheaper and faster than using credit or conventional means. Meaning the cost to send someone crypto, which can be converted into regular currency, is cheaper than something like a check or wire transfer.
• Highly secure: All records of its creation and when it’s sent or received are stored in a sort of big digital book that anyone can access, keeping it honest. It can’t (easily) be stolen or seized and can be used anywhere in the world.
• Illegal and highly volatile: However crypto is NOT just used for illegal purposes. In fact, due chiefly to its price fluctuation and other reasons it has fallen out of favor on the black market.

What are the Significance of Cryptocurrencies

1. Corruption Check: As blocks run on a peer-to-peer network, it helps keep corruption in check by tracking the flow of funds and transactions.
2. Time Effective: Cryptocurrencies can help save money and substantial time for the remitter and the receiver, as it is conducted entirely on the Internet, runs on a mechanism that involves very less transaction fees and is almost instantaneous.
3. Cost Effective: Intermediaries such as banks, credit card and payment gateways draw almost 3% from the total global economic output of over $100 trillion, as fees for their services.
4. Integrating blockchain into these sectors could result in hundreds of billions of dollars in savings.

What are the Challenges?

• Security risks: Cyberattacks on wallets, exchange mechanism (Cryptojacking). 
• Shield to Crime: Used for Illicit Trading, Criminal Activities, & organised crimes. 
• Threat to the Indian rupee: If a large number of investors invest in digital coins rather than rupee-based savings like provident funds, the demand of the latter will fall.
• Lack of Liquidity and Lower Acceptability: Outside the traditional banking systems.
• Price Volatility:  Prone to price fluctuations & waste of computing power.
• Lack of Consumer Protection: No Dispute Settlement Mechanisms and control of Securities and Exchange Board of India (SEBI). 

Conclusion

• To ensure that cryptocurrencies are not misused, we need proper regulation but regulation has to be transparent to protect from market volatility and possible scams.
• Policymaking is key to accept the change and move on with the technological change which the new century poses in front of us.
• The cryptocurrency which is a part of the Fourth Industrial Revolution and is going to play a major role in advancement in human capital development in India. 

MCQs related with cryptocurrency

Ques 1: What is cryptocurrency?
a) A physical form of digital currency
b) A decentralized form of digital currency using cryptography for security
c) A government-issued digital currency
d) A form of online banking system
Answer: b) A decentralized form of digital currency using cryptography for security

Ques 2: Which cryptocurrency was the first to be created?
a) Bitcoin
b) Ethereum
c) Ripple
d) Litecoin
Answer: a) Bitcoin

Ques 3: How are new cryptocurrencies typically created or introduced into the market?
a) By printing physical notes and coins like traditional currencies
b) By banks and financial institutions
c) Through a process called “mining” using powerful computers to solve complex mathematical problems
d) By government agencies and central banks
Answer: c) Through a process called “mining” using powerful computers to solve complex mathematical problems

Why no law on Crypto,Why no law on Crypto

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