If you haven’t lived under a rock for a while, you might have heard the term "cryptocurrency." More than 10 crore Indians, mainly between 21 and 35 years old, are currently investing in various crypto assets. This makes India the country with the highest number of crypto holders worldwide, just ahead of Russia and the US.
What's cryptocurrency?
The blockchain technology-based cryptocurrency works as a decentralized digital asset. As an alternative to the standard currency that governments issue, cryptocurrency was created to allow for digital currencies to be used online. Bitcoin, the first cryptocurrency, was launched in 2008 by Satoshi Nakamoto (a pseudonymous Satoshi Nakamoto) and is still the most popular cryptocurrency in terms both of market capitalization and influence.
Nakamoto presented his project in a whitepaper. It was described as an electronic payment system that relies on cryptographic proof rather than trust. Since then, Bitcoin's popularity has fueled the creation of many other cryptocurrencies such as Ethereum, Litecoin, and Cardano. These cryptocurrencies are collectively called altcoins, which stand as an alternative to bitcoins. There are currently over 5,000 cryptocurrencies on the market. If you haven’t lived under a rock for a while, you might have heard the term "cryptocurrency".
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Indians, mainly between 21 and 35 years old, are now investing in various cryptocurrency assets. This makes India the country with the highest number of crypto-holders worldwide, ahead of Russia and the US. India's crypto market grew 641% in the past year. It continues to grow as more crypto exchanges and cryptocurrencies are made available to Indian investors. We'll explain the basics to help you get started if you don't have the right knowledge.
How is Cryptocurrency Different from Traditional Currency?
The decentralized nature of cryptocurrency means that it is not controlled by a central authority. Your country's central bank issues and regulates the money in your wallet. This includes the Reserve Bank of India (India), the Federal Reserve (USA), and the Bank of England (UK). Fiat currency is a term that describes all currencies of this nature. Instead, cryptocurrency is managed by a network of computer systems across the internet. You can use cryptocurrency for the payment of goods and services anywhere it is permissible. Or, you can invest in it as you would other digital assets such as stocks and bonds.
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Although cryptocurrency isn't yet widely accepted as a means of transacting, countries such as El Salvador and New Zealand have passed laws that allow for the official use of cryptocurrency.
Can cryptocurrency be created out of thin air?
Blockchains are the foundations that support cryptocurrency's superstructure. Blockchains are open, distributed ledger that records all transactions as code. Simply put, cryptocurrency transactions are stored in blocks and linked to previous transactions.
Now, the question is: How do digital tokens get created? Mining is the process of creating cryptocurrency. It is performed by a worldwide array of computers that try to outpace each other in solving complex mathematical puzzles in exchange for a set amount of cryptocurrency.
Where can you buy cryptocurrency?
You can buy cryptocurrency on peer-to-peer networks or crypto exchanges like Binance, BitMart, and WazirX. After you have opened an account with a particular exchange and completed their formalities you can deposit funds to your account via bank transfer, UPI, or other transactions and start trading or investing in the cryptocurrency of your choice. The crypto market is still very volatile and in its early stages.
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It is recommended to do thorough research on your chosen crypto exchange. This includes the fees, the selection of cryptocurrencies you want to invest in, and the potential risks. Experts recommend that you invest in multiple crypto assets rather than putting all of your eggs in one basket.
Conclusion
India's crypto market has grown by 641% in the past year. This trend will continue as more cryptocurrencies and crypto exchanges become available for Indian investors. We at Errna are here to help you get started in this cryptocurrency tsunami.