Cryptocurrency is a digital currency that can be used to buy goods and services. It uses an online ledger with strong cryptography to secure online transactions. With a market cap of $2 trillion, cryptocurrency is impacting societies globally and in India.
Potential impacts of Cryptocurrency on Global society:
- Economic: It eliminates the intermediaries in the transactions and make the cross-border transactions less expensive and less time consuming. It enhances the phenomenon of Globalisation.
- Political: If cryptocurrency become the significant medium of exchange, it might threaten the monetary sovereignty of Central banks.
- Social: Cryptocurrencies may widen the existing wealth gap, since these digital currencies and their supporting infrastructure are owned by a very few numbers of individuals and institutions. Research shows that just 0.01% of bitcoin holders controls 27% of the currency in circulation.
- Security: Cryptocurrencies provide greater anonymity making them more vulnerable to money-laundering, terrorist funding activities and other organised crimes.
- Environmental: Cryptocurrency mining consumes huge energy.
Impact on Indian Society:
- With increased penetration of Internet, there are multiple platforms for cryptocurrency investments. Around 1.5 crore Indians embraced crypto and invested billion dollars in crypto assets.
- Enterprising teen: Emerged a new class of investor- Enterprising teen. A key attraction for young investors is the chance to earn high profits by investing in small amounts.
- Alternate to Gold: Cryptocurrencies emerged as alternate investment opportunity to Indians who traditionally prefer investment in gold for both economic and cultural reasons.
- Remittances: Indian diaspora started sending remittances in cryptocurrency, especially because transferring smaller amounts can be expensive through the traditional services.
- Employment opportunities: Growing acceptance of cryptocurrency in India created high skilled jobs in block chain technology.
Keeping in view of the market and security risks associated with increased use of cryptocurrency, the union government has been contemplating to bring a bill to regulate crypto currency and the recent taxation on transfer of the digital assets is a step towards this direction.