Cryptocurrency is an emerging alternative to legal tender and can even work like UPI. Continue reading to learn more about cryptocurrency.
What does cryptocurrency mean to you? Businesses are already taking note of this new entrant to the financial sector. If you have a great deal of financial transactions, it is a wise decision to include cryptocurrency in your portfolio.
Bitcoin was the first digital currency introduced in 2009, and now it is a peer-to-peer payment system using blockchain technology without the need for third parties. A revolution in digital currencies helped pave the road to success. Since then, cryptocurrencies have grown exponentially in number and popularity, and they have become more and more accepted by speculators. As businesses and central banks launch their own digital currencies, these have been widely adopted in the Swiss market, compared with the traditional model.
In fact, cryptocurrency has become more and more popular due to the shortcomings of the current financial system. In the aftermath of the financial crisis, people have become increasingly interested in ways of processing transactions that are transparent and accountable. Cryptocurrency draws its power from a history of innovation that is ever-changing. Traditionally, the financial transaction cost of cryptocurrency is much lower than that of trades in traditional economies. Bitcoin’s emergence will certainly change the structure of the international monetary system, and how the government spends money.
To qualify as part of the traditional financial system, a cryptocurrency must meet some strict standards: it must keep users anonymous, cannot be used for illegal tax evasion, and must be resistant to fraud and money laundering. It is crucial that consumers are adequately protected.
Numerous developing nations have begun to adopt Bitcoin and other cryptocurrencies. However, the Indian government has not yet announced its official position on how this new asset class will be regulated. The market is not regulated, according to experts. This can lead to disastrous black market transactions. As far as digital currencies and crypto transactions are concerned, the Indian crypto community is waiting for positive legislation.
A global overview of cryptocurrency
Cryptocurrencies are not legal in all countries. Apart from that, there are different regulations for cryptocurrencies in different countries. So, let’s take a look at how some of the world’s biggest countries are responding to the cryptocurrency.
- United States: It is generally believed that Bitcoin will have a positive impact on the United States. Two major financial institutions have given cryptocurrency strong support in the United States. Besides giants like Tesla, Microsoft Store, Metro, etc. also accept Bitcoin
- Canada: The Canadian government has responded well to Bitcoin, and has ensured that cryptocurrencies cannot be used for money laundering. In recent months, the Ontario Securities Commission, the Canadian financial regulator, approved the listing of the fund on the Bitcoin exchange. The Canadian Financial Transaction and Reporting Analysis Center requires registered exchanges to report suspicious transactions
- China-There is a strict cryptocurrency policy in China’s banking system. Since Bitcoin is not considered legal tender, not all financial institutions can trade with it
- India: India does not recognize cryptocurrencies as legal tender or coins. So, the government developed a bill to ban all private cryptocurrencies in the country. This is one of the issues preventing cryptocurrency use in India. The detailed provisions of the draft law have not yet been released. Despite this, the Supreme Court recently lifted its ban on cryptocurrency, which is deemed to be against the freedom of business and profession. As a result, cryptocurrency continues to function in an unregulated environment
- Germany: Although Germany has different tax rules for exchanges, companies, miners, and users, Bitcoin is recognized as legal in the country
Cryptocurrency and UPI platforms
The National Payment Corporation of India, which operates UPI, refused to ban cryptocurrency transactions, and allows banks to make decisions considering the recommendations from their legal and compliance departments. A majority of banks restrict payments for cryptocurrency transactions, and they do not allow customers to use online banking, UPI, or any other method of online transfer to trade cryptocurrencies.
Nevertheless, as Unified Payment Interface (UPI) has gained popularity, Bitcoin exchanges have become increasingly interested in adopting and promoting this payment method. United Payments Interface was created by National Corporation of India for the purpose of facilitating the purchase of goods faster and enabling the financial system to function. The Indian population now has the option of buying and selling Bitcoin through exchanges because of these simple payment methods. A lot of UPIs, like Google Pay, PayTM, Phonepe, and BHIM, allows you to buy and sell BTC straight-away and quickly.
What does the future hold?
Cryptocurrency’s success depends mainly on four factors: the right technology, customer needs, executive leadership, and a supportive regulatory environment. Valid currencies must be accepted by a wider audience and by consumers. There are also regulatory issues to overcome. Unlike traditional currencies, cryptocurrencies are much more complex, thus dissuading most people, apart from technical experts. Due to its highly speculative nature, it is not suitable for everyone. There are many in the digital payment industry who does not understand the true value of cryptocurrencies, since they think only of speculation and volatility. On top of that, many countries consider cryptocurrency to be illegal, which makes tax evasion and money laundering more likely.
The use of this technology is expected to spread across a variety of industries, including e-commerce and retail. In the future, it could replace most electronic payment methods. The global e-commerce financial sector is also targeting blockchain technology, which should drive the market in the coming few years.
Today, transactions are increasingly going digital. In light of the pandemic, more people are paying with digital methods than ever before. During the phase of unlocking in India, digital payments increased during the second quarter of 2020. We can expect more and more transactions to embrace cryptocurrency in the near future.