PRAHLADRAI DALMIA LIONS COLLEGE OF COMMERCE AND ECONOMICS

CRYPTOCURRENCY – IT’S IMPACT ON INDIAN ECONOMY

A Project submitted to
University of Mumbai for partial completion of the degree of
BACHELOR OF COMMERCE (FINANCIAL MARKET)
Under the faculty of commerce

Submitted by
VERMA GAURAV PRADEEP MANJU
Under the guidance of
Prof. Durgesh Kenkre

PRAHLADRAI DALMIA LIOPNS COLLEGE

OF COMMERCE AND ECONOMICS
SUNDAR NAGAR, S.V ROAD, MALAD (WEST) MUMBAI 400064
APRIL 2020
 PRAHLADRAI DALMIA LIONS COLLEGE OF COMMERCE AND ECONOMICS

PRAHLADRAI DALMIA LIOPNS COLLEGE OF

COMMERCE AND ECONOMICS
Sunder Nagar, Malad (West), Mumbai 400 064

CERTIFICATE

This is to certify that Mr. Verma Gaurav Pradeep Manju has worked and
duly completed his Project Work for the degree of Bachelor In Commerce
(Financial Market) and his project is entitled, Cryptocurrency – It’s Impact
On Indian Economy under my supervision.

I further certify that the entire work has been done by the learner under the
guidance and that no part of it has been submitted previously for any Degree or
Diploma of any University.

It is his own work and facts reported by his personal finding and investigations.

Signature
Prof. Durgesh Kenkre

Date of Submission:
 PRAHLADRAI DALMIA LIONS COLLEGE OF COMMERCE AND ECONOMICS

DECLARATION

I the undersigned MR.VERMA GAURAV PRADEEP MANJU here by

declare, that the work embodied in this Project work titled
“CRYPTOCURRENCY – IT’S IMPACT ON INDIAN ECONOMY”, forms
my own contribution to the research work carried out under the guidance of
PROF. DURGESH KENKRE is a result of my own research work and his not
being previously submitted to any other University for any other Degree
/Diploma to this or any other University.

Wherever reference has been made to previous work of other, it has been clearly
indicated as such and included in the bibliography.

I, here by further declare that all information of this document has been obtained
and presented in accordance with academic rules and ethical conduct.

Signature
VERMA GAURAV PRADEEP MANJU

Certified by
PROF. DURGESH KENKRE
 PRAHLADRAI DALMIA LIONS COLLEGE OF COMMERCE AND ECONOMICS

ACKNOWLEDGEMENT

To list to who all helped me is difficult because they are so numerous and the
depth is so enormous.

I would like to acknowledge the following as being idealistic channel and fresh
dimension in the completion of project.

I take this opportunity to thank the University of Mumbai for giving me

chance to do the project.

I would like to thank my Principal, Dr. N.N. Pandey for providing the
necessary facilities required for completion of this project.

I take this opportunity to thank towards My Co-Ordinator and My Project

Guide, Prof. Durgesh Kenkre for his moral support and guidance.

I would like to thank My College Library for having provided various

reference books and magazines related to my project.

Lastly I would like to thank each and every person directly or indirectly helped
me in the completion of the project, especially My Parents And My Peers who
supported me through out of my project.

VERMA GAURAV PRADEEP MANJU

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INDEX

Chapter No. Title Page No.

1 Introduction to Cryptocurrency 1

2 Regulations and Legalization 10

3 Types of cryptocurrency 13

4 Advantages and disadvantages 15

5 Cryptocurrency impact on Indian economy 17

6 News Article 31

7 Conclusion 35
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CHAPTER 1- INTRODUCTION TO CRYTOCURRENCY

1.1 General Introduction

A Cryptocurrency (or Crypto currency) is a digital asset designed to work as a medium of

exchange that uses strong cryptography to secure financial transactions, control the creation of
additional units, and also verify the transfer of assets. Cryptocurrencies use decentralized
control as opposed to centralized digital currency and central banking systems.

The decentralized control of each cryptocurrency works through distributed

ledger technology, typically
a blockchain, that serves as a
public financial transaction
database

Few people know, but

cryptocurrencies emerged as a side
product of another
invention. Satoshi Nakamoto, the
unknown inventor of Bitcoin, the
first and still most important cryptocurrency, never intended to invent a currency. The single
most important part of Satoshi‘s invention was that he found a way to build a decentralized
digital cash system. In the nineties, there have been many attempts to create digital money,
but they all failed.

Crytocurrency are a digital cash designed to be quicker, cheaper, and more reliable than our
regular government issued money. Instead of trusting a government to create your money and
banks to store send and receive it, users transact directly with each other and store their
money themselves. Because people can send money directly without a middleman,
transactions are usually very affordable and fast.

To prevent fraud and manipulation, every user of a crytocurrency can simultaneously record
and verify their own transaction and transations of everyone else. The digital transaction
recording is known as “ledger” and this ledger is publicly available to anyone. With this
public ledger, transactions become efficient, permanent, secure and transparent.

With public records, crytocurrencies don’t require you trust a bank to hold your money. They
don’t require you trust the person you are doing business with to actually pay you. Instead you
can actually see the money being, sent received, verified and recorded by thousand of peoples.
This system requires no Trust. This unique positive quality is known as “trustless”

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The study analyses of various cryptocurrencies and future prospects with its regards as a
potential emerging market that will not only challenge the financial system in the current and
upcoming century but may also be the main source or cause of its disruption. This research
emphasizes emerging cryptocurrencies, ICOs (initial coin offerings), the mining process,
various mining devices, observing the market movements, technical analysis studies, case
studies and more. Outside of cryptocurrencies, most financial transactions are reversible. This
doesn't mean that you can simply go on a shopping spree and try to refund the money, as there
is usually a governing body that oversees the process. For example, let's say that you purchase
something online and the vendor never sends you a product. You can contact your credit card
provider, explain the situation, and after a brief investigation your money can be returned.
People feel safe using credit cards as they are protected by fraud. Bitcoin aimed to be
decentralized and pseudo anonymous. There are many pros to this system, but unfortunately
security is the primary flaw. Because hackers can steal bitcoin with almost no repercussion,
the currency is a major target for fraud. Dr. RUJA IGNATOVA CEO of Onecoin, has used
identity verification to address this problem with his own cryptocurrency."By requesting
documentation that proves the identity of each user, Onecoin makes sure that each transfer
made using the protocol is not anonymous. Since global business opportunities demand
sophisticated international customer identification and verification solution, the KYC policy
adopted by Onecoin includes identifying the user and verifying the identity by examining
reliable and independent documents." The fact that all transactions are tracked has minimized
fraud on the Onecoin platform, and expedited it's adoption as a cryptocurrency. If this solution
is successful, Onecoin just may be the next Bitcoin

Cryptocurrency
mining is a process in
which transactions
for various forms
of cryptocurrency are
verified and added to
the blockchain digital
ledger. Also known
as cryptocoin mining,
altcoin mining,
or Bitcoin mining
(for the most popular
form of Crypto Mining
cryptocurrency, Bitcoin), cryptocurrency mining has increased both as a topic and activity as
cryptocurrency usage itself has grown exponentially in the last few years.

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Cryptocurrency mining is painstaking, costly and only sporadically rewarding. Nonetheless,

mining has a magnetic appeal for many investors interested in cryptocurrency because of the
fact that miners are rewarded for their work with crypto tokens. This may be because
entrepreneurial types see mining as pennies from heaven, like California gold prospectors in
1849. And if you are technologically inclined, why not do it?

However, before you invest the time and equipment, read this explainer to see whether mining
is really for you. We will focus primarily on Bitcoin (throughout, we'll use "Bitcoin" when
referring to the network or the cryptocurrency as a concept, and "bitcoin" when we're
referring to a quantity of individual tokens).

The primary draw for many Bitcoin miners is the prospect of being rewarded with valuable
bitcoin tokens. That said, you certainly don't have to be a miner to own cryptocurrency
tokens. You can also buy cryptocurrencies using fiat currency; you can trade it on an
exchange like Bitstamp using another crypto (as an example, using Ethereum or NEO to buy
bitcoin); you even can earn it by playing video games or by publishing blog posts on
platforms that pay users in cryptocurrency. An example of the latter is Steemit, which is kind
of like Medium except that users can reward bloggers by paying them in a proprietary
cryptocurrency called STEEM. STEEM can then be traded elsewhere for bitcoin.

The bitcoin reward that miners receive is an incentive which motivates people to assist in the
primary purpose of mining: to support, legitimize and monitor the Bitcoin network and its
blockchain. Because these responsibilities are spread among many users all over the world,
bitcoin is said to be a "decentralized" cryptocurrency, or one that does not rely on a central
bank or government to oversee its regulation.

“Virtual currencies, perhaps most notably Bitcoin, have captured

the imagination of some, struck fear among others, and confused the
heck out of the rest of us.” – Thomas Carper, US-Senator.

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1.2 Evolution Of Crytocurrency

In 1990, Digital Cash became a popular topic in cryptography circles. The first decentralized
Cryptocurrency namely bitcoin was created in 2009 by pseudonymous crazy software
developer Satoshi Nakamoto, who however solved the double spending problem without
trusting any third party. Mark Millar, an American computer scientist, Adam Back, a British
cryptographer and crypto-hacker, David Chaum, computer scientist and cryptographer, Stefan
Brands who sold his U-prove technology to Microsoft and Japanese cryptographers were few
of the initial individuals who ought to be strong in their belief that cryptocurrencies have the
potential to transform the payment system all over the world which is fully decentralized.

Back in 1998, an electronic cash system was published by Wei Dai called b-money.
NickSzabo, computer scientist and a legal scholar created an electronic currency system, the
currently recognized in the name of cryptocurrency "Bit Gold” that required users to complete
proof of work function showing solutions, being cryptographically put together and later on
published. Another currency system that showing reusable proof of work, also known as
RPOW as its abbreviation, say for instance, Gold coin's value is observed to be underpinned
by raw gold’s value for it to be made, similarly, the value of an RPOW token is guaranteed by
the value of the real-world resources that is required to 'mint' the POW token. Finney's
version of RPOW, shows the token to be a piece of Hashcash that is a POWS in order to limit
spam emails or junk emails and denial of service attacks, and more recently be recognized for
its use in bitcoin and other cryptocurrencies as part of mining algorithm that was put forward
by Hal Finney who was inspired by the work of Dai and Szabo.

The first decentralized cryptocurrency was bitcoin that was created in 2009 by
SatoshiNakamoto. He used SHA-256, a sub part of SHA-2 that is a secure hash algorithm that
states a set of cryptographic hash function having special class codes used in creation of
cryptography, which is a technique for secure communication tin a way where two entities
communicate without any interference of any third party in an unsusceptible way.
Cryptography is a standard secrecy method that protects the contents of the message from
being disclosed to unauthorized users who may access or detect the communication that can
be prevented by cover communication that conceals the existence of the communication.
These unauthorized users can be third parties like adversaries which are any malicious entity
that prevents the users of the cryptosystem from achieving their goal such as primarily
privacy, integrity, and availability of data, discovery of secret data, corrupting data in the
system, spoofing the identity of a message sender and receiver, forcing system downtime.

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They are mathematical algorithms, specially designed by the US National Security Agency.
Cryptographic hash functions are all those mathematical operations that run on digital data,
connoted when compared with the computed "hash" which is the output from execution of
different algorithms, to an expectedly known hash value, by which a person can determine the
data's integrity. Just like computing the hash of a downloaded file after which we compare the
result to a previously published hash result that indicate whether or not the download has been
modified or tampered with, another key aspect of cryptographic hash function is their
collision resistance where in no user shall be able to find two different input values that result
in the same hash output to be known as a cryptographic hash function, as its POWS.

In April 2011, Name-coin denoted by ℕ or NMC one of the newly invented cryptocurrency
and the first fork of the bitcoin software. It is based on the code of bitcoin and uses the same
POW algorithm. It is limited to 21 million coins. Soon after that, In October 2011, litecoin
was released, which is comparatively better in technical improvements than bitcoins. It was
the very first successful cryptocurrency thatused script, which is a password-based key
derivation function mainly consisting of one or more secret keys from a secret value like a
master key that is nothing but a password, created for a security software called Tarsnap that
encrypts and stores data as it is an online backup service, also used by amazon. The algorithm
was especially designed so as to make it costly enough to perform large-scale custom
hardware attacks that requires multiple computation where typically trying one key and
checking if the resulting decryption gives a meaningful answer after which, trying the next
key if it does not by requiring large amounts of memory as its hash function instead of SHA-
256.

Peer coin, also one of the initially cyptocurrencies was the first to use a proof-of work/Proof-
of-stake hybrid which does not have a hard limit on total number of coins as it is designed to
attain an annual inflation rate of 1%. IOTA was the first cryptocurrency that is based on
Tangle and not blocks chains. Many other cryptocurrencies are created except the ones where
few have been successful because it’s just the beginning to the era of cryptocurrencies.

While 2017 saw massive spikes in the value of cryptocurrencies, they’re still not entering our
day-to-day lives. Most of those who own substantial amounts of bitcoin are doing so as an
investment, rather than looking to utilise cryptocurrency as a new way to buy things. That’s
not to say that you can’t buy things with Bitcoin, in December 2013 a Tesla Model S was
bought for 91.4 bitcoins and Starbucks are currently letting customers use the cryptocurrency
to purchase food and drink from them.

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1.3 Objectives of Crytocurrency

1. Low-cost money transfers
The most well-known benefit of cryptocurrencies is their ability to send and receive payments at a
low cost and at a high speed. The low fees associated with transactions using digital currencies
such as litecoin (LTC), stellar (XLM) or bitcoin cash (BCH) make them excellent payment
systems for international money transfers

Example, a recent $99 million litecoin (LTC) transaction took only two and a half minutes to
process and cost the sender only $0.40 in transaction fees.

2. A censorship-resistant alternative store of wealth

While you probably don’t think your bank account and assets could be frozen, the reality is that
this occurs more often than people realise — especially in jurisdictions with dubious rule of law.
This is where one of the most unique and powerful uses of crypto comes into play.
Cryptocurrencies, such as bitcoin, act as a censorship-resistant alternative store of wealth that only
the individual with the private keys to the wallet has access to. Hence, no personal bitcoin wallet
can ever be frozen by the authorities.

3. Invest in innovative early-stage startups

The emergence of digital token-based fundraising has allowed anyone with an Internet connection
to become an investor in innovative early-stage tech startups, while at the same time providing new
startup ventures with much-needed seed capital.

Initial coin offerings (ICOs) are a new form of fundraising that provides startups with the
opportunity to raise capital by selling a newly-created digital token to early backers of the project
in exchange for established cryptocurrencies such as bitcoin (BTC) or ether (ETH). The price of
the newly-issued token then acts as proxy linked to the success or failure of said startup once it
starts to trade in the secondary market.

4. Make private transactions

Privacy-centric digital currrencies such as Monero (XMR), Zcash (ZEC), and PIVX (PIVX) enable
users to make anonymous financial transactions.That means individuals can make money transfers
without having to explain to a bank why they are sending a large sum of money, what the sources
of the funds are and who they are sending it to, which can delay the transaction and involve
unnecessarily bureaucratic processes.

5. Send non-cash remittances

Another powerful use case for cryptocurrencies is non-cash remittances. Nigerian blockchain

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startup SureRemit, enables its users to send non-cash remittances from anywhere in the world to
selected African nations.
SureRemit raised $7 million during its initial coin offering in December 2017 and plans on using
this money to improve its platform and expand into new markets.

6. Get paid to post content

The world’s first incentivized social media and blogging platform, ‘Steemit’, enables publishers to
receive financial rewards in the form of cryptocurrency for posting content and for curating on the
network by upvoting high-quality content. ‘Steemit’ financially empowers its users by rewarding
them for contributing to the platform as opposed to taking its users data and selling it to third-
parties like Facebook does. For this reason, Steemit has become particularly popular in emerging
markets where it boasts a high number of users.

7. Rent out your spare hard drive space to the cloud

Decentralized blockchain-based cloud storage solutions such as Storj enable users to earn
cryptocurrency in exchange for renting out their hard drive storage space to those who need it on a
peer-to-peer basis.“Storj can be faster, cheaper, and more secure than traditional cloud storage
platforms. Faster because multiple machines are serving you your file simultaneously, cheaper
because you are renting people's spare hard-drive space instead of paying for a purpose-built data
center, and more secure because your file is both encrypted and shredded. There is no need to trust
a corporation, vulnerable servers, or employees with your files. Storj completely removes trust
from the equation.

8. Travel the world

Due to the explosive growth of the cryptocurrency ecosystem in the past few years, it is now
possible to travel the world by spending cryptocurrency. Established travel agents such
as CheapAir and Destinia accept bitcoin as a payment method to book flights, car rentals, and
hotels and for those who prefer to stay in an apartment when traveling can book accommodation
using bitcoin (BTC) or ether (ETH)

9. Travel into space

Richard Branson’s commercial space travel company, Virgin Galactic, announced in November
2013 that they are accepting bitcoin payments for space travel bookings. While the California-
based company has not yet managed to successfully launch a commercial space flight, several
future astronauts have already paid for their tickets — worth $250,000 — in bitcoin, including
bitcoin advocates Cameron and Tyler Winklevoss.

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10. Buy a lambo

Now you can also use your cryptocurrency to buy a Lamborghini. The bitcoin luxury
marketplace ‘De Louvois’ enables the “crypto rich” to purchase sports cars including the
cryptocurrency community’s favorite status symbol, the Lamborghini, using bitcoin.The
marketplace also offers a range of other luxury goods such as art, fine wines, and real estate for
those whose digital pockets are deep enough.

1.4 Importance of Cryptocurrency

1. Safest Currency
Cryptocurrency is one of the safest and trusted kinds of digital currency that people prefer
nowadays. In a world where there is an abundance of conmen and looters, we all need to trade
in the safest possible ways. Cryptocurrencies give us that assurance which makes them an
important source of investment right now and in the future as well.

2. Anywhere access
Another reason why cryptocurrencies have become extremely in demand is because of their
policies. You don’t really need to deal with a third party when it comes to cryptocurrency.
This gives people a reassurance and a feeling of safety. The fact that cryptocurrencies are
digital currencies alleviates the need for a third party. You can transact no matter where you
are situated at.

3. Low cost Transaction

Cryptocurrency is a low-cost means of transaction. You don’t need to shell out money in
order to exchange digital currencies. All you need in order to be able to transact is your cell
phone and a basic knowledge of cryptocurrencies.

4. No extra cost
Most of the digital currencies have to pay for transactions. In the case of cryptocurrencies,
you don’t really need to pay for the transactions. The reason is that the people who mine the
cryptocurrencies; called as miners get their compensation from the network itself.

5. Wallet Friendly
You can store your cryptocurrencies in a safe wallet. Cryptocurrencies give you the option of
storing your money in two kinds of wallets which can easily be transferred to your account.
And the wallets don’t have any charges in order to be able to store your digital currencies.

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6. Highly confidential data

For most people, privacy is the top-most priority. When dealing in cryptocurrencies, you can
expect your transactions to be highly confidential. You can carry out your transactions and be
anonymous.

7. One can buy in fraction

The amount of money that you want to invest is totally up to Cryptocurrencies give you the
liberty of buying them in fractions as well. If you feel like one bitcoin is too much, you can
split it and buy half or one-third of it. This reduces the cost for you and does not require you
to spend out of bounds. Using a crypto converter, you can find out the price of any
cryptocurrency in your country’s currency and invest accordingly.

8. No Need to Share confidential details while doing Transaction

Since the senders and recipients of cryptocurrencies don’t directly transfer any money to the
credit cards, you don’t have to share your credentials with anyone. This helps you in avoiding
identity theft. You decide what information you want to share with the merchant if anything at
all makes you doubtful.

9. No Middleman
You get complete autonomy that you look for. When it comes to cryptocurrencies, there is no
third party involved to demand for any fee or money. You are the only person who is
managing your account.

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CHAPTER 2 - REGULATIONS AND LEGALIZATION

2.1 Regulations.

The financial system of India is framed in such a way where we have as many rules and
regulations than any other country in the world. RBI regulates the Indian banking system and
the debt market, that is all the commercial banks, SEBI regulates all the stock exchanges, we
neither do have any regulatory system for cryptocurrencies nor any uniform international
legal law covering the use of bitcoin but very few countries do have set up their own
regulators for cryptocurrencies like United states and Russia, have started to trade
cryptocurrencies officially. Many countries have legalized it but a particular separate
exchange has specifically been created only by these two countries. Bitcoin has been famous
post 2009, a peer-to-peer digital currency in the new era ofcryptocurrency. But today, more
than 500 different cryptocurrencies exist, but Bitcoin still enjoys the first mover advantage
over other businesses as its being introduced for the first time in the market. Since authorities,
enforcement agencies, and regulators are constantly exploring the phenomena, one pertinent
question yet remains whether bitcoin is legal or illegal. The answer doesn’t only depend on
the location and activity of the user, but also with accordance to market capitalization.
Bitcoins are neither issued, endorsed, nor regulated by central bank but are created through an
automated programmed computer generated process called mining. Cryptocurrencies are not
related to any government, Bitcoin is a peer-to-peer payment system as well as scan be stored
in physical form, having a limitation of just 21 million bitcoins to be in circulation in physical
form, currently present in bitcoin ATMs and can even be exchanged and traded online on
ask/bid price as well as market price. It offers a pretty convenient way to conduct cross-border
transactions with no exchange rate fees but minimum commission fees like transaction fee or
fee in the form of bits irrespective of the volume of bitcoin or bits one is holding. It allows
users to remain anonymous. Consumers have greater ability to purchase goods and services
with bitcoins via onlineretailers, also using bitcoin-purchased gift cards at bricks and mortar
stores. Many Companies have invested in this virtual currency and ventures related to it that
portray a technically well-established virtual currency system.

2.2 Legalization.

 Legal in Nigeria as a committee is set up by the Central Bank of Nigeria (CBN) andNigeria
Deposit Insurance Corporation (NDIC) to look into the possibility of thecountry adopting
the technology of cryptocurrencies. The committee submitted itsreport except few sub-
committees that are yet working towards its regulatory aspect.

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 Legal in South Africa as in December 2014, Reserve Bank of South Africa issued
aposition paper on Virtual Currencies that declared, virtual currency having neither
anylegal status nor any regulatory framework. Legal in Zimbabwe but The Reserve Bank
of Zimbabwe is doubtful about bitcoin andhas not officially permitted its use. On 5 April
2017 however, BitMari, a PanAfricanBlock chain platform got licensed, through its
banking partner, AgriBank, to operatein the country.
 Legal in Canada as Bitcoin is classified as per current provisions of the Personal Property
Security Act simply as an "intangible”.It is regulated under anti-money laundering and
counter-terrorist financing laws inCanada, based on a federal budget bill (C-31), passed in
2014. Regulations must beenacted before this provision becomes active, however, once
they are it is expectedthat "dealers in digital currency" will be regulated as money services
businesses. TheAuthority des Marches Financiers, the regulator in the province of Quebec,
hasdeclared that some bitcoin related business models including exchanges and ATMsare
regulated under its current MSB Act.
 Legal in Mexico under fintech law.
 Legal in United States as a convertible decentralized virtual currency and as per IRS,it is
taxed as a property. In September 2016, a federal judge ruled “Bitcoins arefunds” within
the plain meaning of that term.

2.3 Countries where it

is followed

 Morocco
 Nigeria
 Namibia
 South Africa
 Zimbabwe
 Canada
 Mexico
 United States
 Costa Rica
 Nicaragua
 Trinidad and Tobago
 Jamaica
 Brazil
 Argentina

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 Colombia  Israel
 Chile  UAE
 Kyrgyzstan  Jordan
 Saudi Arabia  Slovenia
 Iran  Slovakia
 Lebanon  Switzerland
 Turkey  United Kingdom
 India (banned by banks)  Australia
 Pakistan  New Zealand
 China  Ireland
 Japan  Netherlands
 Hong Kong  Belgium
 Taiwan  France
 South Korea  Luxembourg
 Indonesia  Greece
 Philippines  Italy
 Cambodia  Bulgaria
 Malaysia  Bosnia and Herzegovina
 Thailand  Malta
 Singapore  Spain
 Vietnam  Portugal
 Croatia  Sweden
 Germany  Iceland
 Poland  Norway
 Austria  Denmark
 Czech Republic  Ukraine
 Romania  Cyprus

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CHAPTER 3- TYPES OF CRYTOCURRENCY

3.1 Below Are Some Notable Cryptocurrencies:

Release Currency

2009 Bitcoin

2011 Litecoin

Litecoin
2011 Namecoin

2012 Peercoin

2013 Dogecoin

2013 Gridcoin

2013 Primecoin Peercoin

2013 Ripple

2013 Nxt

2014 Auroracoin

2014 Dash Ripple

2014 NEO

2014 MazaCoin

2014 Monero

Monero
2014 NEM

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2014 PotCoin 3.2 INACTIVE CURRENCY

Release Currency
2014 Titcoin

2014 Coinye
2014 Verge

2017 BitConnect
2014 Stellar

2018 KodakCoin
2014 Vertcoin

Ether or
2015
"Ethereum"

2015 Ethereum Classic

2015 Nano

2015 Tether

2016 Zcash

2017 Bitcoin Cash

2017 EOS.IO

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CHAPTER 4 - ADVANTAGES & DISADVANTAGES

4.1 Advantages of Crytocurrency

 Decentralize

 Easy to use

 Can be use Internationally

 Low Operation Cost

 Unlimited Transactions

 Fast Transactions

 Transparency

 Anonymity

 Highly Secured

 No Inflation

 Anytime accessibility

 Adaptibility

 Individual ownership

 Identify Theft

 No middle man

 Greater access to credit

 Recognition at universal level

 Improved liquidity

 Leveraged exposure

 Faster account opening in exchanges

 Divisible over as many crypto bank accounts as you want

 Unparalleled Transparency

 Potential to help the “Unbanked”

 Micro payments enables new business model

 Peer to Peer Cryptocurrency network

 Improve digital infrastructure

 No counterfeiting

 Stimulus for financial innovation

 No political risk

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4.2 Disadvantages of Crytocurrency

 High volatility

 High Risk

 Not accepted widely

 Not able to reverse the payment

 No security in case of loss

 Difficult to comprehend

 Scalability

 Lack of Inherent value

 Cyber security issues

 No regulatory body

 Lack of Knowledge

 Storage risk

 Difficulty in payment

 Sources of money laundering for criminals

 Potential for security beaches

 Crytocurrency software can be hacked

 Mining of transaction records

 No control of central bank

 Inconsistent rate

 Government can ban

 Sometime supports deflation

 Increase black marketing

 Unnecessary length records of transaction

 Potential to be replaced by superior crytocurrency

 Bitcoin mining consumes high electricity

 Risk of unknown technical flaws

 No valuation guarantee

 Criticism of crytocurrency

 May not be exchanged with fiat currency

 Skepticism

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CHAPTER 5 – CRYTOCURRENCY IMPACT ON INDIAN ECONOMY

The Indian economy is experiencing severe economic slowdown not seen in many years, and
cryptocurrency can potentially help. However, the government is considering a draft bill to
ban cryptocurrencies, which could have undesirable consequences on the economy.
Meanwhile, the Indian crypto community has already been enduring a banking ban by the
central bank. Crypto Can Boost Indian Economy - How Banning Will Hurt it.

5.1 Job Growth Amid ‘Unprecedented’ Economic Slowdown:

Rajiv Kumar, the vice-chairman of Indian policy think tank Niti Aayog, said last week that
the Indian government is facing “an unprecedented situation.” He explained that “In the last
70 years, nobody had faced this sort of situation where the entire financial system is under
threat.” According to Reuters, economists predicted earlier this week that, in the second
quarter of this year, the Indian economy likely expanded at its slowest pace in more than five
years.

The slowdown has led to

many job losses in a
number of sectors,
particularly the auto
industry. Chief Minister of
the Indian state of
Rajasthan, Ashok Gehlot,
informed the press last
week that almost all
sectors in the country are
struggling, with lakhs
(100,000s) of people losing their jobs. Parliament Member Manish Tewari, a spokesperson for
India’s Congress political party, estimated that over three crore (30 million) people are facing
the threat of becoming unemployed.

Nischal Shetty, CEO of crypto exchange Wazirx, believes that job growth is among the major
benefits crypto can help his country’s economic situation. Kunal Barchha, cofounder of the
crypto exchange Coinrecoil, shares the sentiment.

According to job search site Indeed, the crypto and blockchain market is still “rapidly
growing.” The company found that the share of U.S. job postings related to crypto,

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blockchain and bitcoin has grown 90% over a one-year period ending February. Earlier this
year, the company revealed that Bengaluru was the number one city in India for crypto jobs,
followed by Pune, the second-largest city in the Indian state of Maharashtra.

5.2 Wealth Creation and Helping the Unbanked

Besides job creation, there are other benefits crypto can offer the Indian economy. Among
them is attracting “new foreign venture capital investments into Indian startups,” Shetty
detailed, telling news.Bitcoin.com that “ICOs can be a new global fundraising mechanism for
early-stage Indian startup.” According to ICO data, the total amount of funds raised globally
in ICOs so far this year is over $346 million.

The Waxirx CEO added that cryptocurrency can help make remittances in India “cheaper and
faster.” Data from Trading Economics shows that remittances in India stood at $12.6 billion
in the first quarter. He
also believes that
cryptocurrency can offer
the “Opportunity to bank
the massive 300M+
unbanked people in
India.” The Indian
government’s own data
shows that, as of Feb. 13,
the number of accounts
opened under the
PMJDY, the government-
run financial inclusion
program, was 34.43 crores.

Barchha, however, has doubts about how much cryptocurrency can help the Indian economy.
He argued that “most of the people around the world still understand crypto as money for
illegal activities,” so “It is a distant dream to see crypto helping [the] vast size of Indian
economy.” He opined, “I personally don’t see crypto playing any leadership role in the Indian
economy, not in coming 5 years at least.”

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5.3 Negative Effects of Banning Crypto

Currently, the Indian government is deliberating on a draft bill to ban cryptocurrencies. It was
drafted by an interministerial committee (IMC) headed by former Secretary of the Department
of Economic Affairs Subhash Chandra Garg, who was recently reassigned to the Power
Ministry. The committee was constituted on Nov. 2, 2017, and only met three times before
finalizing this bill. However, the community is confident that the bill is flawed and has
been tirelessly campaigning to convince lawmakers to reexamine the IMC recommendations.

Shetty shared with news.Bitcoin.com the short term and long term effects of banning
cryptocurrencies in India. In the long run, he explained that “India will see a massive brain
drain,” as skilled citizens move out of the country to seek opportunities elsewhere. Bahrain,
for example, has already been courting Indian startups to set up shop there, marketing itself as
a crypto-friendly country.

If the government decides to ban cryptocurrency, “India will not have blockchain and crypto
expertise leading to no crypto-related work reaching India,” the Wazirx executive pointed out,
emphasizing that the country stands to “lose billions of dollars worth of investment that the
crypto sector can potentially attract.” Consequently, “Hundreds of jobs will be lost,” he
indicated, elaborating:

“Indian citizens will lose hundreds and thousands of crores of their hard-earned money …
India will lose out on thousands of jobs that would otherwise be generated if the crypto
sector was to be positively regulated”.

5.4 Hurting Legitimate Players

Whether done in fiat currency or cryptocurrency, “Illegal activities, money laundering, and
terrorist financing are the top concerns for the government of India,” Barchha asserted. “As of
now, every exchange allows trading after verifying documents rigorously,” he described,
affirming that “A ban will result in [the] closure of all exchanges and that will result in no
accountability of transactions.” He further conveyed that “People with illicit intentions are …
going to deal in crypto using their own network,” elaborating:

“Indirectly, the government of India will increase their headache of tracing illegal
transactions, which would have been easier if strict KYC based exchanges are regulated”.

On the other hand, he opined: “honest traders or investors won’t give up their faith on the
technology and they will trade in cash through peer-to-peer portals. They won’t be paying any

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taxes for these transactions, which is an additional loss for the government.” Recently, The
Indian National Association of Software and Services Companies (Nasscom) voiced its
concerns regarding the proposed banning of crypto assets in India. The association describes
itself as “the apex body for the 154 billion dollar IT BPM industry in India,” which “Liaisons
with government and industry to influence a favourable policy framework.” Nasscom stated
that “A ban would inhibit new applications and solutions from being deployed and would
discourage tech startups” and would also “handicap India from participating in new use cases
that cryptocurrencies nad tokens offer,” emphasizing:

“A ban is more likely to deter only the legitimate operators as they have no intent to be non-
compliant”.

In his open letter to the Indian finance minister, Sohail Merchant, CEO of local crypto
exchange Pocketbits, wrote: “If the ban comes into effect, the black market will continue to
thrive. It will be the common man, compliant businesses, and innovators building upon these
protocols that will be affected.”

5.5 Supreme Court Hearing, One Petition Withdrawn

There is already a banking ban in place in India, imposed by the Reserve Bank of India (RBI)
in its circular issued
in April last year.
The ban went into
effect 90 days later.
A number of
industry
participants filed
writ petitions
challenging the ban,
which the Indian
supreme court was
originally set to
hear in September
last year but Supreme Court of India
was continually delayed. The wait has caused a few operators to shut down their local
exchange operations, including Zebpay, formerly one of the largest crypto exchanges in India,
Coindelta, Coinome, Koinex, and Cryptokart.

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During the Aug. 21 hearing, the supreme court instructed the central bank to answer the
representation by crypto exchanges. Shetty told news.Bitcoin.com that the document was
submitted by the Internet and Mobile Association of India (IAMAI) sometime last year. “It’s
basically a set of suggestions that IAMAI had sent to the RBI. Stuff like exchanges following
KYC and AML policies etc,” he clarified. “The objective was to put across the fact that there
are better ways to ensure investor protection and prevent malicious activities in crypto.”

Coinrecoil, the first company to challenge the RBI ban in court, has recently withdrawn its
writ petition. “Yes, we did withdraw our petition last week,” Barchha confirmed. “Even
though being a startup, we decided to take the risk and became the first exchange in the
country to file the petition. We tried our best to stay till the end of the fight. But regardless of
our passion or confidence, at some point, money matters.”

According to Barchha, the financial burden was the only reason for his startup with limited
funds to withdraw its petition. “Most of the investment was done by three directors, friends,
and family. That was enough to build the exchange from scratch, and make it operational for
4 months. The banking ban was a blow to our financial planning,” he detailed.

5.6 Cryptocurrency In India

India with a population that is over 1 billion strong has been on something of an economic
renaissance in the last few years. Such has been the extent of the country’s growth that the
IMF has called it the fastest-growing emerging economy. More than 40 percent of the
country’s
population has
access to telecoms
and internet
services. A country
steeped in mystery,
history, and culture,
it is also not one to
fall behind when it
comes to
technological
advancement.
Bitcoin and other
cryptocurrencies have been operating within the country for a number of years now. This
article looks at the state of the Indian cryptocurrency market.

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In India bitcoins has been available since 2012.And at present in India there are 11 trading
platforms and around 1 million users of bitcoin. At the movement RBI has banned the
transaction of bitcoins in India. So, one cannot use the cryptocurrency for the payments of
goods and services. Recently in 2018 during the union budget declaration the Indian
government declared that cryptocurrencies such as bitcoins were not a legal tender. There is
no protection available to those using and trading them or dealing in them. In recent days
finance minister Arun Jaitely said when asked by the media the Government views on
cryptocurreny he said the government was aware that the cryptocurrency is being used for the
illegal activities such as terrorism, cryptocurrencies function within the community and they
enjoy the trust of that. According to the Indian government people using these types of
currencies should take certain caution because there is no lawful protection for these
currencies. And no help can be gained by the people from the government side if some fraud
is faced by the people. Regarding the future of cryptocurrencies in India an expert committee
also constituted to measure the risk involved in it. This committee will examine the action of
cryptocurrencies and release the report in few months.

Some countries are accepting the cryptocurrencies while some are not, some of them are yet
to make their decision. Cryptocurrencies has its own set of complications. What are expert’s
views? Experts across the world are coming to the conclusion that cryptocurrencies are here
to stay. The experts say the only way to bring value to the cryptocurrency is by issuing the
real money instead of it. The experts also talk about the risk trading cryptocurrencies because
here is no law on the fraud done in these types of digital currencies and also the cyber crime
can be its biggest demerit as it all works online. According to the experts and many research
papers the copy of cryptocurrency can be made and a false transaction can be done so the
trading would not be a safe one. There is still a lot and lot of analysis to be done on this and a
healthy result would come out from it which would tell us a brief idea about the usage of
cryptocurrency its pros and cons, and why it can swap the physical money in the market. So
how do they do this? One method is to deal in art objects. Buy a curio in local currency. Then
sell that curio abroad in a foreign currency. Even if they do not make a profit, they at least
would own some foreign exchange, having bypassed exchange regulations. Suppose the curio
in question is just a few lines of computer code? So buy some lines of computer code in local
currency, and sell those lines for foreign currency. Even better, if they can do this transaction
anonymously, for that would ensure that their stash of foreign exchange would not even come
to the knowledge of the snoopy authorities. Welcome to China (did you think I was referring
to someplace else?), a large prosperous nation with currency controls and a one-party
government. Welcome to bitcoin, ethereum, litecoin, et al, - computer codes that are curios
and crypto-currencies.

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Bypassing currency controls Bitcoin is of course, the most well-known and oldest of these
virtual currencies. And, bitcoin is extensively used to bypass currency controls, not just in
China, but in Greece and other places as well. Bitcoin has become popular in India as well.
Volumes of rupee trading in bitcoin have exploded this year – over 2,500 Indians trade
bitcoins daily. Not coincidentally, demonetisation of 86% of Indian currency on November 8
triggered off an explosion of interest. Some estimates indicate that rupeedenominated bitcoin
trades now generate the third-largest volumes after American dollar and yen. Bitcoin has now
been around for many years and its codes are open-source. But many people don’t understand
how it works. Internationally, bitcoins are traded on multiple financial exchanges and they’ve
shot up in value over the last year. Most exchanges insist on some degree of “Know Your
Customer” or KYC details, but there are loopholes. For example, the same person could own
many wallets in which the coins are held. It is possible to layer trades such that it is
impossible to figure out who sold what, when. What’s more, the underlying reason for a trade
is irrelevant – all that is known is that a coin has moved from one wallet to another.

5.7 India’s Government

Although India’s RBI has long warned cryptocurrency users and traders of its perils, Indian
President, Narendra Modi, indirectly promoted Bitcoin, on July 2, 2015, with his ambitious
Digital India. Plans included digitizing government data, improving India’s digital
infrastructure, and optimizing its online connectivity. Last month, the government formed an
inter-disciplinary committee to examine the framework on virtual currencies and set up a
forum MyGov for public opinion on virtual currencies.
Last week, India’s Department of Economic Affairs in its Ministry of Finance met to
discuss how Bitcoin could be regulated. The committee suggested the following: that
cryptocurrencies should be governed by the Reserve Bank of India Act of 1934; that Bitcoin
investors should be taxed; that guidelines for buying and investing in cryptocurrencies should
be drafted; that the IRB should extend FEMA to cross-border cryptocurrency deals; and that
users should be taxed on their cryptocurrency returns.

Observers predict that India’s government will regulate Bitcoin in stages. India’s Bitcoin
industry welcomes these changes knowing that government acceptance will give the
cryptocurrency the backing it needs. In fact, India’s Bitcoin industry has long tried to
popularize Bitcoin with strategies that include conducting security checks, requesting
identification from users, such as government-verified address documents, Permanent
Account Numbers (PAN) or Aadhaar IDs, and sometimes even checking bank details. Private
Bitcoin companies have also launched an association, called the Digital Assets and

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Blockchain Foundation India (BFI), to educate lay people on Bitcoin benefits and usage.
Government intervention credits their efforts.

5.8 Impact of GST

The government of India is reportedly taking a different approach to regulating

cryptocurrencies, mulling over an 18 percent Goods and Services Tax (GST) on trading the
digital coins, According to the report, citing Bloomberg, the Central Board of Indirect Taxes
and Customs is looking at the proposal. A finalized draft will be presented to the GST
Council. The government could hit the cryptocurrency with the GST tax retrospectively from
July of 2017, which was when the GST was created, noted the report.

For the government of India to tax cryptocurrencies, the digital tokens have to be considered
goods or commodities instead of currencies and securities. The miners, exchanges and wallets
would be considered as
services that enable the
supply of goods. If the
tax becomes law it will
mark a big change in
how the government of
India has been
approaching
cryptocurrencies.

The Reserve Bank of

India (RBI), India’s
central banking institution, has long been a critic of cryptocurrencies, warning users about the
risks since as far back as 2013. In April, RBI banned regulated financial institutions in the
country from dealing with cryptocurrencies, CNBC reported.
The bank wrote in a statement, “In view of the associated risks, it has been decided that, with
immediate effect, entities regulated by RBI shall not deal with or provide services to any
individual or business entities dealing with or settling [virtual currencies].”

Institutions that currently provide services related to cryptocurrencies will have to end those
relationships “within a specified time.” The bank said a circular with more information is
being issued separately.

In February, India’s finance minister said — per a transcript from The Hindu newspaper —
that the government would “take all measures to eliminate the use of these crypto-assets in

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financing illegitimate activities or as part of the payment system.” And, in December, India’s
finance ministry decried bitcoin trading (and other associated cryptocurrencies), claiming that
it is, at base, the same as buying into a Ponzi scheme. The finance ministry noted that
cryptocurrencies are not legal tender and, therefore, offer users absolutely no governmental
protections.

5.9 Impact of Demonetisation

On November 8, 2016, the Reserve Bank of India (RBI) removed 500 and 1000 Rupee notes
from circulation, stripping the nation of 86% of its currency. At a time when the Narendra
Modi government’s
decision to
demonetise high-
value currency notes
has left Indians
scrambling for
alternative payment
and investment
options, the demand
for new-age
cryptocurrency
options has seen a
surge. For this and
other reasons,
Bitcoin, the largest
and oldest of
cryptocurrencies, is trading at a huge premium in the country.

The demand spike in India follows a similar trend in neighbouring China. In the past month,
while the dollar strengthened, and the Chinese currency weakened to an eight-year low, the
demand for Bitcoin in China increased dramatically. Over this period, the price has surged
over 25% to around $740 per Bitcoin on major global exchanges.

On Indian exchanges, the Bitcoin prices are being quoted at 25-28% higher than cost. The
interest among people here has been fuelled mainly by the government’s demonetisation
move.

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On November 8, Bitcoin was priced at about Rs 52,000 on leading Bitcoin trading exchanges
Unocoin and Zebpay. On that day, the international cost of one Bitcoin, when converted into
rupee, stood at Rs 46,942. So, the difference between the cost and trading quote came to about
10%. Compared with that, the trading price at present is at Rs 64,000, while the international
price is around $740 (about Rs 51,000), a difference of over 25%

Unocoin Chief Executive Officer Sathvik Vishwanath says: “The price of Bitcoin is higher
than the international price because there is high demand but limited supply for Bitcoin
among Indian traders.”

Sandeep Goyenka, CEO of Zebpay, India’s largest Bitcoin exchange by volumes traded, says:
“There is a surge in interest for Bitcoins. Indians are inquiring about Bitcoins as an alternative
and safe investment option. They are downloading Zebpay as they want to experiment with
digital currencies. There has been a 50% increase in Zebpay downloads.” Google search data
show that Indians’ search for the keyword ‘Bitcoin’ was at its peak soon after demonetisation.

Sathvik adds: “It cannot be easily imported because of capital controls in India,” so the supply
is always less than demand. But, his company Unocoin targets Indians abroad looking to send
remittances home. The best way, he suggests, is to buy Bitcoin on an international exchange
and transfer it to India, where it can be immediately sold on a Bitcoin exchange. The transfer
can take place through blockchain, a transparent public ledger. The Indian receiver, while
encashing it, gets a premium and all deals are done using the banking channel, with proper
know-your customer records.

5.10 Impact of High Crypto Prices

The general level of prices of cryptocurrencies in India is on the high side. Market rates are
relatively higher by as much as 5 to 10 percent compared to the global average. This means
that Indians can only get involved in peripheral participation in crypto trading as far as
international crypto exchange platforms are concerned. Lack of large-scale mining facilities
especially with regard to Bitcoin has been identified as a reason for this. Also, strict
government restrictions on international money flow also make it significantly difficult for
Indians to transact with many of the large foreign crypto exchange platforms. The emergence
of local platforms has helped to alleviate this issue to some extent as it is now a little easier
for lower income citizens to gain access to cryptocurrencies.

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5.11 Indian Companies using Cryptocurrency

Several top corporates and banks are experimenting with virtual currency as a more
transparent treasury management tool for optimal utilisation of working capital settlement
among subsidiaries and paying vendors and suppliers while being cautious about regulatory
compliance.
Even as bitcoin loses sheen, some companies and banks are looking to use digital currency for
their internal operations based on blockchain technology, said people with direct knowledge
of the matter. They said Hindustan Unilever Ltd (HUL), Reliance Industries Ltd (RIL), HDFC
Bank and ABG Shipyard are among those running such pilots for internal treasury
management, record
keeping and trade
finance functions. ET
spoke to some of the
people working directly
on blockchain pilots.
HUL said it is constantly
looking to bolster digital
capabilities. RIL, HDFC
Bank and ABG Shipyard
didn't respond to queries
"The cryptocurrency
would only be used by
the companies and banks internally," said one of the persons cited above. "It will mainly be
effective as a working capital management tool, where rather than actually transferring
money, cryptocurrency will be transferred and accounts shall be reconciled at a later date."
The companies and banks involved in the pilot projects have not yet set a definite timeline for
scaling up usage.

A company with several subsidiaries has to move money back and forth among the various
entities. These transfers can number in the millions annually, especially in infrastructure and
banking. Currently, these could be book entries or actual money may have to be paid and
received. This is where an internal cryptocurrency comes handy, experts said. Several large
companies are evaluating various use cases of blockchain, including in areas such as
managing intra-group transactions and as a logical extension, looking at its use as a group
treasury management tool for more efficient cash and working capital management," said Sai
Venkateshwaran, partner and head of CFO advisory, KPMG, in India. "Apart from greater
efficiency and accuracy, it has the potential to bring enhanced levels of transparency for group

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treasury management and also cost saving .

"In line with our vision of 're-imagining HUL,' we are constantly looking to augment digital
capabilities in our business," a company spokesperson said. "We are currently working on a
number of experimentation projects across our value chain which will propel us into the
future and redefine the landscape in which we operate." Corporates are experimenting with
cryptocurrencies to reconcile accounts, with actual money being transferred only at the end of
the financial year or quarter.

5.12 Bitcoins is not a legal tender in India

Governments control fiat currencies. They use central banks to issue or destroy money out of
thin air, using what is known as monetary policy to exert economic influence. They also
dictate how fiat currencies can be transferred, enabling them to track currency movement,
dictate who profits from that movement, collect taxes on it, and trace criminal activity. All of
this control is lost when non-government bodies create their own currencies. Control over
currency has many downstream impacts, perhaps most notably to a nation’s fiscal policy,
business environment, and efforts to control crime. The Ministry of Finance said that virtual
currencies (VCs), including bitcoins, are not currencies. “VCs are not currencies. These are
also being described as ‘coins’. There is however no physical attribute to these coins.
Therefore, VCs are neither currencies nor coins," the ministry said in a press statement. It
further clarified that virtual currencies are not backed by government fiat. “These are also not
legal tender. The government or Reserve Bank of India (RBI) has not authorized any VCs as a
medium of exchange." With this statement, there is finally some clarity on how India plans to
treat bitcoin. So far, it was not clear if bitcoin would come under the purview of Reserve Bank
of India. Bitcoin exchanges are not surprised by this move. “For the government to give
virtual currency a currency status has a bigger implication, especially due to the capital
controls we have here in India. If they give it a status of currency, they have to allow us to run
the exchanges here. If they allow the exchanges, how are they going to control the flow of
money in and out of the country? I was expecting this to happen," said Praveen Kumar,
chairman and chief executive officer of Belfrics Global SDH, a company that runs bitcoin
exchanges in Singapore, Malaysia, Bahrain, Japan, Kenya, Nigeria, Tanzania and India. Why
has the government clarified about coins? “Several initial coin offerings are coming up in the
country. Some term it as currency or coins. From a layman perspective, they can assume that
it is something similar to what central banks issue as coins. It is a clarification that the
government is not regulating the virtual currencies and coins," added Kumar. since Bitcoin
became a popular investment option, the Reserve bank of India has expressed their reluctance
towards cryptocurrency. Last year the RBI stated “There is a real and heightened risk of

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investment bubble of the type seen in Ponzi schemes which can result in sudden and
prolonged crash exposing investors, especially retail consumers losing their hard-earned
money,” the ministry had said. “Consumers need to be alert and extremely cautious to avoid
getting trapped in such Ponzi schemes.

5.13 Future of Crytocurrency in India

E-commerce is the reason for the future growth of the cryptocurrency

Although e-commerce is growing, the obsolete global financial system represents the biggest
barrier to its expansion. Currently, banks act as intermediaries between buyers and sellers on
the internet. That’s not a big problem for people who already shop online. However, there are
many people who could benefit from online shopping but can’t open a bank account.

I’m talking about people from third-world countries where banking systems are undeveloped,
as well as disadvantaged people from developed countries. According to some estimates,
there are more than two million people world who fall under this category. Cryptocurrency
could connect those people with the world of e-commerce. After all, they just need an internet
connection to get started. There’s no list of requirements for downloading a wallet and using
digital coins as a means of payment. You don’t even need to provide your personal
information.

Holding, selling or dealing in cryptocurrencies such as Bitcoin could soon land you in jail for
10 years. The “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill
2019” draft has proposed 10-year prison sentence for persons who “mine, generate, hold, sell,
transfer, dispose of, issue or deal in cryptocurrencies. Making it completely illegal as well as
the bill makes the holding of cryptos a non-bailable offense.

The Reserve Bank of India issued a press release that said: “Technological innovations,
including those underlying virtual currencies, have the potential to improve the efficiency and
inclusiveness of the financial system. However, Virtual Currencies (VCs), also variously
referred to as cryptocurrencies and crypto assets, raise concerns about consumer protection,
market integrity, and money laundering, among others. Reserve Bank has repeatedly
cautioned users, holders and traders of virtual currencies, including Bitcoins, regarding
various risks associated with dealing with such virtual currencies. In view of the associated
risks, it has been decided that, with immediate effect, entities regulated by RBI shall not deal
with or provide services to any individual or business entities dealing with or settling VCs.
Regulated entities which already provide such services shall exit the relationship within a
specified time.”

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Points to be noted Soon you might not be able to transact from Indian Crypto exchanges in
INR. We may expect to see some currency like Tether for Indian citizens. The only problem
is liquidation that could be fixed by using decentralized exchanges like BiSQ or by using a
P2P exchange website like DEX. The price will affect the Indian crypto market. However,
this won’t affect the global market as Indian crypto market is just a fraction. This shutdown
may put everyone back in the 2014-15 mode were buying/selling Bitcoin was not possible or
as easy on exchanges. The government of India has taken this step to curb down growing
crypto scams. The government’s fear of money laundering is real but this is not the only
country that has faced this problem. Many countries of the world like Australia, Japan, USA
are adopting and creating a new ecosystem for the growth of crypto economy and technology,
this step will put a big dent in the growing cryptocurrencies and also blockchain sector of the
Indian market.

Koinex, one of the leading cryptocurrency exchange in India, has shut down its trading
services with effect from 2 pm on June 27. “After months of uncertainty and disruption, we
have regretfully decided to shut down all digital assets exchange services and operations
today,” said Koinex co-founder Rahul Raj. The deadline for withdrawing all digital assets
from the exchange was 9 pm on July 15. “Sooner than expected, it is goodbye from Koinex,”
the exchange said in its email to its users. With existing companies shutting down the
cryptocurrency decision in India will have a huge impact on Facebook’s plans to launch its
own crypto token, Libra, An outright ban will make things difficult for Facebook in India.

5.14 Difference between actual investment and virtual investment

Actual investment Virtual investment

1) Tax benefit. 1) No tax benefit.

2) High future forecasting. 2) Low future forecasting.

3) Can’t use in black market. 3) Can use in Black market

4)Regulatory body are RBI, government,
4) There is no regulatory body
SEBI
5) Transaction can be reverse without 5) Transaction cannot be reverse
consent of receiver without consent of receiver.
6) High credibility 6) Low credibility
7) There is involvement Third party. E.g.- 7) There is no involvement of Third
Bank. party
8) Three days for settlement. 8) Payment & settlement is on the spot.
9) Eg. Debt, Shares, Properties, PPF, 9) E.g. Bitcoin , ripple, Litecoin,
Gold, etc Gridcoin etc

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CHAPTER 6 - NEWS ARTICLES

16th March,2020 : Cryptocurrency Markets Drop by - 34.4%

Due to the fears surrounding COVID-19, the crypto markets crashed on Thursday and
recorded the worst day in their
history. Investors are
still extremely fearful.
Some stablecoins like Paxos
Standard (PAX), USD
Coin (USDC), and Binance
Coin (BUSD) were able to
strongly gain liquidity amid
these extreme market
movements. The latter made
issuances for the third time in a
row and is now ranked higher
than its competitor TrueUSD (TUSD).
Excluding stablecoins, all cryptocurrencies are deep in the red. The least bad performer was
UNUS SED LEO, the exchange token for Bitfinex and Ethfinex. Compared to Bitcoin, LEO
gained +29,5% to trading at 17,016 satoshis.
By far the worst performer was the payment platform Swipe. This is peculiar, since Swipe
was one of the top performers in January, but has lost ground since and dropped out of the
CMC100-ranking for now.

9th March,2020 : Over $26

billion wiped off
cryptocurrency market in
24 hours after massive oil
price plunge
1. The value of the entire
cryptocurrency market fell
over $26 billion on Monday.

2. Bitcoin, the biggest

cryptocurrency by value, fell
10% in 24 hours.

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3. Other big digital coins ethereum, XRP and bitcoin cash, posted double-digit losses.

4. The sell-off in digital coins followed a plummet in oil prices.

The market capitalization or entire value of cryptocurrencies was down $26.43 billion from a
day earlier at around 1:17 p.m. Singapore time, according to data from Coinmarketcap.com.
The sell-off worsened as the day went on.

6th March 2020, MUMBAI (Economic times) : RBI to file a review petition in the
Supreme Court

The Reserve Bank of India (RBI) is planning to file a review petition in the Supreme Court
against the quashing of a central bank circular aimed at curbing cryptocurrencies, said people
with knowledge of the matter. The central bank is concerned that the apex court’s decision on
Wednesday could pave
the way for trading in
virtual currencies and put
the banking system at
risk.

Several cryptocurrency
platforms that had shifted
base to Singapore and
elsewhere after the RBI
circular that was issued
on April 6, 2018, are now
looking to move back to India. This may also mean that banks will allow customers to link
bank accounts to cryptocurrency platforms, facilitating trading. The circular had barred
financial entities regulated by the RBI from entering into any transactions involving
cryptocurrencies.

The apex court said the right to create something that doesn’t violate any existing rule is an
unsaid fundamental law. Hence, citizens have the right to create a new industry of
cryptocurrencies and exchanges along with the fundamental right to trade, it said. The bench
also said that the central bank hadn’t demonstrated that trading in such currencies was
damaging to the entities it regulated.

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6th March,2020 (Money Control): Fans of Bitcoin in India got a huge shot in the arm
this week
After the Supreme Court ruled that the Reserve Bank of India (RBI) could not impose a
blanket ban on banks
from dealing with or
providing services to
individuals or businesses
dealing with or selling
virtual currencies. To be
sure, virtual currencies or
cryptocurrencies (of
which, Bitcoin is but one)
haven’t been legalised by
this judgment — the draft
Bill proposing to ban
cryptocurrencies is
awaiting Parliament scrutiny.
However, the basis on which the Supreme Court came to its conclusion — the doctrine of
proportionality — is probably what should mark this decision out. A read through the
judgment would suggest that the court rejected most of the arguments that the lawyers for the
cryptocurrency companies made — it said that the RBI had jurisdiction over, and therefore
could not be barred from regulating alternative currencies; as well as that the mere fact that a
majority of countries had not banned the currency cannot be a reason to preclude India’s
authorities from doing so.

6th March,2020 Mumbai : Supreme Court Quashed RBI Circular: The supreme court
quashed The Reserve Bank of India (RBI) circular that banned banks from dealing in
crytocurrency and, investors are looking forward to using the Indian currency to be introduced
on to cryto exchange. However regulations could still make it difficult for crytocurrency
players to survive in India.

There’s a still proposed bill pending with the government that could prove Tenuous – The
banning of crytocurrency and regulation of official Digital Currency Bill,2019.

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5th March 2020 (Business Standard): RBI circular prohibiting banks from facilitating
virtual currency After the Supreme Court’s judgment Wednesday setting aside The Reserve
Bank of India (RBI) circular prohibiting banks from facilitating virtual
currency/cryptocurrency/crypto-asset transactions the question arises what next.

The judgment holds that

while the RBI had the power
to take note of and deal with
virtual currencies, the
prohibition was excessive
since it cut off the lifeline of
an otherwise legitimate trade.
It also holds the RBI did not
show any harm to its
regulated entities as a result
of their facilitating virtual
currency trade and any
defects in the functioning of virtual currency.

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CHAPTER 7 – CONCLUSION

Hence, the cryptocurrency age is yet to prosper with emerging access to digitalpayments, fast
track speed transactions and relevance to transfer money withoutany source like brokers or
financial institutions. It
is an efficient way to
earnand trade. Many
financial institutions
have added it as its
AUMs. We
haveobserved the
importance of more
requirement of bytes as
many people
transactand use
cryptocurrencies as per
growing years and population that increases inthe picture. More transactions take place. When
more of buying and selling, swaps, bids and buys and more order matching and enhancement
of profits.

7.1 Obstacles

Cryptocurrencies such as Bitcoin still have numerous significant obstacles to overcome before
they could totally replace current currency systems. The most immediate is the simple
opposition from existing financial institutions, which wield great power and have incentives
to discourage the proliferation of cryptocurrencies. Other large corporations, even when
amenable to the idea of cryptocurrencies, do not currently consider them stable enough to
keep as assets for long periods of time. In addition to battling the current economic system,
cryptocurrencies have some internal challenges to overcome. Attempting to convert the entire
world financial system to the Bitcoin model, for example, could cause such a massive growth
in blockchain size that the distributed ledger model would become impractical. It is also still
unclear whether blockchain technology could be successfully adapted to use cases which
require very high speeds with high volumes (on the order of seconds instead of hours), and
would be poorly suited for any application which required some degree of reversibility.
Finally, because of the substantial energy costs and diminished rewards over time associated
with the "mining" process, users may eventually be forced to bear increasingly high and
unreasonable transaction costs.

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7.2 Short-Term (3-5 Years)

INCREASING EFFICIENCY IN THE FINANCIAL INDUSTRY

Since the 2008 financial crisis,

large banks are increasingly feeling
pressure to increase efficiency and
cut costs wherever possible. To that
end, a May 2016 report from
Goldman Sachs estimates that the
financial industry alone could
realize up to $6 billion/year in
savings through use of blockchain
technology. However, this would
not necessarily included centralized
cryptocurrencies such as Bitcoin, but may involve the creation of new proprietary centralized
cryptocurrencies (such as the Bank of England’s newly introduced RS Coin). The introduction
of cryptocurrencies may also lead to increased levels of transparency and few incidents of
fraud. Under current systems, the correct identification of fraud is very manual-labor intensive
and prone to error. However, cryptocurrencies are designed to be explicitly transparent and
automatically detect fraud, greatly alleviating the costs associated with managing associated
systems.

7.3 Emerging Markets

Because cryptocurrencies require only an Internet connection, and are not dependent on
established institutions such as banks, they are ideally suited for societies without a
welldeveloped financial infrastructure. As with how many individuals emerging markets
skipped over landlines and went straight for mobile phones, the same individuals may skip the
overhead of the traditional banking system and engage directly in mobile banking. For these
reasons, we expect cryptocurrencies to become a major influence in emerging markets over
the next 3-5 years.

7.4 Long-Term (5-10 Years) Financial Market Disruption

Within the cryptocurrency community, one of the most popularized goals is the total
replacement of banks and other centralized financial intermediaries. Although such
institutions may never be fully replaced by a democratized network, their role (and associated

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profitability) may steadily diminish with rise of cryptocurrencies, hopefully leading to the
prevention of future financial catastrophes on the scale of the 2008 crisis.

7.5 Expanding Industries

In addition to revolutionizing the financial system, the blockchain technology of underlying

cryptocurrencies has the potential to expand across nearly any industry that involves large-
scale record-
keeping.Blockchain could
be a massive boon to
proponents of effective
protection of intellectual
property rights, such as
with music and film. New
companies such as Ascribe
are pioneering methods for
creating secure limited
copies of digital media, in
order to ensure that artists are properly compensated for their work, instead of being financial
damaged by pirates. Other examples include the growing "Sharing Economy" (including Air
BnB) which can use blockchain to ease identity and reputation management, and "Smart
Grid" utility companies which could use blockchain to introduce efficient micro transactions
for energy consumption.

7.6 Far Future (10+ Years)

In the very far future, global and democratized cryptocurrencies have the potential to replace
government-backed fiat currencies as the primary means of conducting financial transactions.
With that end in mind, Microsoft has also begun facilitating large-scale simulation tests on
behalf of banks and other large corporations interested in understanding the potential
ramifications for such a large-scale shift in the global economy.

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BIBLIOGRAPHY

No books or manuscripts have been used for the purpose of data collection.

WEBLIOGRAPHY

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