The new budget proposes a 30 per cent tax on income from the sale or transfer of virtual and digital assets such as Cryptocurrencies. There are estimated to be around Rs 45,000 crore worth of Crypto assets in India right now with more than 15 million investors. However, efforts to legalize Cryptocurrencies have been paused for the time being. The government is probably waiting for the Reserve Bank of India (RBI) to first conduct a pilot launch of its own digital currency. Perhaps because of this factor, the Cryptocurrency and Regulation of Official Digital Currency Bill is not being presented in Parliament.
Union Finance Minister Nirmala Sitharaman also announced in the Budget that in the financial year 2020-23, the Reserve Bank of India will launch its own Digital Rupee. Digital Rupee will be based on Blockchain Technology. A blockchain is a database of transactions that is shared over a computer network. Blockchain collects information electronically in digital format. It keeps the record completely safe. This technology can be easily understood with the example of a pearl garland.
The key difference between a database and a blockchain is how the data is prepared. A blockchain collects information together in groups, called blocks, which contain a set of information. Only a certain amount of data can be stored in each block. When a block is full, it closes and joins the previously filled block, creating a chain of data called a blockchain. You can think of it as a train with many compartments or a pearl garland, in which pearls are attached one after the other. In any database, information is represented in tables, whereas a blockchain packs its data into chunks (blocks). When a block is filled with information or data, it is set like a stone and becomes part of the blockchain. Each block in the chain is given an exact timestamp when it is added to the chain. The data or information recorded in the blockchain can be viewed, but cannot be edited or changed.
According to blockchain analysis company CipherTrace, in the year 2020, theft and fraud of Cryptocurrency caused a loss of more than 14,000 crores of rupees. If there is any loss in such transactions, then even the police or the court cannot help the victim, as there are no rules and regulations in place for this at present. The responsibility of loss lies entirely with the investor. The servers of exchanges that trade Cryptocurrencies in India are located outside the country and no one knows which country’s laws will apply to them. Even an organization like the Securities and Exchange Board of India (SEBI) also cannot do anything in this matter or fraud. Investing is done in Cryptocurrencies in the form of Bitcoins. This is a very fluctuating game. In June 2021, within 24 hours the value of a Cryptocurrency called Titan had come down from about 4,500 rupees to 15 paise. That is the risk involved. Therefore, never make the mistake of falling into the trap of Crypto-related advertisements. There is currently no security system in India to track Cryptocurrency transactions. Nor is there any government regulation binding on such transactions.
