Explained: What are private cryptocurrencies?

New Delhi, Nov 24: India is set to introduce, evaluate and enforce a bill to prohibit "all private cryptocurrencies" in the country.

The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, to be tabled in the parliament proposes to prohibit all private cryptocurrencies, with a few exceptions.

The bill aims to create a facilitative framework for the creation of the official digital currency to be issued by the Reserve Bank of India. The Bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses."

What is a cryptocurrency?

A cryptocurrency is a form of digital money that is not controlled by a central authority such as the government. It is based on blockchain technology, which is a distributed ledger framework.

Many popular cryptocurrencies are currently available in India, including Bitcoin, Ethereum, Cardano (ADA), Uniswap (UNI) and Binance Coin, which are based on public blockchain networks.

The government has raised concern a rising number of advertisements promising easy and high returns on investments in cryptocurrencies. And hence, the government is mulling for a strong regulatory steps could be taken to deal with the issue.

What is Private Cryptocurrency?

In fact, there is no official definition of private cryptocurrencies yet. Private cryptocurrency conceal the transaction information to offer privacy to users. Here, the transactions can happen anonymously

Private cryptocurrencies include Monero, Particl, Dash, ZCash, Grin, Horizen (ZEN), ByteCoin (BCN), Firo (FIRO), Super Zero Protocol (SERO), BTCX India, UCoin and Delta. These coins allow users to transact without making the data public, which raised concern among the authorities.

Will there be a ban on cryptocurrencies?

The Indian government is unlikely to ban all cryptocurrency. However, strict regulation will be brought in.

Though, crypto investment has attracted investors, it pose a severe danger to the country's macroeconomic and financial stability. One must be aware of using or investing in these cryptocurrencies.

Indian companies accept Bitcoin payments in India

HighKart: This e-commerce store is positioned to become India's leading online store that takes bitcoin payments.

The Rug Republic: The Rug Republic is a Delhi-based decor firm that accepts the top 20 cryptocurrencies

Purse: Purse is one of the few online marketplaces that accepts cryptocurrencies.

Sapna: Sapna is also one of India's most popular online stores, specialising in books also accepts cryptocurrencies.

Things to check before making Bitcoin payment

• Wallet Security
• Bitcoin price is volatile
• Bitcoin payments are irreversible
• Government taxes and regulations