Crypto’s escape hatch through Budget 2022

First, let’s know what exactly cryptocurrency is?

Cryptocurrency is a digital payment system that doesn't rely on banks to verify transactions. It’s a peer-to-peer system that can enable anyone, anywhere to send and receive payments. Instead of being physical money carried around and exchanged in the real world, cryptocurrency payments exist purely as digital entries to an online database describing specific transactions within it. When you transfer cryptocurrency funds, the transactions are recorded in a public ledger. Cryptocurrency is totally stored in digital wallets. Cryptocurrency received its name because it uses encryption to verify transactions' status. This means advanced coding is involved in storing and transmitting cryptocurrency data between wallets and to public ledgers. The aim of encryption is to provide security and safety. The first cryptocurrency was Bitcoin, which was founded in 2009 and remains the best known today. Much of the interest in cryptocurrencies is to trade for profit, with speculators at times driving prices skyward.

How does the crypto industry work?

Cryptocurrencies run on a distributed public ledger called a "blockchain," a record of all transactions updated and held by currency holders.

Units of cryptocurrency are created through a process called mining, which involves using computer power to solve complicated mathematical problems that generate coins. Users can also buy the currencies from brokers, then store and spend them using cryptographic wallets. 

If you own cryptocurrency, you don’t own anything tangible. What you own is a key that allows you to move a record or a unit of measure from one person to another without the help of a trusted third party.

Although Bitcoin has been around since 2009, cryptocurrencies and applications of blockchain technology are still emerging in financial terms, and more uses are expected as crypto will increase in the future. Transactions including bonds, stocks, and other financial assets could eventually be traded using the technology.

Some of the known examples of cryptocurrency are as follows:

1. Bitcoin: Founded in 2009, Bitcoin was the first cryptocurrency and still the most commonly traded. The currency was developed by Satoshi Nakamoto, widely believed to be a pseudonym for an individual or group of people whose precise identity remains unknown.

2. Ethereum: Developed in 2015, Ethereum is a blockchain platform with its own cryptocurrency, called Ether (ETH) or Ethereum. It is the most popular cryptocurrency after Bitcoin.

3. Litecoin: This currency is most similar to bitcoin but has moved more quickly to develop new innovations in it, including faster payments and processes to allow more transactions.

4. Ripple: It is a distributed ledger system that was founded in 2012. Ripple can be used to track different kinds of transactions, not just cryptocurrency. The company behind it has worked with various banks and financial institutions.

Non-Bitcoin cryptocurrencies are collectively known as "altcoins" to distinguish them from the original.

After Budget 2022, there will be significant changes in the crypto world.

It’s likely the first instance of an industry cheering the imposition of a steep levy on the asset class it trades in.

Investors and startups operating in the virtual digital assets and cryptocurrency ecosystem hailed Finance Minister Nirmala Sitharaman’s move to tax at 30 percent "any income from transfer of any virtual digital asset", calling it the furthering of the "mainstreaming excitement" on the asset class.

Cryptocurrency investors and coin exchanges believe that the government's move to tax them provided them with clarification as well as the first step in the eventual legitimization of this asset class.

"It's too early to gauge the impact on trading. In a couple of days, we will have a clearer picture, "said Shivam Thakral, CEO of BuyUcoin. "At this moment, we have not witnessed any selloff or panic selling on our platform. The sentiment around the budget announcements is looking positive right now, and we hope that the budget announcements are implemented keeping in mind the aspirations of investors and entrepreneurs within the Indian crypto ecosystem. "

"I am getting lots of queries on issues that need clarification. What part is taxed at 30%-INR to cryptocurrency or cryptocurrency to cryptocurrency? How will the crypto to crypto transactions be taxed? " Mudrex's founder, Edul Patel, stated

 "Digital assets should be treated as equity, and we should have LTCG or STCG rather than 30% tax," said Rahul Soni, a Delhi-based investor. 

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Aashi Harita