London, UK, 7th August 2021, ZEXPRWIRE – Cryptocurrencies are virtual coins, designed to be used as a medium of payment with no central bank or single administrator: existing as data on the internet. They are decentralized (no one controls them).
The first such currency was Bitcoin, which was created in 2009 by Satoshi Nakamoto. It is not clear who Nakamoto is/was, but it is thought he (or they) may be one or more individuals.
Cryptocurrencies rely on a technology called blockchain, which is a public ledger holding information about all transactions in that currency (who sent it to whom). These are verified by users who must use powerful computers to do so, and this takes time (minutes rather than seconds), so the transactions are recorded but not immediate.
They work using so-called ‘mining’, i.e. solving mathematical problems to verify transactions, and getting a reward in that currency for doing so: mining also creates new coins (or tokens). That requires considerable computing power, meaning users must pay for it by providing the computer processing with their own electricity (so this, in turn, contributes to global warming!). The rewards are small, but any transaction fees when sending cryptocurrency to someone else go to the miner.
Most of the cryptocurrencies have no intrinsic value and are not backed by any government. Also, unlike real money, they cannot be used for investing in company stocks or bonds which can generate returns as well. In order to become mainstream, cryptos must facilitate easier transactions through faster processing times and fewer transaction fees; otherwise, they will lose their purpose.
These are governed by the code which was written and developed by a team of mathematicians and cryptographers from around the world. The decentralized nature of these currencies depends on users’ networks to record transactions.
FinancialCentre Broker Joe Lewis believes that it is not the cryptocurrency itself that causes concern, but the businesses that are arising around it. There have been numerous cases of money laundering related to it and police raids against these criminals are becoming more frequent. As a result, people are hesitant about whether they should invest in it or not.
Mixed Reaction Of Different Nations
Cryptos met mixed reactions from different countries all around the globe. While some of them banned it completely, others welcomed it with open arms. Japan even recognized the ‘virtual’ coins as a legal form of payment. Lately, countries have been split in their reactions to cryptos.
Russia favors it and decided to legalize it as a form of payment, India on contrary is cracking down on cryptocurrencies and announced that any crypto-related activity will be considered illegal from this month onwards. The United States ‘ Internal Revenue Service (IRS) declared that cryptocurrency is a property and not a legal tender. This means that it is not a currency as such, but an asset. The only difference between real estate and cryptocurrency is that one can be seen, while the other cannot.
Until now, cryptocurrencies have been negotiated and traded freely in most countries across the globe. South Korea even declared that it will use cryptocurrency as a payment system in 2018. Cryptocurrencies are still facing some challenges to become more popular among the general population.
Russia is a country that has welcomed crypto with open arms because they see great potential in it. This is why the government has moved ahead of the paperwork and is taking practical steps. The government has granted funds worth 200,000 US dollars for the establishment of tools that can be used to track the transactions made using cryptos. The reports say that a company named RCO has been granted the contract and it is backed by Russia’s largest bank, Sber. The platform under discussion will be collecting detailed profiles of all crypto users and will examine their activity to spot potential roles in illegal activities.
In an attempt to make crypto more acceptable, the country has already announced a transparent blockchain project that will help the regulatory authorities track the status of digital financial assets. Lewis says that if these steps reach implementation then the country will be one of the first countries that will work towards reducing the anonymity factor associated with the currencies and this can prove to be a milestone for the Russian crypto industry.
Russia has been a major supporter of cryptos for a long time. The country believes that it is every individual’s right to make their own choices; hence, the government is not regulating users but instead implementing measures and tools against illegal activities taking place within the crypto network. Cryptocurrencies are still in their infancy as a currency. Mr Lewis thinks that cryptos have many advantages associated, which make them look promising, but for an increased use we need more regulation which is only possible through more such solid steps on national and international levels.
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