Curiosity about the subject Investing in Cryptocurrency has grown by leaps and bounds.
Since Finance Minister Nirmala Sitharaman mentioned digital assets or crypto currencies in her Budget address earlier this year, it has created a buzz among the financial sound people.
Crypto currencies have been around for quite some time, and individuals all around the world have been using them very often. Many analysts are optimistic about the future of cryptocurrencies.
Because Bitcoin does not rely on intermediaries, it has the potential to reduce transaction costs for companies and establish itself as a key means of electronic payment processing.
Given these characteristics, Bitcoin has a strong development potential. Virtual currencies, like regular currencies, can, of course, be used for money laundering and other illegal activities. However, the possibilities are similar to those in the physical world.
When we talk about cryptocurrencies, the first thing that springs to mind is Bitcoin. There are a few other virtual currencies, such as Ethereum (ETH), Litecoin (LTC), Cardano (ADA), Polkadot (DOT), Stellar (XLM), Dogecoin (DOGE), and others.
Here’s how you can get started investing in cryptocurrencies:
Currency acquisition entails:
(I) Careful cryptocurrency selection since the market for such virtual currencies is volatile and completely impacted by market conditions because it is typically acquired for the aim of investing.
(ii) Locate a cryptocurrency exchange. There are several cryptocurrency exchanges, but not all of them operate in all countries. Different exchanges also provide different types of cryptocurrencies, allow various payment methods, and charge varying fees.
(iii) Establish a trading account.
(iv) Save the payment method.
(v) After that, make an order to acquire the cryptocurrency of your choosing.
Make use of the cryptocurrency:
You must now select whether to spend or keep the currency, like in the stock market. Whether or not you establish a portfolio. Use cryptocurrencies to make online transactions or to acquire products or services from local merchants who accept cryptocurrency.
The cryptocurrency’s future:
Virtual currency speculators believe that digital currency is the way of the future. Because it may be used to satisfy day-to-day payment needs in the same way that other means of payment, such as money, cards, and another digital wallet, if the government allows it. Cryptocurrency allows for significantly speedier payment than any other way at a low cost all over the world. The users of cryptocurrencies think that if this occurs, a day will come when cryptocurrency will replace the existing payment system and may operate as an alternative to national fiat money and traditional commodities such as gold.
The Finance Minister stated in his address for the Union Budget 2022-23 that revenue from digital virtual assets, or crypto, will be taxed. This news instilled some hope in cryptocurrency investors, who feel that the decision to tax them is a clear indication of future legalization.
The government will levy a 30% flat tax (plus a fee) on the gain from the bitcoin transaction. Because of the nature of speculation, no deductions are permitted to compute profit. If a loss occurs in such a transaction, it cannot be offset against other income and cannot be carried forward. Current year losses, on the other hand, are allowed to offset the current year profit of similar transactions.
To keep track of such transactions, there is a provision for 1% tax deducted at source (TDS). Gifting bitcoin is likewise taxed in the recipient’s hands. All clauses take effect on April 1, 2022.
The launch of Central Bank Digital Currency (CBDC) will provide the digital economy a significant boost. In addition, digital currency will result in a more efficient and cost-effective currency management system. As a result, it is planned that the Reserve Bank of India produce Digital Rupees utilizing blockchain and other technologies beginning in 2022-23. This may alleviate the RBI’s concerns about private cryptocurrencies, which it claims may cause financial instability.
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