Understanding the Pros & Cons of Crypto Currency Investments

20 May 2024 3 mins Investing

Thanks to unique codes, cryptocurrency is digital money that can be safely used for online transactions without the need for banks. Dogecoin, Pepecoin, and Bitcoin are a few examples; India is also producing its own virtual currency.The Working of Cryptocurrency

The Workings of Cryptocurrency

Cryptocurrencies differ from fiat currency. They spread transactions out over many computers using blockchain technology, which makes them fast and cheap. But they have issues, like their value going up and down a lot and being used for shady stuff.

Advantages of Digital Currency:

Protection against Inflation: Cryptocurrencies like Bitcoin don't change in value, so they're not affected by inflation.

Transaction Speed: Cryptocurrency transactions happen much quicker than with regular banks.

Cost-effective Transactions: Sending cryptocurrencies doesn't require middlemen like VISA and comes with very low fees.

Decentralization: Cryptocurrencies are secure because they're not controlled by any single group or government.

Portfolio Diversification: Investing in cryptocurrencies can help balance your overall investments.

Privacy: Using cryptocurrency keeps your personal information private.

Simple Currency Exchanges: You can buy cryptocurrencies on websites like WazirX, UnoCoin, ZebPay, CoinDCX, and CoinSwitch Kuber.

The Disadvantages of cryptocurrency

Safety & Security: Cryptocurrencies are secure because of their unique coding.

Transparency: Cryptocurrency transactions are easy to track, which helps prevent fraud.

Privacy: Using cryptocurrencies keeps your personal information safe.

Easy Currency Exchanges: Platforms like WazirX, UnoCoin, ZebPay, CoinDCX, and CoinSwitch Kuber make buying cryptocurrencies easy.

India's Cryptocurrency Laws and Taxes:

India doesn't have a central body that oversees or issues cryptocurrencies. However, recent tax guidelines on digital assets indicate a change in government stance. The official status of cryptocurrencies in India is still unclear.

India's Cryptocurrency Tax:

Cryptocurrency taxes in India are complicated, especially with the new rules from the Union Budget 2022. Investors are required to maintain thorough records of their bitcoin gains and losses. They can write off the expense of purchasing cryptocurrencies, but they must pay taxes on the income they make from selling them.