New Delhi | Manish Mishra: Cryptocurrencies have gained massive global attention in recent years and Indians are not far behind. While some countries have recognised Cryptocurrency, in other countries it is completely banned. In India, there are some rules regarding cryptocurrency, which are important to understand before investing. First, let us understand what are Cryptocurrencies and on what technology are they based.
What is cryptocurrency?
Explaining what is cryptocurrency, Pankaj Mathpal, MD and CEO, Optima Money Managers, said that it is a digital currency based on blockchain technology that is cryptographically secured. A blockchain is a digital ledger, which can be used only by its users. He said that blockchain technology is not only secure but also transparent. It is so secure that even its administrators cannot modify it for their own benefit.
Transactions with cryptocurrency
Mathpal explained that the cryptocurrency is stored in a digital wallet and you can transfer it to other wallets. He said that you can use cryptocurrency to buy or trade any goods or services or even take cash in return.
Mathpal said that while on the one hand, trading is fully regulated in the stock market. You even know after how many days of the selling of the shares, the money will come into your account. However, there is no such regulation in the case of cryptocurrencies. You can buy and sell it through brokers or crypto exchanges. Here the identity of the seller and the buyer is not disclosed.
Why do cryptocurrency prices fluctuate?
According to Mathpal, the cryptocurrency does not have any underlying asset. When you buy shares, you know what the assets and liabilities of the company are. You know that the profit of the company will increase or if there is any positive news related to the company, then the share prices will increase and you will make a profit. Cryptocurrency prices are affected only by demand and supply. You can’t predict how much it can fluctuate.
Tax on cryptocurrency
According to Mathpal, a provision has been made in the budget presented this year that investors will have to pay tax at the rate of 30 percent on selling cryptocurrency. He said, suppose a person buys a cryptocurrency worth Rs 50,000 and sells it for Rs 60,000 in profit or Rs 25,000 in loss, he will have to pay tax at the rate of 30 percent.
(Disclaimer: The above story has been originally written by Manish Mishra, Deputy Editor, Dainik Jagran. It was translated to English by Sugandha Jha, Sub-Editor, Jagran English.)