What are private cryptocurrencies? How do they differ from Bitcoin, ether? (2024)
The Indian government is preparing a bill to regulate cryptocurrencies, which will be presented to parliament in the Winter session starting November 29. The ‘Cryptocurrency and Regulation of Official Digital Currency Bill, 2021’ seeks to prohibit all private cryptocurrencies in India.
However, the government will allow only certain cryptocurrencies to promote the underlying technology and its uses, according to a legislative agenda for the winter session that is set to start later this month.
Even as the definition of private cryptocurrencies has not been defined by the government, Bitcoin, Ethereum and many other crypto tokens are based on public blockchain networks, as the transactions made by the networks are said to be traceable while still providing a degree of anonymity to users.
On the other hand, private cryptocurrencies could refer to Monero, Dash, Zcash and other such digital tokens are built on public blockchains, obfuscate the transaction information to offer privacy to users like not saving transaction history as they are routed through multiple networks.
“It is hard to comprehend what the government means by private cryptocurrencies. Bitcoin, Ether etc. are public crypto built on public blockchains and have their own specific use cases. They are needed to run smart contract and write to the distributed ledger that they’re built on top of. People cannot use INR or USDT to pay for fees on the Bitcoin or Ethereum Blockchain," said Nischal Shetty, Founder of crypto exchange WazirX.
India has had a hot-and-cold relationship with digital currencies in the past few years. In 2018, it effectively banned crypto transactions, but the Supreme Court struck down the restriction in March 2020.
Through the cryptocurrency and Regulation of Official Digital Currency Bill, 2021, India is also looking to make a framework for the official digital currency that will be issued by the Reserve Bank of India. The central bank has voiced "serious concerns" about private cryptocurrencies and is set to launch its own digital currency by December.
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As an enthusiast deeply entrenched in the world of cryptocurrencies, I can assert my expertise by delving into the intricate details of the developments mentioned in the article. My knowledge extends beyond a superficial understanding, allowing me to dissect the nuances of the Indian government's approach to regulating cryptocurrencies.
The 'Cryptocurrency and Regulation of Official Digital Currency Bill, 2021' discussed in the article is a pivotal piece of legislation. This bill, slated to be presented to the Indian Parliament during the Winter session starting November 29, aims to regulate the cryptocurrency landscape in India. Drawing on my extensive understanding, I can shed light on the key elements of this bill.
The primary objective is the prohibition of private cryptocurrencies in India, a move indicative of the government's cautious approach to digital assets. While the term "private cryptocurrencies" lacks a precise definition in the government's discourse, the article notes that the prohibition would not extend to all cryptocurrencies. This selective approach, permitting certain cryptocurrencies, underscores the government's interest in fostering the development of blockchain technology and its applications.
The distinction between public and private cryptocurrencies is crucial in comprehending the government's stance. Bitcoin and Ethereum, cited as examples, operate on public blockchain networks, ensuring traceability of transactions while maintaining user anonymity to a certain extent. Contrasting this, private cryptocurrencies like Monero, Dash, and Zcash leverage public blockchains but obfuscate transaction information, prioritizing user privacy by not storing transaction histories on a public ledger.
Notable voices in the cryptocurrency space, such as Nischal Shetty, the Founder of WazirX, highlight the challenge in interpreting the government's stance. Shetty emphasizes that cryptocurrencies like Bitcoin and Ethereum serve specific use cases, integral to running smart contracts and contributing to the respective distributed ledgers.
India's history with digital currencies has been marked by regulatory oscillations. In 2018, the country effectively banned crypto transactions, only for the Supreme Court to overturn the restriction in March 2020. The current legislative endeavor reflects a maturing regulatory landscape, aiming to establish a framework for the official digital currency issued by the Reserve Bank of India (RBI).
The RBI, expressing "serious concerns" about private cryptocurrencies, is poised to launch its own digital currency by December. This move aligns with global trends where central banks explore digital currencies as alternatives to traditional fiat.
In conclusion, the 'Cryptocurrency and Regulation of Official Digital Currency Bill, 2021' encapsulates India's evolving regulatory approach to cryptocurrencies. The nuanced understanding of public and private cryptocurrencies, coupled with the historical context of India's regulatory journey, positions me as a knowledgeable authority on this subject matter.
Private cryptocurrencies. There are coins that are more private in terms of transactions. Private cryptocurrencies are built on public blockchains, which obfuscate the transaction information to offer privacy to users like not saving transaction history as they are routed through multiple networks. Bitcoin, Ether, etc.
Bitcoin is primarily designed to be an alternative to traditional currencies and, hence, a medium of exchange and store of value. Ethereum is a programmable blockchain that finds application in numerous areas, including DeFi, smart contracts, and NFTs.
Public blockchains allow anyone access; private blockchains are available to selected or authorized users; permissioned blockchains have different levels of user permissions or roles. Many cryptocurrencies are built on open-source, public blockchains.
Bitcoin is the first and one of its kind cryptocurrency. It includes all other types of digital currencies, including bitcoins. Bitcoins are primarily used for storing value and making payments. Cryptocurrencies can be used for different purposes like supply chain management, smart contracts, payment systems, etc.
Buying either crypto requires a high risk tolerance. Looking at past performance, it's difficult to choose a winner between Bitcoin and Ether because their relative returns fluctuate depending on the time frame. In the past year, Bitcoin prices are up 157% compared to a 100% gain for Ether.
Ethereum is a payments network too, and it's the No. 1 smart contract blockchain. I wrote about how Ethereum smart contracts work over here, but the TL;DR is that they allow developers to build all kinds of decentralized applications (dapps) on Ethereum.
Ethereum is a decentralized blockchain platform that establishes a peer-to-peer network that securely executes and verifies application code, called smart contracts. Smart contracts allow participants to transact with each other without a trusted central authority.
A private key is a secure code that enables the holder to make cryptocurrency transactions and prove ownership of their holdings. Bitcoin keys specifically feature a 256-bit string displayed as a combination of letters and numbers.
A cryptocurrency wallet is a device or program that stores your cryptocurrency keys and allows you to access your coins. Wallets contain an address and the private keys needed to sign cryptocurrency transactions. Anyone who knows the private key can control the coins associated with that address.
Private BlockChain : A private blockchain is a restrictive or permission blockchain operative only in a closed network. Private blockchains are usually used within an organization or enterprises where only selected members are participants of a blockchain network.
Is Bitcoin Real Money? By most definitions, money is any item that acts as a way to exchange value in an economy, stores value or is generally accepted. It is used by people globally for these purposes, so it can be considered "real money."
Ethereum has been the second-most-valuable cryptocurrency for years. In March 2024, its market cap was over $400 billion. No max supply. There isn't a cap on the total number of ETH that will go into circulation, but its current supply of about 120 million is expected to remain relatively stable.
PayPal USD (PYUSD) is a type of cryptocurrency called a stablecoin now available for eligible US PayPal users. Learn more about PYUSD. Terms and conditions apply.
These include commercial trade exchanges that use barter credits as units of exchange, private gold and silver exchanges, local paper money, computerized systems of credits and debits, and digital currencies in circulation, such as digital gold currency.
Yes, it is possible for individuals to create their own private cryptocurrency. This process is known as creating a "token" or "coin." While creating your own cryptocurrency can be a complex and time-consuming process, it can offer several advantages over using an established cryptocurrency like Bitcoin or Ethereum.
Private currencies are units of value issued by a private organization (such as a corporation or nonprofit enterprise) to act as an alternative to a national or fiat currency, which would otherwise be the standard unit of value in a country. As a result, these currencies are not legal tender.
Unlike traditional cryptocurrencies, Monero uses ring signatures, stealth addresses, and confidential transactions to obfuscate the sender, recipient, and transaction amount. This means that transactions made with Monero are virtually untraceable, making it difficult for anyone to uncover your financial activities.
Introduction: My name is Van Hayes, I am a thankful, friendly, smiling, calm, powerful, fine, enthusiastic person who loves writing and wants to share my knowledge and understanding with you.
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