Hello friends, now days you must be hearing the name of crypto currency, bit coin, aquarium or many such things from the mouth of many people. Similarly you must be hearing how people are becoming rich overnight and earning a lot of money. Then today we are going to understand in very simple language that what is bit coin, what is crypto currency? You should or should not invest money in this? You should know whether it is legal or not? How many money can invest or how people are earning money? Can you earn or not? Today we will try to understand the answer to all these things in very easy language. Before understanding all these scenarios, you have to understand that what is crypto currency?
Suppose there are 200 countries inside this whole world. Now 200 countries have their own currency. So in this way 200 countries has their own currency. Similarly crypto currency is also one such currency which we also call digital currency.
Now as we call different money of the whole world currency. As we live in India, the currency of India is called INR or Rupee. If we live in USA, so the money is called dollar. If we live in Europe then we call the money as Euro. Similarly, this is also a universal digital currency. Inside which a lot of currency comes. Like Bit Coin, Ethereum, Ripple, there are many such currencies in it.
Now a question must be coming in your mind that why crypto currency was needed. So let’s go to 2008, where a huge financial crisis came inside America. And its effect was on the whole world. In 2008, there was such a big crisis inside the stock market that a lot of people’s money got drowned.
Now at that time a person must have thought that this was very wrong. The control of people’s money is not in their hands. If the company is sinking, their money will also sink. Meaning the control of their money is not in their own hands. People earned money with so much hard work but their control is not in their hands. So he thought I would make such money, I will prepare such a money, whose control will be in his hands. And from that the crypto currency was born. Like many people think. I will change the whole world. That I will change the name of the money. I will change the meaning of money. So crypto currency started from there.
What Is Crypto Currency?
Now another question must be coming in your mind, what is crypto currency? Crypto currency is collection of 2 words. First crypto and second currency. If you search for the meaning of crypto, then it means hidden or secret. Such a thing which is hidden, secret, about which no one can find out that is called crypto currency.
A few days ago there was a big issue of whatsapp. Where people were saying the company can read the messages of WhatsApp, people can read it, the government can know. But whatsapp said that our messages are end to end encrypted. Here encrypted means hidden or secret. Which no one can see? Only one sender and receiver can see that message. Crypto currency is like that too. Only that person will be able to see it. No one else will be able to see. Only the person who gave and the one who has received will be able to see it. No one else will be able to see.
Who Created CryptoCurrency?
Now one more question must be coming in your mind. Who created this crypto currency? So this was created by a person named Satoshi Nakamote. But later that person did not even know who that person is? Where does he lives? Or is he still alive or not? He created crypto currency and then it disappeared again.
How to invest in CryptoCurrency?
Now let’s understand the main thing, that how a person is investing money in this, how he is earning and how he is becoming rich. For this, first you have to understand that when the first crypto currency bit coin was created in 2009. No one know about Crypto currency. How to buy it? Nobody knew anything. That’s why its price was zero. After some time people came to know about it. And then people started buying it. In 2010, according to the Indian value, the value of 1 bit coin was closer to 2.85 paise. But today you all will be very surprised to hear that the value of that 2.85 paise one bit coin has become more than Rs 33 lakh today.
And the highest price of this bitcoin has been Rs 43 lakh. Now understand this also logically how a person earns money from this. If in 2010 a person would have bought and kept a bitcoin of 2.85 paise. And he would not have sold it, he would have kept that bitcoin. So today value has exceeded Rs 33 lakh, which he can get cash for. Now understand why its price is increasing so much. How does the price of any crypto currency increase? Let’s understands that.
This whole game is running on the formula of demand and supply. As the demand increases, so the price also increase. And if the demand falls, the price also goes down. The person who created bitcoin. He made only 21 million bitcoins for this whole world. Neither made more than this nor made less than this. Now out of this 21 million, about 18 million have come in the market. And the rest is yet to come.
How crypto currency price increased?
Many big companies started investing money in it. And the owners of the companies started saying that bitcoin or crypto currency is the future of this world. Like you know Elon Musk. He has invested a lot of his money in crypto currency. Now people saw that Elon Musk is investing money in crypto currency. So they also started investing money in it. Now as the demand started increasing, the supply was less, so its price started increasing automatically.
But a few days ago, Elon Musk made it absolutely clear, he will not accept crypto currency as a legal tender. And on hearing this, there was a stir in the market. Everyone started selling their crypto currency and due to this its value also decreased. Where a crypto currency was 43 lakhs, today the price of a crypto currency has become 33 lakh rupees. Meaning the person who would have bought 1 crypto currency worth 43 lakhs, he got a direct loss of 10 lakhs.
CryptoCurrency is legal or not?
Now the question arises whether crypto is legal in India or not. Yes, It is absolutely legal in India, but only for trading. In 2018, RBI had banned crypto currency. But later in 2020 this ban was removed and where you can trade in crypto currency. Moreover crypto currency is not a legal tender at all.
Now what is this legal tender? Let’s understands it
Legal tender means that RBI has issued money for us. We can buy anything with that money. But if you take crypto currency anywhere. If it is in digital form, then you cannot buy anything from it. Similarly, if you buy shares of a company and take those shares anywhere. And say take these shares from me and give me this car, then the people of the car will not give you the car at all. He will say that you have to pay me only which is a legal tender. So you can buy anything.
Now till now you have got answers to many questions, so now let’s know what are its benefits and what are the disadvantages.
Advantages of CryptoCurrency
- This is the first advantage you get. That if you want to do a transaction in crypto currency, then there is no mediator in it. If you want to send crypto currency to someone, then you can easily send crypto currency to him. There will be no mediator. Like suppose you live in India. Some of your money came from outside of India. So first your money will come in your bank. Then banker will verify you and will ask many types of questions, where did this money come from? What is its purpose? You will get that money only after so much verification. But this is not in the case with crypto currency. Sending crypto currency to anyone is absolutely easy.
- The second advantage is that it is global money. You can send crypto currency from any country to any country without anyone’s permission.
- Thirdly, it has the advantage that the transaction fee is very less in this. Whereas if you want to convert money from Dollar to INR or INR to Dollar, then you have to pay an amount for that. Which is not to be done in crypto currency.
- Its transaction is very fast. If you want to send crypto currency from here to any person in any other country. So you can send it very easily and very quickly.
Now let’s talk about what are its disadvantages
- The biggest disadvantage is that even if you accidentally move any number back and forth or do any wrong transaction, then you will never be able to find out where that money has gone. Whereas if you do any wrong transaction in the bank, then you come to know where that money has gone. So you can request from that person. Or you can request from the bank that money should be returned to you.
- The second disadvantage is that if no one is aware of where this crypto currency is going. So the illegal activity has increased a lot due to this. Many terrorists are using this money for very wrong reasons.
- Its third biggest disadvantage is when its value is going up, when it is going down. You will not know anything about it. No one has any idea when it will become very expensive and when it will come to zero.
Now you have to understand 2 term in this which is very important
1. Block Chain
Just a while back you understood that there is no middle man between 2 transactions. So how does this transaction happen? So these transactions happen through the block chain. Block chain is one such block. In which whatever transaction you are doing. In it all the complete information is kept safe. As soon as the first block is filled. It becomes a chain. And from there another block starts. When the second block is filled, further a chain is formed. And when the third block is filled, again a chain is formed. And in the same way a block chain is being formed where all your information is kept secure.
Now here comes a very famous term which we call mining. Now when a person is sending money to another person. So it is not in physical form. It does not mean that you took a pack and sent another person to reach it. The money that is in digital form, it is in the form of coding. And no one can read it. So how will that money go from person to person? That is call mining. Miners are sitting in the middle who do the mining of that coding and decode the code.
To reach the person to whom that money has been sent. So for this, many people are also doing mining work nowadays. Mining means installing very large computers in their homes. Because this mining is not done with a normal computer. Because a lot of data is receive and transfer from here. That’s why very large computers are used. But what do they get in return? So in return they get a little bit of crypto currency.
You should buy cryptocurrency or not?
By now many of your doubts would have been cleared. Now let’s understand that any person can make crypto currency. There are more than 6000 crypto currencies available in this market right now. But more than 2000 are dead. No one is using them and no one is buying them. Meaning the famous crypto currency is only 5 to 6 which has covered 80% area of the whole crypto currency.
Now understand that you do not have to buy the entire crypto currency. Let’s assume that the price of one bit coin is rupees 33 lakh. So you don’t have to buy the whole rupees you can buy even a small part of it. Whether you buy for 100 rupees or buy 200 rupees and you can also sell it.