SC Ruling on Cryptocurrency Ban
The Supreme Court quashed ban on cryptocurrency imposed by the Reserve Bank of India. This is expected to revive the almost extinct industry in India.
Cryptocurrency is a virtual or digital currency secured by cryptography. Its notable features include decentralised structure (no central authority), security and transparency. It is based on the blockchain technology. Blockchain is a distributed ledger enforced by a distinct network of computers (nodes).
Bitcoin was the first blockchain based cryptocurrency introduced in 2009. It was launched by Satoshi Nakamoto and is the most valued cryptocurrency with a market cap of 161 billion USD. Some of today’s cryptocurrencies are based on Bitcoin while others were built from scratch. These competing versions are called ‘altcoins’. Eg: Ethereum, Litecoin etc.
Stablecoins are a class of cryptocurrency that seek to address the issues in Bitcoins. Bitcoins are produced independently of any central authority, has value instability and whose total numbers would hit a predetermined ceiling. In case of Stablecoin, there is linking to fiat currency and management by reliable entities like banks. It attempts to offer the best of both currency structures: stability of fiat currency and instant processing and security of cryptocurrency.
In 2018, the central bank had imposed a ban on trading using cryptocurrency in India. Its 2018 circular directed all entities under its purview to not deal in cryptocurrency or provide services for facilitating any entities dealing with such currency. It also directed the entities already dealing in cryptocurrency to exit the business in 3 months. This was challenged in the Supreme Court by the Internet and Mobile Association of India.
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