What is Cryptocurrency? How does it affect global society? Has it been affecting Indian society also? (250 words) [2021]
Introduction
Cryptocurrency is a digital or virtual currency that uses cryptography for security and operates on decentralized networks based on blockchain technology. With a market cap of $2 trillion, cryptocurrencies have been impacting societies globally, including India. This digital asset class has both positive and negative effects on global and Indian societies.
Impact on Global Society
Cryptocurrencies affect the global society in various ways:
- Economic Integration: They economically integrate the global society by bypassing divisions created by different currencies.
- Sovereign Power: They take away the sovereign power of issuing currency, making economic policy ineffective and diluting the bond between citizen and government.
- Transaction Speed and Cost: They enable cheap and fast transactions, making capital more mobile and volatile, posing risks to macroeconomic stability and consequent social consequences.
- New Asset Class: They have emerged as a new asset class, although fluctuations in their value have created both wealth and losses.
- Crime and Anonymity: They are used by terrorist organizations and drug cartels, negatively impacting society at large. Anonymity in cryptocurrency has the potential to increase crime.
- Environmental Impact: Cryptocurrency mining, particularly Bitcoin, is responsible for 0.1% of world greenhouse gas emissions and contributes to air pollution and e-waste.
Impact on Indian Society
Cryptocurrency has also been affecting Indian society in several ways:
- Financial Inclusion: Cryptocurrencies improve financial inclusion in India, enabling underserved populations to access financial transactions quickly and cheaply.
- Investment Opportunities: Around 15 million Indians have invested in crypto-related assets, with a recent survey noting that a sixth of urban Indian residents own cryptocurrency.
- Government Concerns: The Indian government and the central bank are concerned about the adverse effects of cryptocurrency, such as supporting terrorism and money laundering.
- Impact on Traditional Banking: Cryptocurrencies have disrupted traditional banking by offering alternative means of conducting financial transactions and increasing competition in the financial industry.
Conclusion
In conclusion, cryptocurrencies have both positive and negative impacts on global and Indian societies. While they offer economic integration, faster transactions, and investment opportunities, they also pose challenges such as increased crime, volatility, and environmental impact. It is important to address these concerns and ensure that cryptocurrencies contribute positively to societies worldwide.
