Hello friends, nowadays you must have heard the names of cryptocurrency, bitcoin, Ethereum, or any such things from the mouth of many people. And you must be hearing that people are becoming richer overnight, earning more money. So today we are going to understand in very simple language that what is this bitcoin? What is this cryptocurrency? Should you invest money in this or not? You should know whether it is legal or not. How is money invested? How are people earning money? Can you earn or not? Today we will try to understand the answer to all these questions in very simple language.
What Is This Cryptocurrency?
To understand all this, first of all, you have to understand that what is this cryptocurrency?
- Suppose there are 200 countries inside the whole world, now 200 countries have their own currency. So it means 200 currency in the whole world.
- Cryptocurrency is also one such currency which is called digital currency.
- Now as we call different money of the world currency. As we live in India, we call the currency of India INR or rupee. If we live in the USA, then the money there is called the dollar. If we live in Europe, then we call the money there as Euro.
- Now similar cryptocurrency is also a universal digital currency. In which many currencies come inside.
- Like bitcoin, Ethereum, ripple, and so many other currencies, let’s understand it further.
What Was The Need To Create A Cryptocurrency? Why Was Cryptocurrency Created?
Now the question will come to your mind that what was the need to create a cryptocurrency? Why was cryptocurrency created?
- So let’s go to 2008, where there was a huge financial crisis in America. And its effect was on the whole world.
- In 2008, there was such a big crisis inside Shermarket that a lot of people’s money was lost.
- Now at that time, a person must have thought that it was very wrong that the control of people’s money is not in their hands. If the company is sinking, their money is sinking. Meaning the control of their money is not in their own hands. People earn money through hard work but they do not have control in their own hands.
- So he thought that I will make much money, I will prepare such money, whose control is in his hands. And from there the cryptocurrency was born.
- Like many people think that I will change the whole world. Similarly, that person must have thought that I will change the name of money only. I will change the meaning of money. And that’s where cryptocurrency started.
Now the question will come to your mind that what is this cryptocurrency?
- It is made up of two words whose name is crypto and currency. If you search for the meaning of crypto, then it means ‘hidden or confidential’. Something that is hidden is a secret, about which no one can find out. It is called cryptocurrency.
- Just a few days ago there was a very big matter of WhatsApp. Where people were saying that companies can read WhatsApp messages, people can read, the government will know. But WhatsApp said that our messages are encrypted. What does ‘encrypted’ mean? Encrypted means ‘hidden or secret’. which no one can see. These two people with only one giver and one receiver can only see that message.
- Similarly, there is also a cryptocurrency, which only the person who gave and the one who has received will be able to see it and no one will be able to see it.
Who Created The Cryptocurrency?
Now another question will come to your mind that who created the cryptocurrency?
- The cryptocurrency was created by a person named ‘Satoshi Nakamoto’.
- But later it happened that that person did not even know who this person is? Where does he live? Or is it still alive or not?
- He created cryptocurrency and then it disappeared after that.
How To Invest In Cryptocurrency?
Now let’s talk about the main thing, how is the person investing money in this?
- How is earning? How are you spending money? And how is he becoming rich?
- For this, first, you have to understand that when the first cryptocurrency was created in 2009, its value was 0. Meaning that no one even knew that there is a cryptocurrency? What is this? Do you even have to buy it? Or how to buy? Nobody knew anything, so its prize was zero.
- Slowly people came to know about it. And people started buying it slowly. In 2010, according to Indian value, the price of a bitcoin was close to 2 rupees 85 paise.
- But today you will be very surprised to hear that the value of one bitcoin of that 2 rupees 85 paise has gone up to more than 33 lakh rupees today.
- And the highest price of this bitcoin so far has been Rs 43 lakh. Yes, the cost of that 2 rupees 85 paise a bitcoin was more than 43 lakh rupees.
How A Person Earns Money?
Now understand logically how a person earns money?
- If at that time a person would have bought 2 rupees 85 paise a bitcoin and he would not have sold it, then he would have kept that bitcoin with him. So today its value is Rs 33 lakh, which he can get cash for.
- Now understand this thing why its price is increasing so much. How does the price of any cryptocurrency increase? Understand that.
- The whole game is going on with the formula of demand and supply. As the demand increases, so does its price. When demand falls, the price goes down.
- The person who created bitcoin. He created 21 million bitcoins for the whole world. And after that neither made it more nor made it less.
- Now out of this twenty-one million, almost eighteen million bitcoins have come to the market. And the rest is yet to come.
How Its Price Increased?
Now understand this thing that how its price increased?
- A lot of big companies started investing money in this. And the owner of a very big company started saying that bitcoin or cryptocurrency is the future of this world.
- Like you all know Elon Musk. He has invested a lot of his money in cryptocurrency.
- Now people saw that Elon Musk is investing money in cryptocurrency, then he also started investing money. Now as the demand increased, the supply was less, so its price started increasing automatically.
- But a few days ago, Elon Musk made it absolutely clear that he will not accept cryptocurrency as a legal tender at all.
- And on hearing this, there was a stir in the market, all the people started selling their own cryptocurrencies and due to this, its price got reduced.
- Where the cryptocurrency had become 43 lakhs, today the price of this cryptocurrency has gone up to 33 lakhs. Meaning the person who would have bought a cryptocurrency for 43 lakhs, directly lost 10 lakhs.
Whether This Cryptocurrency Is Legal Inside India Or Not?
- Now the question arises whether this cryptocurrency is legal inside India or not?
- So the answer is absolutely but only and only for trading.
- On 6th April 2018, RBI had first banned the trading of cryptocurrencies. But later in 2020, this ben was removed. And said that you can definitely trade in cryptocurrency but cryptocurrency is not a legal tender at all.
What Is This Legal Tender?
Now, what is this legal tender?
- Understand this, the meaning of legal tender is that RBI has issued money for all of us, now by taking that money, you can buy anything anywhere.
- But if you are told about crypto currency which is in digital form then you cannot buy anything from it.
- Just like you buy shares of a company. And you go somewhere with those shares, you take this share to him and give me this car, then the car owner will not give it to you at all. He will say that you will have to pay only my money. Which is a legal tender and you can buy anything.
By now you have got the answer to many questions.
So now know what are its advantages and what are its disadvantages?
Advantages Of Cryptocurrency
(1) There is no mediator.
- The first advantage is that if you want to transact in cryptocurrency, then there is no mediator in it.
- If you want to send crypto from a to b, then a can send crypto directly to b. There will be no middle man.
- Like, suppose you live in India today. And if any of your money comes from outside India, it will first come to your bank. The bank will verify you. Many types of questions will be asked that why this money has come? Who has given? From what purpose did it come? And after that money will reach you.
- But this is not the case in cryptocurrencies at all. It is very easy to go from a to b.
(2) It is global money.
- The second advantage is that it is global money. You can send it from any country to any other country without anyone’s permission.
(3) The transaction fee is very less.
- Thirdly, there is a big advantage in this that the transaction fee is very less in this.
- When you want to convert money from Dollar to Indian Rupee or from Indian Dollar to Rupee, you have to pay an amount that is not to be done in cryptocurrency.
(4) The transaction is quick and easy.
- Apart from this, its transaction is also very smooth and very fast. If you want to send cryptocurrency from here to any person in another country, then you can send it very easily and very quickly.
Disadvantages Of Cryptocurrency
Now let’s see what is its loss.
(1) Difficult to detect the wrong transactions.
- The biggest disadvantage is that if you accidentally change a number back and forth or if a wrong transaction happens, you will never be able to find out where that money has gone?
- Whereas it happens in the bank that if a wrong transaction happens in your hands, then you know that that person has done it. You can request from him or request from the bank that that money should be returned to you.
(2) To be used for wrong purposes.
- The second disadvantage is that if no one is aware of where this cryptocurrency is going, then it has increased the illegal activity very much.
- Many terrorists are using this money for very wrong things.
(3) Its value changes very quickly.
- The third biggest disadvantage is that 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 too expensive and when it will come to zero.
Understand These Two Terms: Blockchain And Mining
Now you have to understand these two terms which are very special.
- The first is blockchain. First of all, understand blockchain, what is blockchain?
- Just a little while ago you understood that no one is in the middle between two transactions. Then how does this transaction happen?
- This happens through the blockchain.
- Blockchain is a block in which all the information about the transaction you are doing is kept safe.
- As soon as the first block is filled. All the information goes in it, it becomes a chain. And from there the second block starts. When the second block is filled, a chain is formed and the third block is created. So in this way a blockchain is being formed where all your information is secure.
- Now here comes a very famous term which is called mining.
- Now when a person is sending money to another person, it is not in physical form.
- It does not mean that you took a pack of notes and sent it to reach the other person, it does not happen.
- The money that is there is digital which means it is in the form of coding and no one can read that coding. So how will that money go from one person to another ? and that is called mining.
- The miner is sitting in the middle, who does the mining of that coding. Meaning that code is decoded to reach the person to whom that money has been sent.
- So for this, a lot of people are also doing mining work nowadays.
- The work of mining means installing very big computers in their homes because this mining cannot be done with a normal computer. Because a lot of data is received here, it is transferred, so a lot of big computers are used. And using it he decodes it. And it reaches the person whose money is there.
- But what do they get in return? In return, they get a little bit of cryptocurrency.
All of your uncertainties should have been dispelled by this point.
Any Person Can Make And Sell Cryptocurrency
- Now understand this thing that any person can make cryptocurrency.
- Right now more than 6000 cryptocurrencies are available in this market. But more than 2000 are dead, none of them are being used. That means no one is buying them. But the famous cryptocurrency is only 5 to 6 which has occupied about 80% of the entire cryptocurrency.
- Now here, also, socialize the fact that you do not need to buy the entire cryptocurrency.
- Suppose the price of one bitcoin is Rs 33 lakh. So you don’t have to buy the whole rupee. You can also buy a small piece of it. If you want to buy it for Rs 100, buy it for Rs 200 and you can also sell it.
When Should I Buy Cryptocurrency?
- Now understand whether you should buy it or not? When should you buy it? Or will it benefit you more than it will cause a lot of damage? Understand this.
- You all must have heard that hitting on the spot. Those people who had hit the spot in 2010 for 2 rupees 85 paise, their bitcoin has become 33 lakh rupees today. But think for yourself and see for yourself that if a person now buys any bitcoin worth 33 lakhs. And here any person coming to the market says that now its price is going to increase or the price is going to fall.
- It is not like the share market at all, it is a very different thing, it is a whole gamble. You only bet in this, you only expect in it that its price will increase or its price will fall. And only with the help of hope you keep investing your money. And whether you will gain or lose in that, only time will tell you.
Two Opinions About Cryptocurrency
- Now the people whom you consider to be greater, you consider more successful, among those people, there are two opinions about cryptocurrency.
- Warren Buffett says that the whole cryptocurrency is a gamble, speculative. And remember that you will absolutely lose your money in this.
- But at the same time, Elon Musk says that cryptocurrency is going to be the currency of the future.
Now only time will tell what will happen to cryptocurrency?