REGULATION of CRYPTO CURRENCY

 Crypto currency is the collection of virtual currency in which binary data  is designed to work as a medium of exchange.Crypto currency mining refers to the process of gaining crypto currencies by solving cryptographic equations with the assistance of high power computers. Individual virtual coin and ownership records are stored in a ledger.The ledger is computerized data base using strong crypto graphy to secure transaction records to control the creation of additional coins, and to verify the transfer of coin ownership.It is implemented with decentralised control and each crypto currency works through distributed ledger technology, known as block chain which serve as a public financial transaction database.A block chain is a growing list of records called blocks that are linked together using cryptography. Each block chain contains cryptographic hash of the the previous block, a time stamp and transaction data.The time stamp proves that transaction data existed when the block was published in order to get into its hash.The block chains are resistant to modifications of their data because once recorded the data in any given block cannot be altered retroactively without altering subsequent blocks. Block chain transactions are spread across many computers to manage and record transactions.Since transactions rely on many computers they are considered more secure than centralised currencies.Decentralised block chain distributes risk . Accordingly if one part of it is hacked it doesn't put the rest of the system in jeopardy instead it acts as a circuit breaker. Crypto currency mines verify the legitimacy of block chain  transactions by solving complex puzzles.The first miner to complete a " block" (solve the puzzle) verifies the transactions and recieves a small crypto currency reward for his work. Crypto currency gets its value based on what people are willing to pay for it.

The invention of block chain for Bitcoin made it the first digital currency to solve the double spending problem without the need of a trusted authority or central server.The Bitcoin design has inspired other applications subsequently resulting in a plethora of digital currencies. Total market capitalisation of  private digital currencies in the global market is estimated to be $3 trillion as on 9 th November 2021 accounting for more than the GDP of India.In this Bitcoin alone account for 46 percent of the Crypto market capitalisation in the world. Presently an estimated 100 million Indians have embraced virtual currencies ranking the country  behind USA .WasriX one of India's leading crypto exchanges alone has more than 9 million users spread over large, tier 2 and tier 3 cities in India.It has over 100 crypto currencies for trading. Crypto currency trading attained wider usage instead of simply buying to hold-like - Bitcoin wants to be a means of transaction, and others like Ethereum in building smart contract or online "bridge services" of different types of transactions. It may be noted here that Bitcoin prices violently fluctuated from 1$ in April 2011 to $ 60955.77 in November 2021.

   It has been observed that well regulated digital currencies can provide significant public benefits in greater efficiency and lower costs of both domestic and in particular international payments systems, and help to ensure financial services reach the hundreds of millions of people especially to developing countries without bank accounts. While China totally banned private crypto currencies and launched Government backed Central Digital currencies in 2020,in contrast El Salvador treated private digital currencies as legal tender money enabling all transactions and investments. Bitcoin and other crypto currencies put together also known as 'crypto assets' is viewed as volatile, speculative asset class which many are prepared to accept as a form of payment. They relies on the combination of cryptographic and block chain technology which protects the identity of holders. Obviously governments are deeply concerned about possible crypto currency usage in many illegal activities such as money laundering, terrorist financing and tax evasion.

 Taking into account the risks involved like money laundering and terrorists financing India effectively outlawed crypto transactions in 2018 which the Supreme Court struck down 2 years later. This has led to a boom in the crypto sector with a vast number of young people got involved and film stars and cricket players are modeling for it's advertisement. The Reserve Bank of India Governor has reiterated his concerns about deeper macroeconomic and financial stability issues involved in welcoming digital currencies. According to Stephen Pickford Benefits of digital financial technology is far less compared to the concerns of public policy and geographical threats from this potentially disruptive innovation especially from so called wildly fluctuating global "stable coins" operated by loosely regulated, non financial technology giants but denominated in national currencies. Serious questions about range of public issues including challenges to fair competition, financial stability, monetary policy and in international monetary systems emerge.

   In nutshell we have to regulate money laundering and terror financing. Crypto currencies like Bitcoin presents a risk especially to younger generation as the Government prepares to introduce legislation to regulate crypto currency.Crypto market should not become avenues for money laundering and drug and terror financing.Critics of crypto currency allege that largely anonymous unregulated transfers make them a preferred tool for drug traffickers, smugglers or money launderers.The central government is considering an effective regulatory framework to manage and oversee investments made in crypto currency.Experience of other countries and expertise in emerging critical and cyber technologies will pave the way for development of appropriate regulatory mechanism.