What is cryptocurrency? How does it impact global society? Has it been affecting Indian Society also?

It is rightly said that forces of Globalization not only make a borderless world, but a global village too. Any development in any part of the world impacts society and economy at large. One of the newly introduced technologies in the world because of globalization is Cryptocurrency.

A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology.

Impact of Cryptocurrency on Global Society:

• Diversion of Youth: The excessive use of the cryptocurrency in illegal narcotics business puts to test our youth and closes the window of the Demographic dividend short open.

• Lack of spending on Social Sector: The possibility of Tax evasion and the lack of traceability that defeats the aim of the progressive taxation reduces government expenditure in the social sector.

• Inequality in Society: The sudden rise and fall of value of cryptocurrency is a kind of boon for few and curse for few in the terms of profit maximization.

• Erosion of Trust: The entire financial system runs on the value of Trust, which is completely absent in Cryptocurrency.

• Potential for Cyber-attack: Cryptocurrency is becoming the target for the cybercriminals as they can easily demand from the crypto holders the ransomware in the form of cryptocurrency. So, society will largely be driven by criminals as it is the best way to earn more with minimum effort. 

Positive Social Impact of Cryptocurrency:

• Ethereum co-founder donated $1 billion of cryptocurrency to support India’s Covid-Crypto Relief Fund.

• Environmental Protection: Trespass Coins are digital coins that give people control over carbon offsets. Each coin is equivalent to avoiding more than 2,500 miles of driving. The ability to give and track carbon offsets puts environmental power into the hands of users.

• Crypto currencies could help to increase financial inclusion in developing countries by serving as a quasi-bank account, since everybody with internet access can download a Bitcoin wallet.

Impact on Indian Society:

The RBI and the Government are cautious in introducing cryptocurrency in Indian society and right now it is not a legal currency in India. Even after this, youth especially working in MNC are attracted towards cryptocurrency and its impact can be seen as:

• Washout of savings in search of better return and high volatility of cryptocurrency.

• There are few stories reported in India also where elderly is investing in cryptocurrency. It may be seen as awareness about financial products but it may cost them also in case of loss. However, it will be good for Indian society in the context:

• To check corruption.

• To bring the Unbanked into the banking system.

• Efficiency in Money transfer without paying transaction cost will be a win-win situation for Individuals and industrialists.

• Reduces the Scope for counterfeiting.

Cryptocurrency and its negative side effects will affect global society, thus individual countries must come together to eliminate the negative consequences of the crypto currency. But it must be held true that the conventional sovereign money economy can’t be replaced as a whole.