Model Question and Answers for APSC | What is Cryptocurrency? How does it affect global society? Has it been affecting Indian society also? (UPSC CSE MAINS- 2021)
Ans : At its core, cryptocurrency is typically decentralised digital money designed to be used over the internet. Bitcoin, which launched in 2008, was the first cryptocurrency.
Based on the analysis, the following key features of cryptocurrency were identified:
1. exchange for goods or services;
2. exchange for classic currency;
3. payment for goods and services;
4. the minimum level of impossibility of abduction;
5. payments, fast and direct transactions;
6. investment asset;
7. business development in cryptocurrency.
Cryptocurrency impact on global society and India
1. Past examples suggest countries that welcome crypto networks reap economic benefits through innovation, investment, jobs and taxes.
2. Business benefits of adopting crypto as a digital asset include access to new demographics and technological efficiencies in treasury management.
3. For example RBI is experimenting with central bank digital currency (CBDC) which can make currency management easier and cheaper and transactions less costly for citizens
4. Basic technology behind crypto has many other administrative applications which can transform society and government interactions
1. Use in illegal activities like cyber attacks, money laundering and terror fianacing
2. These activities affect social order globally for instance terror financing fuels radicalization across the world
3. Crypto facilitates drug trafficking which corrupts young Individuals across the world
Cryptocurrency is truly a wonderful technology, bringing together all the latest innovations in modern financial, internet, and software services. The risks will most likely continue to decrease, as governments establish guidelines for the institution and wellknown private organisations proceed to discover ways to stabilise the Cryptocurrency whilst preserving its one-of-a-kind appeal.