Earlier in 2022, Russia announced that it might ban cryptocurrency operations, and in July 2022, Russian President Vladimir Putin signed a law banning digital payments across the nation. Not, only in Russia, but even in China, cryptocurrencies have been banned since September 2021.

The interest rate hikes are also one of the biggest reason behind the falling price of crypto as, the Central Bank all around the world hikes interest rates as a result squeezing away the liquidity from the market the markets are natural to react but the ferocity of reaction will depend on how much of it is actually artificially inflated and as we all know that cryptos generally don’t have any underlying assets from which it derives value, more the money pumped in, more the demand and hence the price hike, but as soon as the plug of liquidity is pulled off the demand dries and price falls.

Remember the Terra Luna crash, in the mid of 2022? LUNA fell over 95% in a day, while the Terra network and its leader, Do Kwon, rose to prominence in the cryptocurrency world over the course of four years, all ending in a disastrous fall from grace. The Luna crypto network collapsed in what is considered the largest crypto crash ever, with an estimated $60 billion wipeout, shaking the global digital currency market.  Besides that, sources claim that the crash of the cryptocurrencies Terra USD and LUNA caused losses to about 2.1 lac Indians.

A month before, news flashed all over social media that one of the largest crypto exchanges, FTX, had filed for bankruptcy. The entire crypto community was stunned and shocked. Now, the former CEO of failed crypto firm FTX, Sam BankBankman-Fried, has been arrested in the Bahamas at the request of the U.S. government and charged with defrauding investors and diverting proceeds from investors to buy real estate on behalf of himself and his family. According to reports, he could face life in prison. What is more important is that he was once viewed as a white knight in the cryptocurrency community and is now a con man.

These are some of the significant events that have contributed to the downfall. If you look at the top 10 cryptocurrencies by market cap, you will notice that they have all seen massive wealth destruction.

On the other hand, Blockchain, the technology underlying cryptocurrency, has seen increased acceptance by the Indian government in a variety of sectors, most notably:

The Telecom Sector: 

The Telecom Regulatory Authority of India (TRAI) has directed that all telecom companies begin implementing blockchain technology. The use of blockchain technology in the telecom sector will aid in the reduction of spam calls. Through blockchain technology, authorities will be able to track down unregistered telemarketing companies. Telecom companies believe that using blockchain technology in conjunction with artificial intelligence (AI) will help to eliminate most of the telecom industry’s shortcomings.

The Tea Board of India:

The Tea Board of India intends to use blockchain technology to improve traceability throughout the whole supply chain. They have been dealing with a decline in the quality of tea produced as a result of adulteration. The use of blockchain technology throughout the supply chain will aid in the keeping of records at each stage. It will help to increase accountability while also allowing authorities to identify and eliminate problem areas.

Blockchain for secured voting:

Three students from Malla Reddy Engineering College for Women have created a novel idea that demonstrates how blockchain technology can be used to safeguard our nation’s electoral system. A pilot project conducted by these students in gated communities and housing estates demonstrated that implementing the concept in real life would be extremely beneficial.

Securities and Exchange Board of India (SEBI):

SEBI has directed all depositories to use blockchain technology to keep records. It will increase transparency in the record-keeping process, as well as in the monitoring of the creation of securities and covenants on non-convertible securities.

Blockchain for Land Records:

India: In 2018, the Uttar Pradesh government announced plans to introduce a blockchain-based record-keeping system to secure land registries and revenue records. Similarly, another state, Andhra Pradesh, is also working with private firms to secure land records in its new capital, Amaravati, using blockchain.

Blockchain for Police Records:

The police force of Goa, a state in western India, has signed a memorandum of understanding (MoU) with blockchain startup 5ire to adopt a blockchain-based record-keeping system. The Goa Police has taken this step to go paperless as well as improve security and transparency to provide better-policing services to citizens.

Although blockchain is a revolutionary technology, as an investor, you might probably be better off reducing your exposure to this highly risky asset. If you are highly optimistic about crypto, then you can limit your investment to at most 10 percent of your investment portfolio. In days to come, we might witness some great use cases and opportunities; till then. Sit tight!

There are numerous other industries where the Indian government plans to implement blockchain technology, aside from those in which it has already been adopted or is in the process of adoption. The Indian government also plans to establish a national blockchain framework that will help transform the future of as many as forty-four sectors, including education, pharmaceuticals, farming, energy, e-governance, and others. Blockchain technology has many potential applications in India, and the government is prepared to make it easier for this new technology to be incorporated and adopted there.

Blockchain technology is certain to change the game for India shortly. It will help in redesigning and eradicating all of the significant issues in the majority of the crucial government services. According to projections, blockchain technology will be worth $176 billion by 2050. Therefore, in the future, India’s adoption of blockchain technology is going to take it to a whole new level and help it move up significantly in the rankings among the countries.

Written by: CA Suraj Kar  

For more information, reach us at support@prudentwealth.in

Get your copy of PW INSIDER now!

Read Next: RBI’s Central Bank Digital Currency (CBDC

One fine morning, you wake up and tune into your tv, and watch the news flashing, the local land registrar’s office accidentally caught fire, and the entire building, along with the land records, has turned down into ashes.

A panic starts engulfing your mind with thoughts of how the government will determine the ownership of the land as there are no records or copies of records anymore. If some of you are wondering what if the government would maintain the records digitally, would that solve the problem?

Let’s revisit the breakfast scene. This time news flashed, there was a massive data breach, and all the records were deleted by the hackers, or the records were deleted by the hackers, or worse, the records were altered with no trails, now what would you do?

You might be technically living in the house, but in the records of the government authorities, it doesn’t exist. To solve this problem, let’s introduce blockchain. 

Blockchain technology is as simple as the two English words, “block” and “chain”, which combine to form “blockchain”.

Sounds confusing?

In real life, a blockchain can be thought of as a box where information can be stored. You can also save transactions in this virtual box. 

In our case, we will input all the land titles of our state in the block, and this first block will be known as the “Genesis Block”.  Again on the next day when multiple land dealings will take place, all those will be recorded in the next block.

Now, this block is digitally sealed and signed with the help of hashing algorithm. What is hash algorithm is a topic of a different time. However, for the time being, you need to know that when the box is sealed, it will generate a hash, which is an alphanumeric number that represents the block and its content. It’s like a fingerprint; no two people can have the same one. The initial block’s hash will now be carried forward to the next block, and so on, cryptographically linking the blocks.

How does it solve the problem?

You bought a property, and that is recorded in one of the blocks. For example, the 5th block in the blockchain has it, and more blocks were added afterward. Now, a hacker tries to hack the blockchain and steal your property. If he gets inside the block and changes the land title from your name to his, as a consequence, the hash of that block will change, along with it, all the following blocks in the chain will get corrupted and get invalidated as the blocks are interlinked to each other. Thus, making it almost impossible to hack the chain, this phenomenon is known as immutability.

In case, if you’re still worried that the hacker might validate the entire blocks of the chain, after manipulating the data, the blockchain comes with one more feature known as a distributed ledger, which means the record is not contained in a single computer or with a single entity, rather, the ledger or copy of the ledger, is with multiple users (known as nodes), and they could be in thousands or millions in number to simplify it.

Suppose the ledger is held by all of our country’s local authorities, and now you can imagine the number of stores, units, and local governments that exist in our country. So, when you buy a house in Delhi, the transaction is authenticated and accepted by all of the network’s nodes or participants, and everyone gets a copy of the big ledger.

So now, if a hacker hacks the ledger with the local authority of Siliguri and changes the content of one of the blocks, this manipulation will not be accepted by the other participating nodes; they will send the correct copy of the ledger, which will replace the completed ones.

What’s inside the block?

If you’ve read this far, you already know that the block contains transactional data. What else?

• Timestamp: The time when the block was mined.
• Block number: The length of the blockchain in blocks.
• Hash: Hash of that block, when the block is mined or mined.
• Previous hash: Hash of the previous block.
• Nonce: “Number Used Only Once”, the magical number. Which helps in determining the hash value of that block.

There are few more data depending on the blockchain, it will vary. So, now you know what a blockchain is.

Written by: CA Suraj Kar

To learn more, get our Journal: PW Insider for FREE!

Read Next: Annual Information Statement (AIS)

For more information, reach us at support@prudentwealth.in

Team, MyGoalMySip.

What made them so valuable was the unique color and the limited quantity of those flowers. Similarly, NFT’s are modern-day tulips unique in their kind and restricted to a single copy.

Jokes apart, an NFT (Non-Fungible Token) is a digital asset that symbolizes real-world assets such as art, music, video, and in-game stuff. They are purchased and traded online, often using cryptocurrencies, and are encoded with the same underlying software as many cryptos.

Too technical? Let me explain easily. Let’s say you made a sketch, and you take a snapshot of it, and instead of uploading it on Instagram, you upload it on any of the NFT approved platforms. The image uploaded will have unique attributes which will make it an original copy. You can then auction the art you created, similar to an offline art exhibition where you can put your work on display.

For example, renowned digital artist Mike Winklemann, popularly known as “Beeple,” created “Every day: The First 5000 Days,” possibly the most famous NFT of the moment, which sold at Christie’s for a record-breaking $69.3 million.

HUGE!!! Yes, that was the sum paid for the digital art, another digital art Nyan Cat, a 2011-era GIF of a cat with a pop-tart body, which sold for nearly $600,000 in February. As of late March, NBA Top Shot had grossed more than $500 million in sales. A single NFT featuring LeBron James sold for more than $200,000.

Individual photographs, as well as the full collage of images, can be viewed online for free by anyone anywhere. So, why are individuals willing to spend millions of dollars on something that they can easily screenshot or download?

Because it gives the buyer the right to keep the original item. Not only that but also includes built-in authentication, which acts as proof of ownership. Collectors value “digital bragging rights” nearly as much as the item itself.

How do NFTs work?

On a high level, the majority of NFTs are part of the Ethereum blockchain. Ethereum is a cryptocurrency, similar to bitcoin and dogecoin, but its blockchain also allows these NFTs, which store additional data that allows them to function uniquely, for instance, an ETH coin. It’s worth mentioning that various blockchains can use it in their very own ways.

What’s worth picking up at the NFT supermarket?

It could be anything digital (paintings, music, even your brain being downloaded and turned into an AI), but the recent hype is centered on selling digital art.

Recently in an auction, the Shahenshah of Bollywood, Amitabh Bachchan, his collection of NFTs smashed all records. The entire collection which includes Madhushala NFTs, Iconic Vintage Posters NFT, The Loot Box NFT, and BigB Punks were sold for a whopping $966,000 or Rs 7.18 crore.

What’s the point of NFTs?

That is dependent on whether you are an artist or a buyer.

I’m an artist.

Well, that’s Great News, you have a sky full of opportunities.

You might be willing to engage in it since it allows you to sell work that would otherwise be difficult to market. What are you going to do if you have an out-of-the-box concept for a digitized sticker? Sell it on the Google Play Store?  No way, right?

Furthermore, NFTs include a function that you can enable, which will pay you a percentage every time the NFT is sold or transferred, ensuring that if your work becomes extremely popular and its value skyrockets, you’ll reap part of the benefits forever

I’m a buyer.

One of the most basic advantages of purchasing art is that it allows you to financially support the artists you admire, and it’s also the case with NFTs (which are, by the way, trendier than WhatsApp stickers). 

Purchasing an NFT usually includes some fundamental usage rights, such as the right to share the image online or set it as your profile photo. And, of course, there are also the bragging rights that you own the artwork, backed up by a blockchain entry. Like, I’m a collector, not a thief. 

Although I feel a little filthy for bringing it up, let’s be honest, the majority of the people hold an NFT’s to gain from speculation, thus NFT’s functions similarly to any other speculative investment: you purchase it and hope that its value rises over time, allowing you to sell it for a profit.

The question now is, are each NFT’s one-of-a-kind?

In the boring, technical sense, each NFT is a distinct token on the blockchain. It could, for example, be a Van Gogh painting with only one definitive edition or a trading card with 50 or hundreds of numbered copies of the same artwork.

For your information, the first-ever tweet on Twitter by its founder Jack Dorsey has been sold for a massive sum of $2.9m. I’m pretty much sure too many of us rarely have any value.

Who would spend big bucks for something that is a trading card?

That is, in part, what makes NFTs so unwieldy. Some people treat them like the future of fine art collection (like a playground for the ultra-wealthy), while others treat them like Pokémon cards (which are available to the general public but also a playground for the ultra-wealthy).

Whether you are an artist or a collector, NFT’s are going to stay and you need to figure out how you can reap the benefit out of it or maybe avoid it altogether.

Written by: CA Suraj Kar

To learn more, get our Journal: PW Insider for FREE!

Read Next: Lumpsum Investment

For more information, reach us at support@prudentwealth.in

Team, MyGoalMySip.