What are private cryptocurrencies? How are they different from bitcoin, ether?

However, according to the legislative agenda for the winter session that begins later this month, the government will only allow certain cryptocurrencies to promote the underlying technology and its use.

Even though the definition of private cryptocurrencies is not defined by the government, bitcoin, ethereum, and many other crypto tokens are based on public blockchain networks, as transactions carried out by the network are said to be traceable while still providing a degree of anonymity. Is. the user.

On the other hand, private cryptocurrencies can refer to Monero, Dash, Zcash and other such digital tokens built on public blockchains, obfuscating transaction information to provide privacy to users such that transaction history is not saved as they Many are routed through the network.

“It is difficult to understand what the government means by private cryptocurrencies. Bitcoin, Ether etc. are public cryptos built on public blockchains and have their own specific use cases. They require running smart contracts and writing distributed ledgers, which Above they are made. People cannot use INR or USDT to pay fees on the Bitcoin or Ethereum blockchains,” said Nischal Shetty, founder of crypto exchange WazirX.

India has had hot and cold relations with digital currencies over the years. In 2018, it effectively banned crypto transactions, but the Supreme Court lifted the ban in March 2020.

Through the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, India is also looking to create a framework for official digital currency which will be issued by the Reserve Bank of India. The central bank has expressed “serious concerns” about private cryptocurrencies and is set to launch its own digital currency by December.

(with inputs from agencies)