With the rapid development in the era of technology, there are a lot of new opportunities developing around the world rapidly. The most influenced sector due to this rapid change in information and technology is the business sector. With such developments taking place all over the globe online activities have increased to a significant extent. This increase in online transactions is not just limited to shopping but has also become the fountainhead of an online substitute for the legal tender and that is a cryptocurrency that facilitates the activities of trading, buying and selling.

Cryptocurrency is an online payment money method that is formulated to function as a medium of exchange but is considered to be a high-risk investment as it is generally volatile. Cryptocurrency is not regulated or issued by the Reserve Bank of India or Central Bank; rather, it is generated through computers by a process known as mining. The most commonly traded cryptocurrency is Bitcoin but when it comes to the legality of cryptocurrencies around the globe, some of the countries have welcomed cryptocurrency as a payment method but as of June 2021, El Salvador is the sole country that endorsed Bitcoin as a legal tender.

Talking about India, after a lot of dawdling of either banning or legalising cryptocurrencies, the Indian government has taken some encouraging steps for the regulation of cryptocurrencies in the country. Even though some significant steps are being taken towards the regulation of cryptocurrencies still there are a lot of challenges that are faced in governing cryptocurrency in India.

It is due to the volatile nature of the currency which makes it more prone to scams as the identity of the trader can be kept anonymous while trading in these cryptocurrencies which ultimately gives rise to all the illegal activities that are funded through the use of cryptocurrencies which include illegal transactions, funding for the spread of terrorism etc by the medium of the dark web.

However, steps are being taken by the central government to flag the reservation around the misuse of cryptocurrency and also wanted to put a blanket to the use of this online money. The use of cryptocurrencies is rising by the day and therefore the country needs to come up with some serious regulatory measures in order to curb the misuse but also stimulate the positive growth of cryptocurrencies.

India with the help of the Ministry of Corporate Affairs has managed the use to some extent but still, there is a long way to cover in near future. This research paper majorly deals with the status of cryptocurrencies in India and also focuses on whether the use of cryptocurrencies is legal or not in the eyes of law. Besides this, the paper also explores all the possible legal areas concerned with the use of cryptocurrency in the country.

Introduction
At present when everything around us is changing at a fast pace with technology being the first and the foremost thing developing rapidly, money has also changed its forms over the past year and has also come out in digital form i.e., cryptocurrency. Other than the financial market, the business sector is also a developing sector and therefore in consonance with the business sector the use of digital money is also growing rapidly.

The increased number of users that use the online platforms have developed a lot of new concepts and have created a new phenomenon to use these platforms in a better and more useful way. A cryptocurrency is a form of digital money, intangible in nature that can be used as a medium of exchange but is not a replacement for the legal tender i.e., real money, rather it can be used for many online transactions, for example in peer-to-peer networks, online gaming platforms, virtual worlds and online networks across the globe.

Cryptocurrency is gaining so much popularity nowadays because of its easy accessibility, online and virtual availability but as everything comes with its own merits and demerits, some of the aspects that are attached to cryptocurrency also make it menacing for the users to trust the use of cryptocurrency across the world. This paper explores all the possible areas of cryptocurrency which include its history, legality, threats, impact on the economy and its way ahead in a country like India.

Evolution Of Cryptocurrency
The true spirit of cryptocurrency can be seen to ease the online market and the financial transaction taking over the web. The beginning of cryptocurrency can be traced as the first digital currency which was developed as an alternative of the fiat' money and also that is more reliable and easier to use and transact.

The occupational foundation of cryptocurrency can be traced from the year 1980s by David Chaum, an American cryptographer. He developed an algorithm to suit modern internet encryption. This algorithm developed by Chaum laid the base for a digital payment currency which could act as a barter between two people and fulfil some of the requirements of the legal tender to be known as an alternative of real paper money later when David moved to the Netherlands, he laid the foundation of DigiCash, a company that was dedicated to such algorithms, which were known as blinding algorithms.

The position of DigiCash at that time could be substituted to the central bank, as the central bank has a monopoly of printing notes in a similar manner DigiCash had the sole monopoly over the algorithms or cryptocurrencies, but as the company transacted only with individuals, the Central Bank of Netherlands put some restrictions as to the transactions of DigiCash and allowed it only to transact through banks which were difficult for DigiCash to accept and follow. After the popularity of DigiCash, many countries and individuals came with the idea of electronic money but none could gain as much popularity as DigiCash and also every other payment method was nowhere similar to real money and due to which they were not able to maintain their positions in the market for a very long time.[1]

When the popularity of DigiCash was growing, countries such as Russia and the United States set up their own online platforms which could also develop e-money and came up with the idea of WebMoney and e-gold respectively. America's e-gold gained popularity in the 2000s but due to lack of safety issues and hacking problems which would leave the users with an only option to leave the platform and incur financial losses, the company was shut down in 2009.

Thinking of a currency that is more flexible and liquid in nature[2], the first and the foremost modern cryptocurrency being used is Bitcoin. Bitcoin is used for transactions in a wide range of companies nowadays and also many countries have accepted Bitcoin legally. Bitcoin is used as an exchange medium and it also maintains secrecy as to the users but can also trace the transaction using blockchain technology.

The person who invented Bitcoin is anonymous and his identity is not known to date but it is said to have been invented in the year 2008 by the same person who developed white paper. Another cryptocurrency that came out about Bitcoin is Litecoin. The first official transaction of Bitcoin can be traced back to the year 2012, where WordPress accepted payment in Bitcoin and after which a lot more companies started to do the same.

Classification Of Cryptocurrencies
Recently, according to the data of April 2021, there are more than 10,000 types of cryptocurrencies circulating across the globe.[3]

The types of cryptocurrencies fall into two categories which are:

• Tokens
• Coins

Some popular cryptocurrencies are:
Bitcoin:
Bitcoin is the first officially accepted cryptocurrency, firstly being used by WordPress for making the transaction. It was developed by an unknown person in the year 2008 and was officially circulated in the year 2009. The transactions that take place in bitcoin are among the peer-to-peer network and the transfers are direct transfers that do not involve any intermediary.

The transfers that take place do keep in mind the safety and therefore they are verified by the use of special cryptography network codes and blockchain is used for keeping the record of the transactions. The most commonly traded cryptocurrency is Bitcoin but when it comes to the legality of cryptocurrencies around the globe, some of the countries have welcomed cryptocurrency as a payment method but as of June 2021, El Salvador is the sole country that endorsed Bitcoin as a legal tender.

Litecoin:
The biggest competitor of Bitcoin in the modern market is Litecoin, which is another cryptocurrency that is used for basically transacting in a comparatively smaller value than Bitcoin and in a fast way. Charles Lee was the developer of Litecoin and which was developed in 2011. The basic difference between Bitcoin and Litecoin is that Litecoin can be developed and managed through a normal desktop with low processing whereas for Bitcoin the mining process is comparatively very heavy, hence today the value of Litecoin is compared with Bitcoin is four times than Bitcoin.

Ripple:
Ripple was developed in the year 2012 by Chris Larsen in a company called OpenCoin. The method by which Ripple works is very similar to Bitcoin, as the transactions that take place by Ripple can be done within seconds and in no time the funds can be transferred.

Ethereum:
Alternate name for Ethereum is Eter as it was named after the platform it was developed on that was Ethereum. It was developed in the year 2013 by a computer programmer who was also a researcher on cryptocurrency only. The platform of ethereum is public and a smart scripting facility is also available on it. It is a platform made friendly for cryptocurrency and so it can be used for the purpose of making transactions as well. The price of Ethereum has grown significantly in the past year.[4]

Mintchip:
Mintchip is somewhat different from other cryptocurrencies as it traces its origin from the Royal Canadian Mint and is also backed by the Canadian Dollar. It is a smart card with electronic value and it can be used for making transactions that are secure and safe in nature. Mintchip has some similarities with Bitcoin as the user cannot be traced but unlike Bitcoin or any other cryptocurrency, it is the only cryptocurrency that is backed by physical and real fiat money i.e., the Canadian Dollar.

Challenges Regarding Cryptocurrency
Initially when cryptocurrency started to circulate in the markets not many people were aware of the technology behind it and only a few people knew what cryptocurrency is. Gradually and slowly when people started to take interest in digital currency and started understanding the term cryptocurrency, many people started to develop their platforms and digital currency like Litecoin.

But when it comes it the legality of such currencies, initially people thought that because as the origin of the user could not be traced, cryptocurrency was used for all kinds of illegal purposes and on places such as the dark web, to fund terrorist activities, to deal illegally in drugs, black markets and a lot more such activities. But when the popularity of cryptocurrency started to spread, knowledge regarding the use and awareness was also spread among the masses.

Nowadays, many countries are friendly with the use of cryptocurrency as a medium of exchange there, some are neutral but some countries are very restrictive to the use of cryptocurrency as a medium of exchange there.[5] Talking about India, after a lot of dawdling of either banning or legalising cryptocurrencies, the Indian government has taken some encouraging steps for the regulation of cryptocurrencies in the country. Even though some significant steps are being taken towards the regulation of cryptocurrencies still there are a lot of challenges that are faced in governing cryptocurrency in India.

Some of the major challenges in the use of cryptocurrencies are
No restriction to entry but barriers to leave- It is very easy to enter the digital world of cryptocurrency and start dealing and investing in Bitcoin as there is no such complication due to easy accessibility and availability of everything on the web, but once any person enters the Bitcoin business it becomes very difficult for that person to leave the world of Bitcoins.

Unsecured and High Risk- All the transactions that involve some money or financial value are automatically connected to the risk factor and cryptocurrency being a digital payment method is prone to fraud due to many factors. The unavailability of banks that usually act as intermediaries and solve the problems of uncertainty is absent here and the cryptocurrency works through blockchain and therefore there are high-risk factors that emerge with the use of such currency.

Manipulation- Through the amount that is transacted through cryptocurrencies is low, still, there are high risks of losing the money if not done with due care and caution and therefore it is easy for the crypto holders to get manipulated and become victims to such social engineering and lose their money.

Care and caution- Unlike real money, cryptocurrency is intangible in nature and due to this, it becomes very important for the users to be very cautious while transacting online. It is mainly risky for people who invest small amounts of money as they are very easily accessible to hackers and may lose all their money.

Cyber risks- People are very cautious while transacting online due to the cyber risks involved in the transactions. The same is the case with cryptocurrency as viruses can anytime attack the ransomware and create a lot of problems for the investors online.[6]

Another big challenge of using cryptocurrency is that the identity of the user cannot be traced easily which makes the wallets of crypto users very prone to hacking and phishing by cybercriminals.[7] As the identity cannot be easily traced, the wallets of the users can be hacked and therefore it has become very easy for such people to carry on their operations that are illegal by the use of cryptocurrency in the dark web and therefore cryptocurrency is becoming a very easy target for people who carry such activities and hence cryptocurrency has opened new opportunities for such malicious and illegal activities.

All the challenges discussed above can also be termed as threats with regard to the use of cryptocurrency by people. The main difference between the physical currency and cryptocurrency is the amount of confidence and trust the masses have in both mediums of exchange. The physical currency is government-issued currency and it also has the amount of security and safety that is missing in cryptocurrency.

Real money is less prone to fraud and hacking and all the illegal functioning that is easily carried on with the help of cryptocurrency. But apart from that, some merits are the reason behind the tremendous growth of cryptocurrency throughout the globe. And therefore, countries across the globe are trying to become friendly with the concept of cryptocurrencies and accept them as an alternative or a mere medium of exchange. Some of the countries have allowed the transactions to carry on with the use of cryptocurrency and as of June 2021, El Salvador is the sole country that has endorsed Bitcoin as a legal tender.

Talking about India[8], after a lot of dawdling of either banning or legalising cryptocurrencies, the Indian government has taken some encouraging steps for the regulation of cryptocurrencies in the country. Even though some significant steps are being taken towards the regulation of cryptocurrencies still there are a lot of challenges that are faced in governing cryptocurrency in India.

However, steps are being taken by the central government to flag the reservation around the misuse of cryptocurrency and also wanted to put a blanket to the use of this online money. The use of cryptocurrencies is rising by the day and therefore the country needs to come up with some serious regulatory measures in order to curb the misuse but also stimulate the positive growth of cryptocurrencies. India with the help of the Ministry of Corporate Affairs has managed the use to some extent but still, there is a long way to cover in near future.

Impact On The Indian Economy
India is a country with the second largest population in the world and the amount of change the Indian financial market has gone through in the past years is nothing but a renaissance for the country.

And with such a huge population and almost 70% of the total population having access to the internet and web services, cryptocurrency is not a new concept in India. Bitcoin and other types of tokens as well as coins with all forms of cryptocurrency have been used in India for a long time now. In the year 2012, Bitcoin transactions started to take place in the country, when slowly and gradually in the year 2013 when cryptocurrencies were rising across the globe and a few business houses started to accept payment by the mode of Bitcoin, a small pizza place in Worli, Mumbai became the first restaurant to accept payment through Bitcoin.

In no time, cryptocurrency started to gain popularity in the Indian market and shortly pioneers like Unocoin, BtexIndia and others started to offer cryptocurrencies transactions and exchanges that could take place via cryptocurrencies and soon after this Bitcoin-India, ZebPay and others also started to deal in cryptocurrencies.

After 2013, when the Indian economy was overviewing the transactions taking place in cryptocurrencies, a major step of the Prime Minister to demonetise the rea currency in the year 2016 was a major turning point for the financial market of the country and therefore when in a span of 24 hours almost 86% of the fiat money was rendered useless, people started to look for new opportunities when cryptocurrency came in and people started to invest in Bitcoins and all types of other cryptocurrency in order to save themselves from such kind of havoc, also Bitcoins seemed a safer option and more liquid in nature to people, also there was no burden of taxation and all such kind of government legislation due to which the market of cryptocurrencies started to grow in leaps and bounds.

Despite having such a huge population and also demonetisation spurred the growth of cryptocurrencies in the economy, still, only 2% of the total Indian population contributes to the world's total crypto users. Such a response from the world's second-largest country in terms of population was because of the strict norms of the Reserve Bank of India which is the central bank of the country, the guidelines issued by the Reserve Bank of India were very strict and had led to the crackdown of the cryptocurrency in India. This was done as RBI was concerned about the risks arising out of cryptocurrencies and therefore raised the market prices of cryptocurrencies in the country.

The prices of cryptocurrencies in India are much higher as compared to any other country and because the central bank as well the government is aware of risks and uncertainties arising out of the use of cryptocurrency the government finds it difficult to endorse such an unregulated and decentralised currency where the transactions and the users cannot be easily traced also such type of currency is prone to many illegal activities majorly the funding of terror groups which is a big threat to India.

Therefore, the Reserve Bank of India keeps warning people from time to time about the risks involved and urge them to be cautious enough while transacting in cryptocurrency in order to keep their money safe and also keeping them aloof from the attack of hackers and phishers online.

Legality Of Cryptocurrency In India
Besides the challenges and threats that accompany cryptocurrency, another issue of concern is the legality of cryptocurrency while we talk about its usage. Some of the countries have banned the exchange of cryptocurrency for real money, others have regulated it while some have not. Some of the countries are welcoming cryptocurrencies as a medium of exchange while others are hostile towards them. Countries like the United States, Japan, and Singapore are friendly as to the usage of cryptocurrencies while others like South Korea, Britain, and Thailand are neutral towards the usage and countries like China and Vietnam are hostile towards the idea of cryptocurrency.

Talking about India the first and foremost question that arises is whether cryptocurrencies are legal in India?[9] The answer to this question is quite uncertain because till date the governments as well the court of law have not reached to any conclusion which could firmly reveal the status of cryptocurrency in the country.

In the year 2018, the Reserve Bank of India somewhat banned the usage of cryptocurrencies in India keeping in mind the damage that this digital currency can cause to the investors s well the people who are not fully educated about the same but still transact in Bitcoins and other cryptocurrencies. But in the year 2020, the Supreme Court of India lifted the ban on the cryptocurrency issued by the Reserve Bank of India and allowed people to transact in this digital currency.

Despite the ban being lifted by the apex court in its decision, the commercial banks of the country still did not transact in cryptocurrency as being under the impression that they are governed by the Reserve Bank still assumed the 2018[10] decision of RBI being in circulation which was later corrected by the Supreme Court.

The Supreme Court while delivering the judgement also kept in mind Article 19(1)(g)[11], which gives the right to practice and profess any profession or to carry on any occupation and deliver the judgement by lifting the ban. As the ban was lifted by the Supreme Court of India, still the concerns that were raised but the commercial banks of the country were put forth by the RBI and being the central bank of the country RBI is always issuing guidelines for the investors to be cautious and diligent enough while investing in cryptocurrency.

Taking into consideration the recent situation regarding the status of cryptocurrency it can be said that cryptocurrencies are not illegal in India but are just unregulated'. The word unregulated is difficult to explain as it is a topic of concern for the government as well as to how to regulate a currency whose basic agenda is to be decentralised.

But according to the latest development, the government is planning to impose Cryptocurrency and Regulation of Official Digital Currency Bill, 2021 which plans to impose a complete ban on private cryptocurrencies but also keeping in mind the grey areas will also provide a framework as to the regulation of cryptocurrency and will provide certain exceptions as to the transactions that can take place via cryptocurrencies. India with the help of the Ministry of Corporate Affairs has managed the use to some extent but still, there is a long way to cover in near future and therefore is planning to introduce the new bill.

In March 2021[12], the government has issued new guidelines to businesses that before the start of the new financial year they have to disclose their income from cryptocurrencies which were undertaken in the previous financial year. This was done to be friendly enough to welcome the transactions done via cryptocurrencies and understand the situation of the same in the country as well.[13]

Conclusion
With all the developments that have taken place through a couple of years, cryptocurrencies are digital currencies that have been growing at a fast pace in most of the countries across the globe. But the mere nature of this digital currency makes it a threat for some people to use and also for the governments of different countries to endorse it.

Despite this regulations are made in many countries including India to safeguard the interest of the investors to save them from all kinds of frauds and also build a framework to smoothen the functioning and regulation of the use of Bitcoins and other types of cryptocurrencies, though India is planning to issue a ban on private cryptocurrencies yet some grey area will be left for the tech-savvy people to invest and experiment in cryptocurrencies and enter the blockchain market but by using it diligently so as to safe with their money while transacting in these digital currencies.

End-Notes:

1. Sunil Kumar Sharma & Krishma & Nihda Nisar & Er. C.K. Raina, Survey Paper on Cryptocurrency, 2IJSRCSEIT 307 (2017)
2. Brian Martucci, What is Cryptocurrency-How it Works History and Bitcoin Alternatives, https://www.moneycrashers.com/.
3. Understanding The Different Types of Cryptocurrency, Sofi Learn, January 2021; https://www.sofi.com/learn/content/understanding-the-different-types-of-cryptocurrency/?
4. Jaysing Bhosale & Sushil Mavale, Volatility of select Crypto-currencies: A comparison of Bitcoin, Ethereum and Litecoin, 6ARJSCMS, 133,135 (2018).
5. Ashish Kheskani, Harsha Bucha, Yogita Aggarwal, Dr. Varsha Agrawal-A Study on Cryptocurrencies and Its Issues, 5 IJRAR, 48a, 49a (2018).
6. Dante Disparte, Beware of Crypto Risks-10 Risks to watch, (July 16, 17:56 PM) https://www.forbes.com/.
7. Kaspersky Lab, Threat Predictions for Cryptocurrencies in 2018, (July 17, 12:57 PM) https//www.securelist.com/.
8. Balaji, S. (2017, June 21), On Bitcoin, India's Government And Tech Companies Find Common Ground. Retrieved from Forbes: https://www.forbes.com/sites/sindhujabalaji/2017/06/21/bitcoin-indiaregulation/#353844e87e4.
9. Reserve Bank of India, Prohibition on dealing in Virtual Currencies (VCs), (April 6th 2018), www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11243&Mode=0.
10. Internet and Mobile Association of India V. Reserve Bank of India, Writ Petition (Civil) No.528 of 2018.
11. The Constitution of India,
12. http://www.mca.gov.in/Ministry/pdf/ScheduleIIIAmendmentNotification_24032021.pdf.
13. The legality of cryptocurrency in India; The Legal 500;Amanraj Singh Chadha,Sarthak Chawla (July 18; 14:57 PM) https://www.legal500.com/developments/thought-leadership/the-legality-of-cryptocurrency-in-india/.

Written By:

1. Aayush Akar, National Law University Odisha
2. Ritika Bansal, Maharaja Agrasen Institute of Management Studies, IP University, New Delhi