Revision summary
Cryptocurrency is a blockchain token without a central issuer. Globally it is mostly a volatile asset, with crime, energy, and inequality effects. Remittance inclusion is still a smaller story than trading. India has a large retail-trader layer; UPI already covers payments. Policy is tax, KYC, and e-rupee, not Bitcoin as tender.
Model answer
Introduction
A cryptocurrency is a digital token on a blockchain, designed to move value without a central bank. Bitcoin is the type case. It affects society as a speculative asset, a payment experiment, and a crime-and-climate headache.
Body
What it is
- A distributed ledger records transfers; miners or validators earn new coins or fees.
- It is not legal tender in most states. It is a private digital asset with extreme price swings.
- Stablecoins and central bank digital currencies (CBDC) are related but not the same as Bitcoin.
Global society
- Inclusion story: remittances and unbanked access — still smaller than the trading-casino story.
- Crime: ransomware, dark-net markets, sanctions evasion; FATF ‘travel rule’ tries to tag VASPs.
- Energy: proof-of-work mining as a climate and local-power issue (Inner Mongolia bans, Kazakhstan loads).
- Inequality: early holders versus late retail; El Salvador’s legal-tender bet as a national experiment.
- Geopolitics: dollar-hedge narratives versus actual dollar stablecoin dominance.
India
- A large young trading class on exchanges; RBI long warned of consumer and macro risk.
- 2021–22 policy path: 30% tax on crypto gains and 1% TDS in the next Budget cycle, plus e-rupee CBDC pilots — India chose tax-and-watch, not a Bitcoin legal tender.
- UPI already solved cheap payments, so crypto’s Indian social role is speculation, startup fundraising talk, and fraud awareness more than daily chai money.
- Digital divide: rural India meets crypto mainly as a WhatsApp tip, which is a social risk.
Recommendation
- Consumer literacy, FATF-compliant KYC, and a clear distinction between CBDC and private tokens.
Flow diagram
flowchart TD CR[Cryptocurrency] --> SP[Speculation] CR --> RM[Remittance crime energy] IN[India] --> TAX[Tax TDS CBDC] IN --> UPI[Payments already cheap]
Conclusion
Cryptocurrency is decentralised digital value, socially expressed as boom, crime, and carbon. India is affected as a trading society with UPI already in the pocket. Regulate the casino; do not confuse it with the rupee.
Quick related
Students also ask
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How does Indian society maintain continuity in traditional social values? Enumerate the changes taking place in it.
Next question in the 2021 paper (Q20). View answer →
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Is crypto banned in India?
It has been discouraged, taxed, and watched. It is not legal tender. The 2018 RBI ban on bank rails was struck down; policy then shifted to tax.
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Is CBDC a cryptocurrency?
It may use distributed tech. It is still a central-bank liability, which Bitcoin is not.
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