Cryptocurrency for Seafarers
Last updated on March 10th, 2023 at 10:52 am
We know that a currency is the standardization of money in any form, in use or circulation as a medium of exchange, for example, banknotes and coins. So how is this different from a cryptocurrency? The term currency is the sole prerogative of a government. Just like you can not use US currency openly in the Indian market, one is prohibited from using Indian rupees in different countries.
Around 10-12 years ago, Satoshi Nakamoto formed Blockchain technology, where block means that each piece of information is stored in blocks that form a digital chain. This technology is widely used for systems of cryptocurrency, which refers to electronic money which does not rely on banks for verifications. They don’t have a central issuing or regulating authority; instead, they use a decentralized system to record transactions and issue new units.
Is cryptocurrency legal in India?
If you go to a grocery shop near your place and ask to pay the bills with bitcoins. In such a case your payment will not be In some countries like Denmark, France, and Germany, Bitcoin-one of the cryptocurrency is accepted as a medium of exchange. However, in India, it is not categorized under an illegal payment system but is not declared legal tender. This means you can not go to a grocery shop near your place and ask to pay the bill with bitcoins. Bitcoins are not yet centralized or regulated by any one agency, such as the Reserve Bank of India (RBI), which manages actual currency in India hence they can not be used as a medium of exchange.
Merits of Cryptocurrency
Easy transactions –
Cryptocurrency can be made with ease and transferred with minimum transaction costs and at a relatively high speed. Since a bank account is not always a requirement to use crypto, it makes buying bitcoin at an ATM using cash and sending those coins to the digital wallet or phone much more convenient. This may be a huge advantage for seafarers who might lack access to the traditional financial system while sailing.
Cross-Border Payments –
Cryptocurrency can be transferred across borders without any difficulty. A seafarer working on foreign lands can send bitcoins to his family in India without hassle. This also saves the hefty fees that banks charge upon the transfer of international payments.
Demerits of Cryptocurrency
Cryptocurrency has no underlying asset
The government which is running the country is standing in charge of its citizens and their needs. The currency sanctioned by the state has sovereign backing, while no institution support cryptocurrencies. They are based on only the quantum demand and supply of the market. We can understand this with an example of gold or stocks offered by firms. These hold considerable value due to an entire industry being connected to them. Cryptocurrency, on the other hand, is not backed by any security system.
Cryptocurrencies are extremely volatile
While cryptocurrency can rise to amazing heights in a shorter period, it can crash to terrifying lows just the same. Recently, the cryptocurrency saw a very big fall in price from 57lakhs to 17lakhs. The cryptocurrency market is so unstable that the trade occurs in lakhs daily. This makes it a risk-prone area while investing.
As a seafarer, should you invest in Cryptocurrency?
Always engage in Legal transactions
It is of no use if it is not legal. As a seafarer, your priority should be investing your hard-earned money legally. The Indian government has not declared cryptocurrency as an illegal medium of exchange, and this can be explained by the recent budget highlights where any transaction in bitcoins will be taxed under a 30% slab as capital gains. The state has already related cryptos with activities such as gambling, horse racing, and lotteries. Hence, seafarers should know all legal terms and conditions before investing or using cryptocurrency.
When a famous person, artist, or singer creates some piece of his/her for a few seconds or a few megabytes and puts it on the market for the purpose of e-auction to build brand value, this is called NFT. People interested in Crypto-trading and people who like to collect artwork often use NFTs. Suppose Amitabh Bachchan signs on a t-shirt and puts it out as NFT, where a buyer buys it for 2 lakhs. After 2 years, the buyer can face two situations,
i. He can get 20 lakhs after selling the same shirt to another buyer
Ii. There are no buyers available in the market for his product
NFTs have the disadvantage of no liquidity. Hence, a seafarer should know enough before investing in any crypto assets.
Cryptocurrencies can take time to get your head around. Just because some kind of investment is available in the market does not provide a good reason to invest in that. Seafarers are simple people who like to stick to safe ideas that can generate sufficient returns. Cryptocurrency is a risky and speculative field of investment. Since each individual’s situation is unique, a qualified professional should always be consulted before making financial decisions.