Journal of Xi’an Shiyou University, Natural Science Edition ISSN : 1673-064X

THE CRITICAL OUTLOOK ON AS THE FINANCIAL INNOVATION IN INDIA’S INFORMATION ECONOMY Dr. A. Michael John1 & A. Pugazh Naavarasi2

ABSTRACT Industry 4.0 is the current and developing environment which has led to the ever- growing use of disruptive technology in all areas of life, including finance and investment. Cryptocurrency regarded at the floor of capital markets in 2008, as one of the finest improvements of our century. The study shows that have their own niche in payment systems; they are highly competitive and dependable financial instruments. The growth momentum of the global cryptocurrency market capitalization makes the most successful example of the use of virtual currency in the information economy.

The economy of our country must follow the path of innovation in order to find solutions to a wide range of technical, economic and legal problems associated with the development of the cryptocurrency market in India, through the participation of the experience of leading countries. The study also assesses how the financial industry is using cryptocurrencies to improve efficiency and investor well-being as an alternative to traditional investment streams. Cryptocurrency has an enormous propensity to improve an investor's risk- yield profile. The document sets out the possibilities and prospects for the future development of the Indian cryptocurrency market.

Keywords: Cryptocurrency, Virtual Currency, Payment System, Financial Innovation, Information Economy.

INTRODUCTION

There is no cookie-cutter approach to investment. Nobody is able to tell you where you should put your money. Everyone has a risk profile, capital, level of commitment, profit targets, etc. Although some investments may suit somebody, the same investment may not serve others. Take the recent incident of Elon Musk and DOGE. The dogecoin wave was everywhere, with its movements controlled to a large extent by Elon Musk and the Doge

1 Assistant Professor, Xavier Institute of Business Administration (XIBA), St. Xavier’s College (Autonomous), Palayamkottai. 2 Research Scholar, Xavier Institute of Business Administration (XIBA), St. Xavier’s College (Autonomous), Palayamkottai. http://xisdxjxsu.asia VOLUME 17 ISSUE 08 233-242 Journal of Xi’an Shiyou University, Natural Science Edition ISSN : 1673-064X community. Looking at who, a lot of people who didn't even know anything about the cryptocurrency being purchased. While some have been able to surf the wave and make millions, more people have gone bankrupt because they have not assessed the cryptocurrency correctly. This particular paper does not state where to invest, but rather how to invest in a cryptocurrency. It also gives a clear idea of cryptocurrency, whether it is a real alternative to traditional investment directions and whether it makes a major contribution to the country's information economy.

HISTORY OF CRYPTO The history of these virtual coins begins with a developed cryptographic system known as e Cash. Twelve years later, it's a different system, Digi Cash, that uses cryptography to keep financial transactions confidential. However, the first good concept of the word "cryptocurrency" was invented in 1998. That year, the development of a new payment method that uses a cryptographic system, the main feature of which is decentralization.

Blockchain is a system of information registration in a way that makes it difficult or impossible to modify, hack or cheat the system. A is essentially a big digital trading book that is duplicated and distributed over the entire network of computer systems on the blockchain. Each block of the chain holds multiple transactions, and whenever a new transaction occurs in the blockchain, a record of that transaction is added to each participant's ledger. The decentralized data base managed by several participants is known as Distributed Ledger Technology (DLT). Blockchain is a type of DLT in which transactions are registered with a fixed cryptographic signature called hash.

VALUE OF CRYPTO Cryptocurrency as real as a rupee. Cryptocurrencies are digital assets and have no physical form as paper currency. The intangible nature of cryptos has led many to believe that cryptos have no real worth and are only a set of codes. In reality, no currency has true value unless people believe it. For instance, the rupee in India matters because it is a sovereign currency, and people believe in its sovereignty. Many people have put their trust in cryptocurrencies as a medium of exchange. They have no intrinsic value. • Payments: It can be used to carry out transactions such as buying goods or services without having to ask a trusted third party to complete it possible.

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• Value Storage: Given that the total supply of most cryptocurrencies is limited, scarcity affects their value. • Stable coins: Cryptocurrency may be attached to raw materials such as gold or oil or currencies, such as USD. • Confidentiality: Security-based technology which allows users and owners to remain anonymous during transactions. • Digital access and ownership: Even people who do not have access to traditional banks can enter the financial system with the help of crypto-currency. . • Digital gold: Crypto coins and gold share attributes comparable to silver. They can be used as a means of exchange, have a reserve of value and have a unit of account.

MOST POPULAR CRYPTOCURRENCY EXCHANGES IN INDIA Crypto exchanges and funds have seen a rise in investments up Rs 1 crore by family offices and wealthy individuals, amid the growing global institutional acceptance of cryptocurrency. WazirX is India's largest volume crypto exchange, has recently created a dedicated over-the-counter team that executes high value bulk transactions to meet increased demand from high-net-worth individuals. WazirX and ZebPay, cryptocurrency exchanges in India create personalized services for individuals with high net worth from India to execute bulk transactions in Bitcoin. Cryptocurrency trading spreads the red carpet for India's super- rich. The other most reliable is CoinSwitch which was established in 2017 as a global cryptocurrency aggregator and in June 2020 it launched its Indian CoinSwitch Kuber.

Today, certain of the most popular cryptocurrencies are Bitcoin, Dogecoin, Ethereum, XRP, Tether, and Cardano. There are over 200 cryptocurrency exchanges that support active trade, and the combined 24-hour exchange volume of the first ten is over $6.5 billion. More than 8,000 cryptocurrencies are in circulation at the moment. The first and most successful cryptocurrency is Bitcoin.

CRYPTOCURRENCIES AND INVESTMENT IN INDIA India has succeeded in capturing the $ 250 billion IT market through crypto regulation. India has the potential to enter another $ 200 billion industry. Cryptocurrency as an asset class has surpassed the $ 1 trillion mark in market capitalization. Cryptocurrencies such as Bitcoin and Ethereum are becoming competitive day after day in terms of performance: the price of http://xisdxjxsu.asia VOLUME 17 ISSUE 08 233-242 Journal of Xi’an Shiyou University, Natural Science Edition ISSN : 1673-064X

Bitcoin has more than quadrupled and the price of Ethereum more than tenfold in 2020.The profits from cryptocurrencies have attracted many retail investors to this attractive new asset class. Many young or novice investors looking to invest in cryptocurrencies in India; However, most investors do not have a complete understanding of the cryptocurrency market.

Investing in cryptocurrency is easy, investing in cryptocurrency is often presented as something that is suitable for tech-savvy people and other people who may not be as successful at it. to eliminate the RBI ban on cryptocurrencies. Many startups like CoinSwitch Kuber have emerged in the crypto space to make it easier for investors to buy and sell cryptocurrency.

THE TOP FIVE CRYPTO-CURRENCY TO INVEST 1. Bitcoin (BTC) Being the first-ever cryptocurrency, Bitcoin is highly reliable. It has been promoted as the new form of money, replacing the paper money. However, as it has not yet progressed fully, it is currently treated as a value reserve such as gold due to the similarities they share. Gold and Bitcoin grow in value over time (deflationary assets) and have a limited offer. Bitcoin is much better than gold in all aspects. There are only 21 million that can be exploited as a whole. Once bitcoin miners unlock all the bitcoins, the supply of the planet will essentially be exploited. Once all Bitcoin has been exploited the minors will always be prompted to deal with transactions with fees. Logic for selecting Bitcoin: • It is equipped with all the key factors. It has a strong focused target, significant market capitalization of > 50%, and has a limited offer. • Bitcoin is also one of the most popular cryptocurrencies with folks like Elon Musk, Richard Branson, and even Amazon plans to take payments using bitcoins.

2. Ethereum (ETH) Prior to Ethereum, all other cryptocurrencies that were launched were solely aimed at competing with Bitcoin. However, Ethereum began with the idea that blockchain could be used for much more than decentralisation fiat and thus introduced smart contracts. With the help of smart contracts, Ethereum lets developers build decentralized apps on its blockchain. Anyone can build everything from crowdfunding apps to games to financial services and make them accessible worldwide. To date, it supports up to 3,000 applications. Ethereum gave rise to the second generation blockchain which uses smart contracts.

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Logic for selecting Ethereum: • Ethereum is a pioneer of smart procurement; it is a platform that can decentralize anything and everything. • This is the second largest crypto-currency by market capitalization. • Has the potential to outperform Bitcoin. • It recently hit an all-time high of $4,000 with an annual gain of more than 1,600 per cent. Furthermore, Ethereum's development company also participates as a partner in the development and testing of the CBDC prototype, the national digital currency.

3. Tron (TRX) Tron intends to build an infrastructure for content sharing and entertainment independent of Google, Apple, Facebook and Amazon with its evolution divided into six phases. Presently, it is in the third phase of its development, called Grand Voyage. It went from a simple P2P content distribution and storage platform to a platform that now allows content creators to express an interest in their personal brand through individual ICO's. It acquired BitTorrent in 2018 and has recently bought the largest decentralized blog and social media platform, Steemit. Steemit also maintains a video-sharing platform like YouTube called D Tube. If the Tron team successfully deploys all its six phases, experts have predicted a bright future for it. Logic for selecting Tron: • There is a limited supply of 100B tokens. • To many developments in its network road map.

4. Chainlink (LINK) Chainlink is a decentralized oracle network. work remotely and therefore cannot access data outside of their network, but for smart contracts to efficiently perform tasks, real world information is important. Chainlink being an oracle network effectively bridges this gap; it is responsible for powering reliable and inviolable inputs into intelligent contracts. The protocol links intelligent contracts across any blockchain with real-world data using oracles. Logic for selecting Chainlink: • Chainlink is the most widely utilized oracle solution among major challenge projects such as Aave, YFI etc., and even Google uses Chainlink. • Has limited procurement of 1B tokens.

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5. Polygon (MATIC) Polygon, previously known as the Matic Network, is a Made in India cryptocurrency which is a scalability solution for Ethereum. Ethereum has thousands of applications working on its network and consequently it has low throughput and high costs. Matic enables Ethereum to interact with multiple blockchain and become a multi-channel system. It significantly lowers the network costs of the Ethereum network and also makes it more efficient. Logic for selecting Chainlink: • It nourishes Ethereum, which by itself is very strong. • It has a limited supply of 10 Mile pieces.

RISKS OF INVESTING IN CRYPTO

1. Crypto Currencies Have A View Underneath| Utility. Each cryptocurrency is not the same; each cryptocurrency has its own separate purpose. They are committed to an underlying view. For instance, Bitcoin has a firm objective of replacing fiat; it realizes fiat traps and improves its shortcomings. Fiat loses value over time and is ineffective in cross-border transactions due to higher charges. On the other hand, Bitcoin grows in value over time and is cost-effective for cross-border transactions. Similarly, Ethereum goes one step further and allows developers to construct decentralized applications on its network. In simpler terms, it makes it easier for developers to build apps on the blockchain by giving them access to the infrastructure of Ethereum. The more a crypto- currency solves a problem, the more people will want to adopt it, and so it gains value.

2. Cryptocurrency is nothing if people don't believe in it. Market capitalization is the share held by a particular cryptocurrency in the overall market. This indicates that the cryptocurrency market dominates. Large market capitalisation means that more people invest in a cryptocurrency, thereby boosting its market value. This is an excellent estimation of which crypto-people are investing in. Bitcoin owns over 50% of the total crypto market capitalization. Moreover, the more market capitalization of a cryptocurrency, the more liquid it is since more people are inclined to invest in it. Liquidity is defined as the facility with which the asset can be converted into cash.

Greater market capitalisation = Greater liquidity. http://xisdxjxsu.asia VOLUME 17 ISSUE 08 233-242 Journal of Xi’an Shiyou University, Natural Science Edition ISSN : 1673-064X

3. Scarcity generates value | Limited offer. A cryptocurrency with limited provisioning would have a higher value than a cryptocurrency with unlimited provisioning. Bitcoin, for instance, has a limited supply of 21 million coins, which contributes to raising its prices. On the other hand, Dogecoin, which works practically on the same framework, but has an unlimited supply and therefore struggles to reach $1. But rarity alone is not enough to determine the potential of a cryptocurrency. If so, then Ethereum would not be as successful as it is today.

BENEFITS OF CRYPTOCURRENCY • Transferring money between two parties will be easy without the need for a third party such as a credit / debit card or bank. • This is a less expensive alternative to other online transactions. • Payments are secure and provide the highest level of anonymity. • The secret key is known only to the owner of the wallet. The private key is known only to the owner of the wallet. • Money transfers are processed with minimal processing fees.

DRAWBACKS TO CRYPTOCURRENCY • The almost hidden nature of cryptocurrency transactions makes them central to illegal activities such as money laundering, tax evasion and possibly even terrorist financing. • Irrevocable payments. • Cryptocurrencies are not widespread and have limited value in other jurisdictions. • Unfortunately, cryptocurrencies like Bitcoin are not tied to physical assets. • The cost of producing Bitcoin, which requires an increasing amount of energy, has been found to be directly related to its market price.

THE LEGAL IMPLICATIONS OF CRYPTOCURENCY IN INDIA Cryptocurrencies are not legal tender in India. While trading in India is legal due to the lack of a robust regulatory framework, the lengthy licensing process makes it difficult for some crypto services and innovative technologies to operate. tax status of cryptocurrencies. Anyone who profits from bitcoins will have to pay taxes on them and will be taxed as capital gains.

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India's cryptocurrency exchange regulations are becoming stricter. While technically legal, in 2018 RBI banned banks and regulated financial institutions from processing or paying for cryptocurrencies. However, RBI confirms that it does not license or authorize a legal person or company to operate the system or trading, but instead issues warnings and obligations for virtual currency transactions, with companies needing to liquidate or leave their positions.

The massive agreement bans cryptocurrency trading on domestic exchanges and licenses existing exchanges until July 6, 2018 at the time of liquidation. In 2020, a landmark Supreme Court ruling declared the ban unconstitutional, overturning the ban and allowing trade to resume. ability. blockchain technologies to improve your financial services industry.

THE DAWNING OF CRYPTO IN FINANCE Cryptocurrencies are a gradually growing ecosystem that develops in the world's traditional financial systems. Between 2018 and 2020, the number of users of various cryptocurrencies increased by 66 million. The public and private sectors are preparing to use cryptocurrencies in their finances. transactions such as payments, store of value and investment. The history of cryptocurrency dates back to decades when cryptocurrencies began to make digital advances. It is a technology that has helped design and develop many types of cryptographic techniques that make the cryptocurrency network so secure and is reliable for performing various transactions. Currently, the number of cryptocurrencies is over 5,000 and they continue to grow, which is why they are considered the future of finance. There is a growing need for transparent, secure and accessible financial systems. This is due to the current centralized financial system, which has not yet brought financial freedom and reliability to its users. Decentralized finance is viewed by many as a system that provides more transparency. and transaction security that replaces certain traditional financial processes.

Cryptocurrency investments are gaining popularity in the investment, trading, lending and lending sectors, driving the financial services revolution. The growing demand and availability of cryptocurrency exchanges are becoming more popular all over the world. Cryptocurrency exchanges have become popular among investors. The belief that cryptocurrency is becoming an increasingly acceptable financial system. The private and public sectors are showing great interest in this and nowadays it is widely recognized in many areas, there are public and private sectors that have publicly recognized cryptocurrencies. Within their

http://xisdxjxsu.asia VOLUME 17 ISSUE 08 233-242 Journal of Xi’an Shiyou University, Natural Science Edition ISSN : 1673-064X financial system, institutional investors, technology companies, and even citizens. Central banks around the world have started integrating cryptocurrencies into their operations.

New policies and regulations are being implemented through cryptocurrency exchanges to create future formal practices. Policies are also used to keep all players in check as more and more players continue to come to official services. financial services, cryptocurrencies provide a viable and tangible solution. Traditional banking services are limited due to lack of personal identification, account opening, active funds, or proximity to an institution. Unbanked individuals around the world can now use this financial model to provide instant access from anywhere with fewer transactions. costs and faster transaction processing.

CONCLUSION

Cryptocurrencies offer a significant advantage for overcoming social distrust and expanding access to financial services, providing a significant advantage for overcoming social distrust and improving the availability of financial services, the importance and value of the information economy with cryptocurrencies is immense. uncertainty and allows the use of better options with higher yields.

The lower the risk and uncertainty, the higher the value of the public service. The paper explores the potential of cryptocurrencies in terms of technology security, low transaction costs, and high return on investment. In terms of issues, the discussion focused on laws and regulations, high energy consumption, the potential for crashes and bubbles, and cyberattacks on the network. The future of the financial world depends on cryptocurrencies, including improvements in security protocols, due diligence, implementation of knowledge management systems.

Looking at the positive outlook for blockchain technology and the government's views on cryptocurrency regulation, more research is needed on various aspects of cryptocurrencies. Seizing the opportunity to get a piece of the pie in cryptocurrency and blockchain technology can benefit investors. The history of cryptocurrency is what the future holds for finance. Blockchain technology capable of disrupting traditional financial systems currently requires a trusted third party to verify, verify and authorize transactions. Industries recognize and accept cryptocurrencies as a viable financial system. Cryptocurrencies in the future may become the new main financial system, stimulating the development of India's information economy.

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