The hot topic in the crypto space is the new regulations on digital currencies in India which has left the Indian crypto fans at the edge of their seats. The bill speaks of a ban on all “private digital currencies” in India, effectively preventing the use of such digital currencies within the nation either for investment or for transaction purposes. But there are many who cannot segregate in public vs private cryptocurrency.
So in this article, we will see what is the real difference between these two cryptos. There are questions like is Shiba INU a private cryptocurrency, is Dogecoin a private cryptocurrency. We will find that answer in this article.
There is nothing to worry about as the bill is just in its proposal stage. It will be offered before the parliament in its winter session, which will begin at the end of this month. And more details on its purpose and meaning will only be revealed during its presentation.
Even though there are many interesting units of jargon used in the proposal that have confused the readers so far. The most crucial word among them is “private cryptocurrency” and private cryptocurrency is opposed by RBI. As people find it difficult to decode the meaning of this, the resulting mania from the possible prohibition has witnessed crypto space go on a freefall. This is because the general idea is all digital currencies are private since they are not regulated or authorized by any body of government. Then what is public vs private cryptocurrency?
Understanding The Notion Of Digital Currencies
To evaluate a better comparison of public vs private cryptocurrency, let us first see how digital currencies operate. All digital currencies are based on the system of distributed ledger, which is one of their largest benefits over any other form of currencies. While in the case of your banks or other financial institution there is only one ledger, cryptos use blockchain technology that employs multiple ledgers, all of which is connected to the network. Any transaction that takes place on the network is recorded and is cross checked across all these ledgers, leaving no chance for bogus entry or miscalculation. It is ver\y simple, anything on the ledger that does not match any ledger gets automatically canceled.
This implies that there is no requirement for third-party monitoring of its ledgers or the network. Hence, any central institution monitoring is absent in the case of the transactions. The network of computers that are connected to the blockchain functions on its own. This is also why digital currencies, mainly Bitcoin, have guided to the origin of “DeFi” or “Decentralised Finance.” This implies everything is decentralized, and there is no one financial institution or bank controlling these finances.
This is also why, in the traditional dimension, all digital currencies are private in nature, as there is no single body that controls them. But in the digital currency space, the terms “public” and “private” refer to the standard of privacy that the digital currencies offer. Let us now compare public vs private cryptocurrency.
Public Vs Private Cryptocurrency: The Comparison
Now that you know the concept of cryptocurrency and how exactly digital currencies operate, it is now time to solve the hottest doubt presently, the difference between public vs private cryptocurrency.
What Is Private Cryptocurrency?
The distributed ledger we spoke about in the above section obviously leads to transparency in the complete system. Implying you can personally regard anything that is taking place across the ledger. This signifies we will know about any transactions and also the wallet addresses leading them right through this network.
A private digital currency employs several cryptographic actions to mask this data. This implies that on the network of private crypto, the wallet addresses will be hidden or masked, the details of the transaction may also be hidden, and many more. This enables users a standard of privacy that is not there with their “public” counterparts. You may wonder now, is Bitcoin a private cryptocurrency. The answer is no.
What Is Public Cryptocurrency?
As you can understand, public digital currencies are quite the reverse of this. Transactions taking place over such systems can be linked or traced to the wallet addresses, and even their amount can be decoded. They offer ways for users to be unknown, but that is only to the level of maybe not disclosing your original name or so. The wallet address that is connected to you can still be designed through a trace.
The Bottom Line
There is not a big but a significant difference between public vs private cryptocurrency which the masses need to understand. In this context of the crypto ban in India, it is important for the citizens to know what is coming for them. It has been heard that the government may ban all the private digital currencies except some and issue their own CBDC (Central Bank Digital Currency). So you may wonder, is Ethereum a private cryptocurrency? The answer is no. On the slight chance that it was not, crypto fans in India can celebrate at the fact that BTC, ETH, and most important digital currencies are not covered in the proposed ban.
Frequently Asked Questions On Public vs Private Cryptocurrency
A private digital currency employs several cryptographic actions to mask this data. This implies that on the network of private crypto, the wallet addresses will be hidden or masked, the details of the transaction may also be hidden, and many more.
Transactions taking place over such systems can be linked or traced to the wallet addresses, and even their amount can be decoded. They offer ways for users to be unknown, but that is only to the level of maybe not disclosing your original name or so.
BTC is not private crypto, so there is a slight chance that it was not, crypto fans in India can celebrate the fact that BTC, ETH, and most important digital currencies are not covered in the proposed ban.