6 Reasons Why Cryptocurrency is illegal in Nepal

Hi friends, today I am going to give you information about cryptocurrency in Nepal and the reasons why cryptocurrency is illegal in Nepal. Many of us don't know what is cryptocurrency? and how it works? Let's start today's post with the core concept of cryptocurrency and its immersion. We will know the advantages and disadvantages of cryptocurrency.

There was a time when we use to practice the barter system. We used to exchange goods with each other and the economy was not extended. Later money is invented in different steps. Somewhere people started using money made of skin, somewhere metal's the most accepted paper money invented after the long use of other money. It was not digitalized.

But here we developed fully digital money that is cryptocurrency. We can not touch it and treat it as tangible material. A cryptocurrency is a digital form of money.

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Cryptocurrency

Before we know what is cryptocurrency? We need to know what is currency? Currency is a medium having a certain value in the market with which we can complete exchanging process (buy) goods and services. Rupees is the currency of Nepal, Euro is the currency of Germany, US dollar is the currency of America. The government of a country gives legality to the currency and it can be used in the country. No other currency can be used without the approval of the government.

Likewise, cryptocurrency also needs to be approved by the government of a country. Using cryptocurrency inside the country where it is not approved by the government of a country can make you visit custody.

The cryptocurrency was first introduced in 2009 and Bitcoin is the first cryptocurrency in the world.

What is cryptocurrency?

Cryptocurrency is a digital currency that we can not touch and carry like physical currency rupees and dollars. If we break cryptocurrency we get crypto and currency where crypto means secrete and currency is the medium of purchase of goods and services.

Cryptocurrency is a digital/virtual currency managed by blockchain technology and secured by cryptography. There is no chance of losing personal data and copying the currency.

We need to know about blockchain, cryptography, miner, mining, and peer-to-peer network to understand the concept of cryptocurrency. The term cryptocurrency is now not relevant in the Nepalese economy because cryptocurrency is still illegal in Nepal. But it's sure that one day Nepal will also have to adopt the cryptocurrency because of its secured feature.

How cryptocurrency works?

Cryptocurrency works in blockchain technology. This technology helps to make a public ledger of a currency and its transactions. There is a huge number of computer systems that are working to make a public ledger of the cryptocurrency transaction.

For example, if person A has 2 bitcoins and he gave a bitcoin to person B then the systems connected with blockchain start to detect if actually, person A has 2 coins and how much does the person B had before person A gave a bitcoin to him from the past transactions. If everything is ok then they proceed with the operation. This protects from fraud. Although cryptocurrency is illegal in Nepal.

If anyone tries to duplicate and copy the coins then the result in other systems does not match with the system that made wrong changes which are connected together through blockchain technology and the fraud can be arrested easily.

Blockchain Technology

Blockchain technology is the revolutionary technology that helps to interconnect different systems storing data with common purposes like the blocks of trains. Blockchain checks the transactions and the data history of the users and helps in providing accurate results within a seconds.

Peer-to-Peer Network

Peer-to-peer refers to the direct exchange of an asset between individuals without the intervention of a central authority, such as a digital currency.

Miner and Mining

Those who take the responsibility of maintaining the public ledger of cryptocurrency are called miners and the process of involving in this is known as mining. This is system-generated work. This action needs special computers and software. Those who involve in mining as a miner gets rewards as a beneficiary in that cryptocurrency that he/she is mining with. Mining cryptocurrency is illegal in Nepal.

Public Ledger

The public ledger in cryptocurrency is the ledger that contains data about each and every currency and each and every cryptocurrency owner and is accessible by every system connected by blockchain technology.

Here a question arises what about privacy if all the data of everyone is accessible publicly by the system. You may be thinking anyone can know about my balance just by looking at the public ledger. But this does not happen here. To maintain privacy in cryptocurrency cryptography works amazingly.

Cryptography

This helps in generating the public ledger in the cryptocurrency a coded document that is not understood by humans. Cryptography translates the normal data to a code and shows it in the public ledger that helps in the privacy of people.

Rate/Value of Cryptocurrency

It is always a non-asked question that if the money is ours then why should a bank or any government control that. Normally the value of the physical currency is affected by the policies and the activities of the government.

This is the most seen reason that cryptocurrency gets popularity among people. Here no bank or the government's activities affects the rate or value of cryptocurrency. The value of one bitcoin in Nepal is more than 70 lakh. But cryptocurrency is illegal in Nepal.

We listen the value of bitcoin increased by this much that much this is controlled by the public, not any government or any other. Cryptocurrency is the decentralized form of currency so that the control over these currencies is upon the public.

Each cryptocurrency has a limit that how much currency will be produced. In bitcoin, its limitation is 21 million. When anything is limited then its cost depends upon its demand in the market. When the demand, usage, and need rise for the currency the value or rate of the currency increases in the cryptocurrency. Exactly opposite happens when the demand decreases for the cryptocurrency.

Musk Dip

This was the incident that happened due to the different two decisions of Elon Musk. The rate and the value of cryptocurrency also depend upon the big news, companies, and investors. In March 2021, Elon Musk declared that Tesla is going to accept even Bitcoin. Then people started purchasing bitcoin thinking that the demand for the bitcoin is going to increase and the value of bitcoin reached $ 60,000.

Later on, In May 2021, Musk changed the decision to accept the bitcoin, and the value degraded to $ 30,000 from $60,000. This is known as Musk Dip

Advantages of Cryptocurrency

Cryptocurrency has different advantages so many countries over the world started using cryptocurrency in their economy. However, it has many advantages cryptocurrency is illegal in Nepal. People around the world are also loving different cryptocurrencies like Bitcoin, Ethereum, Dogecoin, etc because of the following mentioned advantages.

Decentralization

Cryptocurrencies are not controlled by any authorities or any individual. This is under the usage and hand of all people. Everybody gets real ownership of his/her property through cryptocurrency.

No Government Control

The currency of people does not experience the change in rate or value due to the decision of any two countries and the fluctuations. As the cryptocurrencies are produced in limited numbers there is no chance of fluctuation in value due to the new note issued by the government that usually happens with physical currency.

Disadvantages of Cryptocurrency

Besides the different advantages, cryptocurrency has many disadvantages. Looking at the disadvantages Nepal government has banned cryptocurrency in Nepal. Using cryptocurrency is considered an illegal activity in Nepal as it is not approved by RBB yet. Looking at the different disadvantages, cryptocurrency is illegal in Nepal.

No Government and Authority

This point is itself advantages and disadvantages. If there is no government control then we can do anything with our money but in another hand, if anything goes wrong who will be responsible?

Unethical uses

Since this is a secret currency, People use this currency in different unethical activities. No one gets the data on how much currency you have where you spent them and from where you received them. No authority can know how much currency you have.

Non-Eco friendly

The process of mining involved in cryptocurrency uses a huge amount of energy and electricity. Pointing towards this reason Tesla also aborted the decision for accepting Bitcoins. Hope this will be fixed soon through any other technology soon in the future so that we can use cryptocurrency without any doubt.

Is cryptocurrency legal in Nepal?

The answer is no. Cryptocurrency is still illegal in Nepal. This is not considered as the Nepali currency according to the Foreign Exchange Act 2019. Hence cryptocurrency is illegal in Nepal.

Is cryptocurrency legal in Nepal?

There are a lot of actions taken by the Nepal Police to control the trading and mining of cryptocurrency inside Nepal. Recently, Nepal Police arrested three people for trading cryptocurrency. It's not a new action taken. Concerned authorities are taking needed actions like this to control the trading and mining of cryptocurrency inside the country.

6 Reasons why cryptocurrency is illegal in Nepal?

In recent years the interest of Nepali in cryptocurrency is growing day by day. Nepalese are involved in the trading of cryptocurrency hiding from the controlling authorities. But the government of Nepal and the NRB has not still been able to make cryptocurrency trading illegal in Nepal.

Why is Nepal Rastra Bank became unable to make cryptocurrencies legal? I will show you the 6 possible reasons for its illegality in Nepal.

According to the Foreign Exchange Act 2019, it is illegal to trade cryptocurrencies including Bitcoins. Because cryptocurrency is not classified as a Nepali currency. Doing transactions of such currency not classified as Nepali currency is itself an illegal activity.
The government of Nepal or the Nepal Rastra Bank does not have the proper technology to regulate Bitcoin transactions.
As we listen to the news that cryptocurrency is being used in money laundering, fraud activities, and transforming black money into white money, this could be the possible reason why NRB banned cryptocurrency in Nepal.
The transaction done by cryptocurrency is very different from our normal transaction and it cannot be taxed by the government. The government could not be able to collect tax if maximum Nepali started using cryptocurrency. This affects a big portion of the revenue of the government.
The nature of cryptocurrency is very volatile. It experiences a lot of ups and downs which creates instability in the market. As the main responsibility of NRB is to maintain the financial stability of the nation NRB is listing it illegal.
We cannot deny that the high post elder personnel of NRB and the government are not being able to know the actual future and positive factors of cryptocurrency.

These might be the most possible reasons for considering cryptocurrencies illegal in Nepal.

6 Reasons Why Cryptocurrency is illegal in Nepal