Cryptocurrency Trading in Sri Lanka, What you need to know
Cryptocurrency is becoming a digital currency and promises high potential for returns and growth. Read to learn more about trading in Sri Lanka, about what cryptocurrency is, and the Top 5 cryptocurrency in the market
One of the major concerns raised is whether cryptocurrency trading is legal or not. The internet penetration in Sri Lanka is relatively low and the population has minimal knowledge on cryptocurrencies such as Bitcoin. Although they might have heard about Bitcoin, majority of them don’t know how it works.
To answer the question raised, selling or buying cryptocurrencies in Sri Lanka is not against the law. However, CBSL (Central Bank of Sri Lanka) has not provided a license or authorization to any entity due to its decentralized and anonymous nature. Therefore, cryptocurrency trading in Sri Lanka remains dubious in the foreseeable future.
“It is hereby notified to the public that CBSL has not given licence or authorization to any entity or company to operate schemes involving virtual currencies, including cryptocurrencies, and has not authorized any Initial Coin Offerings (ICOs).” (Central Bank of Sri Lanka, 2018)
Cryptocurrency has gained immense popularity and investments over the last few years. The potential of cryptocurrency becoming the digital currency has gained the support of large nations such as the United States, Canada, Australia, The European Union, United Kingdom. However, countries such as China, Russia, Vietnam, Bolivia, Columbia, and Ecuador, have not supported cryptocurrencies since they find the decentralized and anonymous nature of cryptocurrency challenging to allow legal use while preventing criminal transactions.
What is cryptocurrency?
Cryptocurrency is an internet-based medium of exchange (currency) which uses cryptographical functions to conduct financial transactions. Cryptocurrencies leverage blockchain technologies to gain decentralization, transparency, and immutability. One of the most important features of cryptocurrency is that it is not controlled by any central authority. Blockchain technology’s decentralized nature has technically made cryptocurrencies immune to the government’s traditional means of control and interference.
Wait, it gets better! Cryptocurrencies can be directly sent from one party to another using either private or public keys (in simple words, this means the transactions can be encrypted, increasing the transaction’s security). Moreover, these transactions cost very marginal processing fees, allowing users to avoid paying the financial institutions’ standard high processing fees.
The cryptocurrency we have all heard about is Bitcoin (BTC). The potential of returns and growth of Bitcoin has been truly astonishing over the years. Bitcoin started accelerating in 2016 and today is the top cryptocurrency in the market. According to a recent statistic, a $1000 investment in Bitcoin in 2013 will be worth more than $400,000 now. As of today, 1 BTC = $19,401.74 USD / LKR 3,543,837.29 (Coin Market Cap, 2020).
Top 5 Cryptocurrencies
There are more than 1600 cryptocurrencies out there, and the number is continually growing. We have identified the Top 5 Cryptocurrencies that have generated high returns and have grown exponentially in a highly volatile market, other than Bitcoin (Coin Market Cap, 2020).
Ethereum is built on Bitcoin’s innovation, but with some big differences. Ethereum allows users to use digital money without payment providers or banks, and it can be programmable to power applications that everyone can use, and no one can takedown. Hence, it is more than just for payments. As of today, 1 ETH = $612.18 USD / LKR 109,938.14.
Ripple is a real-time global settlement network that offers instant, certain, and low-cost international payments. This enables banks to settle cross-border payments in real-time, with end-to-end transparency, and at lower costs. As of today, 1 XRP = $0.0635767 USD / LKR 117.03.
Tether was one the first and most popular of a group known as stable coins. These are cryptocurrencies that aim to measure their market value to a currency or other external reference point to reduce volatility. As of today, 1 USDT = $1 USD / LKR 184.82.
Litecoin is based on an open-source global payment network that is not controlled by any central authority and uses “scrypt” as a proof of work, which can be decoded using a PC. Litecoin is similar to Bitcoin in many ways. It has a faster block generation rate and hence offers a faster transaction confirmation time. As of today, 1 LTC = $89.02 USD / LKR 15,479.75.
The Chainlink network has become popular for providing reliable tamper-proof data for complex smart contracts on any blockchain. Smart contracts allow cryptocurrencies from one address to be moved to another when certain conditions are met. Smart contracts can be viewed publicly on the blockchain, but they are immutable, which means that the parameters of an agreement or specifics of a contract cannot be altered once it is deployed. As of today, 1 LINK = $14.02 USD / LKR 2,461.19.