VIRTUAL REALITY

The 21st Century is constantly experiencing disruptions, with the latest one being the emergence of Crypto Trade (Virtual currency). VC (Bitcoin being the first) is based on the modern philosophy of ‘self-empowerment’ rather than operating on a ‘trust-based central bank system’. While there is an environment of uncertainty on the legality of trading in such alternative currencies by individuals on a peer-to-peer basis and by-passing the established banking systems, taxation laws are only concerned with the contractual obligations emerging therefrom. Hence, it is necessary that the tax obligations on such arrangements are ascertained. Pseudo ‘Satoshi Nakamoto’ developed the Bitcoin1 as a chain of encrypted digital signatures, functioning as an electronic coin, with a record of the ownership being placed in a public registry maintained under the distributed ledger technology (DLT/ blockchain).

TYPES OF VIRTUAL CURRENCIES
1. Closed virtual schemes – generally termed as ‘in-game schemes’, these operate only in the virtual world (such as gaming) wherein the participants earn coins and are permitted to use those coins to avail goods or services in the virtual world. These coins are not exchangeable with fiat currency.

2. Uni-directional virtual scheme – virtual currency can be purchased with fiat currency at a specific exchange rate but cannot be exchang