What is Bitcoin Currency and is it legally Valid in India?
Bitcoin is gaining popularity in recent times across the world. Many of us does not know about Bitcoin Currency. Bitcoin is a type of digital currency not printed like Euros or dollars. Bitcoin is being used in India too. What exactly is Bitcoin Currency means? How does Bitcoin work? Is Bitcon currency legally valid in India? What does RBI say about Bitcoin currency about its validity? In this article, I would try to cover most of these aspects.
What is Bitcoin Currency?
As per Wikipedia, Bitcoin is a cryptocurrency and a payment system invented by an unidentified programmer, or group of programmers, under the name of Satoshi Nakamoto. Bitcoin was introduced on 31 October 2008 to a cryptography mailing list, and released as open-source software in 2009. There have been various claims and speculation concerning the identity of Nakamoto, none of which are confirmed. The system is peer-to-peer and transactions take place between users directly, without an intermediary. These transactions are verified by network nodes and recorded in a public distributed ledger called the block chain, which uses bitcoin as its unit of account. Since the system works without a central repository or single administrator, the U.S. Treasury categorizes bitcoin as a decentralized virtual currency. Bitcoin is often called the first cryptocurrency, although prior systems existed and it is more correctly described as the first decentralized digital currency. Bitcoin is the largest of its kind in terms of total market value.
Bitcoin is produced to make currency independent, easily transferable electronically with less transaction charges.
Features of Bitcoin Currency
- Bitcoin is a type of predictable currency like dollars, euros, or other currency. It can be used to purchase things electronically. It is different from conventional money as it is distributed and controlled by many institutions. The following are the important features of Bitcoin-
- It works on advanced cryptography coding that makes Bitcoin safe and secure.
- It is decentralized. It is not operated or distributed by the central government or bank like other currencies. Hence there is no risk of oversupply or inflation of the currency available. Bitcoins are released slowly, mined by people with the software used to solve coded encryptions.
- It is easy to set Bitcoin address in less time and charges.
- It is mysterious and one can open many Bitcoin addresses without being linked with other address or personally identifying information of the user to others.
- Sending money to other place is time taking whereas in Bitcoin you can easily transfer money in less than a minute at any place.
- Bitcoin works with complete transparency as each and every transaction is recorded in a ledger called’Blockchain’. You can make it dense by not making many transactions from a single address.
- Once the transaction is made, you cannot get back your Bitcoins unless the other party returns back to you.
How Does Bitcoin Work?
- Install any of the Bitcoin Wallets on your mobile phone or on desktop/laptop.
- Create your first bitcoin address. You can create as many as you can at later point of time.
- Share this bitcoin address with your friends. They can make payment to this address which would be credited to your bitcoin wallet account.
- Block chain is shared public ledger in which entire bitcoin network works.
- Block chain would record all transactions and spender would know the balance which he can spend/ redeem.
- Bitcoin wallet keeps a small piece of secret data which is used to sign the transaction from the sender.
What is Bitcoin Mining?
- Just like anyone can join the Internet, anyone can help to verify and record payments into the block chain. This process is called mining.
- In mining, users offer their computing power.
- Miners are rewarded with newly created bitcoins and transaction fees.
- Currently, miners receive 12.5 bitcoins every 10 minutes. This halves every 4 years. The next halving will happen in mid-2020.
Countries Where Bitcoins are Eminent
Bitcoin has gained its popularity in many countries. The following are the countries where Bitcoin is tested and used by the people.
- ESTONIA: It hosts many Bitcoin ATMs and has started up a global peer to peer buying and selling service of Bitcoins named as Paxful.
- DENMARK: It has many Bitcoins startups and exchanges in the country like CCEDK, which has been a productive reformer in the crypto-space and has released Bitcoin “3.0” technology.
- UNITED STATES: Local Bitcoin a peer to peer trading service in U.S has shown a significant growth in Bitcoin users since the year 2013.
- SWEDEN: Here a number of Bitcoin startup shave introduced like the Safello Bitcoin exchange and Stockholm-based KnCMiner, which is a well-known mining hardware developer that has produced many cutting-edge ASIC miners since 2013.
- EUROPEAN UNION: Bitcoin is free from any regulation in the European Unions, but after the terror attack in Paris in the year 2015, the government guided the people to stop the use of digital currencies.
- SOUTH KOREA: Here they have started ‘Korbit’, a secure and small service to buy and accept Bitcoin that also focus on cross border payments and remittance.
- AUSTRALIA: Many exchanges and Local Bitcoins are rising in this country steadily.
What about Bitcoin Validity in India?
Like many other countries, there is no law for using cryptocurrency in India. But it doesn’t make Bitcoin legal by default. Bitcoin can be adopted in future as the people are moving forward to peer to peer payment solutions.
Many questions and points are raised on the use of Bitcoins in India like cryptocurrencies are anonymous though KYC and AML regulations are applicable to Bitcoin companies. Taxation is also a major point of concern for cryptocurrency in India.
Why Companies are offering Bitcoin in India?
Because of the demonetization in India many companies are offering Bitcoin Exchange in India like Unocoin, Zebpay, Coinsecure and many others. Accepting Bitcoin can benefit the merchants as they don’t have to pay the transaction fees as the payment processor which will increase the profit, reduce the reconciliation time that helps in getting the payment in the account fast. This will decrease the risk of fraud and theft.
According to Sathvik Vishwanath, the CEO of Unocoin, using Bitcoin can benefit like lower the transaction fees, prevent fraud, getting paid quickly.
Zebpay with its Bitcoin app has enabled its users to make payment for prepaid and postpaid mobile phones to many of the telecom operators.
How to get Bitcoins in India?
You can signup with any of the above bitcoin companies and click buy button and you would be able to buy bitcoin with any of the Indian bank accounts. There are several articles which say how to get bitcoins for free in India, but they misguide Indians. Stay away from such companies or websites.
What is the bitcoin price in India?
If you wish to purchase bitcoin in India, many sellers are offering at various prices ranging between 1 Bitcoin = Rs 95,000 to Rs 97,500.
What are legal Guidelines from RBI?
The following are the guidelines issued by Reserve Bank of India to Bitcoin users.
- RBI has not authorized or given license to any company issuing Bitcoin currencies. It is at the users’ own risk dealing in this currency.
- RBI has cautioned people about the use of virtual currencies many times and issued circular again in 2013 warning people adopting virtual currencies for its potential, operational and consumer protection risk.
- The major possibilities in digital wallet is the hacking, malware led attacks, and huge volatility in the value of VCs.
- One of the point raised against digital wallet is that it can raise illegal activities as there is no regulation on the managing bodies which can lead to demand ransom in case of hacking by ransomware.
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What is Bitcoin Currency and is it legally Valid in India
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