In case you are still confused about this one, Bitcoin is a crypto currency that is not physically tangible. It can be considered a new kind of money that comes with a highly innovative payment network. ‘Crypto’ for Bitcoin refers to the use of codes and protocols to establish secure communications.
How it works
This crypto currency is the first of its kind to use peer-to-peer technology and payments done over an online network. Since there are no third parties involved, a complex system of computing and timestamps helps replace the traditional ‘trust’ factor in payments with ‘verification’. Moreover, these transactions are irreversible, which according to Nakamoto could protect sellers from fraud. A timestamp server distributed on a peer-to-peer basis generates mathematical proof of the chronological order of transactions.
Bitcoins are released to come into circulation through the process of Bitcoin mining, which involves solving a computationally complicated puzzle to discover a new block. This block gets added to the block chain, and a reward is delivered in the form of some bitcoins.
Current government stand – the crypto-currency is neither illegal nor legal in India (Vishal Gupta, cxtoday.com)
Bitcoin trade analyst Chris Burniske highlighted that in May 2017, trades from India accounted for 10% of the global crypto currency trade (@ARKblockchain). According to his analysis, which he displayed through a chart tracking crypto currency trades on Twitter, India accounted for 16,754.76 coins by trade volume and is ranked fourth on the Bitcoin crypto currency trading market.
Zebpay and Unocoin are two Indian companies that came up with Wallet-Exchange concept and accept Indian Rupee for trade.
But what about the issues of legality?
Dushyaant Bhati, a Credit Control Specialist at Accenture says, “As of now the crypto currency Bitcoin is neither legal nor illegal in India”.
India has had a good share in the trading of Bitcoin among the top 5 nations where Bitcoin is traded most. This trend continues to grow and shows that Bitcoin has a huge market here as a new investment option.
Bhati says, “As it is not on the stock market, it can be traded like any other commodity. Due to this dynamic, the demand for Bitcoin is very high. For every one seller there are about 20 buyers. This is a double edged sword as it is an investment that is highly volatile. With rises and drops of over 10-15% in a day. Bitcoin is rising at a tremendous rate, its value having increased by more than 1000% in this financial year now standing at 1bitcoin=6.6lakh.”
He further added that if Bitcoin were to be legalised in India;
- It would be recognised as a currency and hence would be taxable
- It would fall under the jurisdiction of the RBI and investing and trading of Bitcoin would be monitored as for any other currency
- Foreign trade and investment using Bitcoin would fall under Foreign exchange management act
In essence, it would be bound by the guidelines of any other currency which is legally accepted for trade and investment across international and national markets.
IT enthusiast Manan Sharma adds, “Bitcoin is already being extensively used in the dark web for different industries like arms and ammunitions, certain illegal drugs and more. A strong law enforcement as well as a highly sophisticated infrastructure would be required before Bitcoin can be legalized in India, simply because the level of expertise of potential hackers will need to be matched. Not to mention the unscrupulous monetary activities that already happen with normal currency. Bitcoin is certainly a double edged sword.”
Countries like Japan, USA, European Union and Singapore have legalized Bitcoins, albeit with certain tax and security conditions placed upon the trade. The BITCOIN ETF, or Bitcoin exchange-traded fund (ETF) has been issued by the Bitcoin Investment Trust (BIT) that is owned and operated by Grayscale Investments, LLC. It is also known as BITShare.
Several international exchanges that facilitate the trade of Bitcoin, includeing CEX.IO, Coinbase, Kraken, Bitstamp, Lake BTC and Bitit.
McAfee founder John McAfee sums up the debate around Bitcoin perfectly, “You can’t stop things like Bitcoin. It will be everywhere and the world will have to readjust. World governments will have to readjust.”