Bitcoin has been around for a while. It is the first, decentralized digital currency, or cryptocurrency of the world. An anonymous developer, who goes by the alias Satoshi Nakamoto, first released the open-source software in 2009. Essentially they are long strings of code that are valued as currency. These virtual bits behave exactly like gold bits, once you own them. They possess market value and can be used to purchase goods and services online. You can even tuck them away and hope that their value multiplies over the years. Now, suddenly this currency is back in the news because its value jumped from around Rs 65,000 in January 2017 to Rs 2.7 lakh in September 2017. Given this financial boom, is it time to move our funds to bitcoins, then?
How do Bitcoins work?
Every bitcoin owner has a personal ‘wallet’ in the virtual space. This could be in a computer drive, a smartphone, or the cloud. The value of a single bitcoin varies daily, and this can be checked in places like the Coindesk. While the market is unregulated and decentralized, it is policed by a body of ‘miners’, who dedicate their personal time and resources to keep the ledger for, and audit, Bitcoin accounts. They are paid weekly in, you guessed it, Bitcoins. The public ledger that maintains bitcoin transactions is called Blockchain. The lowest denomination of bitcoin is 0.00000001, or eighth decimal space of 1 Bitcoin. This is the Bitcoin penny. The coolest feature of the Bitcoin is that it is essentially forgery-proof. The amount of coding required to process a coin is more resource-intensive than the value of the forged currency.
Cool! Why haven’t we all moved to Bitcoins already?
Well, Bitcoin has been riddled in controversy for a long while. In 2011-12, it was hoarded by criminal traders, who wanted to take their money away from the eyes of law enforcement. The decentralization of the money makes it vulnerable to criminal attacks. It is beyond tax officials, and cannot be accessed or frozen by the government, unlike a bank account.
In recent cyber attacks, “ransomware” hackers encrypted victim data and demanded for payments in bitcoins to give access back to the victims.
So is it illegal in India?
No, while the Indian government hasn’t specifically declared the cryptocurrency to be legal, it has not been delegalized either. The RBI has cautioned the investors on the volatility, and risks associated with Bitcoins. The biggest risks are lack of regulation, hacking, and extreme market volatility. There are possibilities of Ponzi schemes and unfortunately, without a government regulating body, there is nobody to complain to.
Should we invest or not?
Despite RBI warnings, 2500 Indians are investing in Bitcoins daily. Zebpay, a Bitcoin exchange app has reported more than five lakh downloads already, with close to 2500 being added every day. While it swings wildly through the year, at one point in 2017, it had more worth than gold. A handful of businesses have started moving towards accepting Bitcoin as currency, for e.g.: overstock.com. So, safe or not, there is a significant slice of investors, who see merit in the astronomical risk.
So, if you have the risk-appetite to lose every penny you invest in this, research the party you are transacting with thoroughly, and take the plunge. You may make a killing of it. Just remember, there is absolutely no one giving you any guarantee or fail safe for this investment. Even the founder and the organization auditing this suspiciously intriguing digital currency are mystic and anonymous. Happy investing!
- Quick Ride Review: Bangalore’s Citizen fight back the Traffic Menace - January 31, 2019
- The Top 5 Books from my 2018 pile - January 10, 2019
- My Daughter’s Feminist Training, Out of Syllabus - October 11, 2018
- The Durga Mythology Fails Women in India - October 9, 2018
- The Review of Stree: An Almost There Horredy! - September 6, 2018
- Yeh Meri Family Review: Making Indian TV Great Again - September 4, 2018
- 5 Tips to make your day at Galle Fort, Sri Lanka Phenomenal! - August 28, 2018
- Rediscovering Faith in the Last Kingdom of Kandy - August 21, 2018
- All you need to know about Assam’s Immigration Issue - August 2, 2018
- The Curious Case of My Missing Grandmothers - July 20, 2018