Sunday February 18, 2018
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From paper to plastic to Bitcoins: Changing money with time

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By NewsGram Staff Writer

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With the internet revolution gaining ground in India at a fast pace, and many initiatives on the part of the government to digitize India and take everything online, the days when money (currency) will also be completely digitized don’t seem far.

Bitcoin is one such example. For those who aren’t aware what it is, it can simply be defined as “digital money.” The advantages of bitcoin extend from zero transaction charges and to mobile platforms offering easy buy and sell options, high security and anti-wallet theft options. Handling bitcoins is extremely hassle-free. With one click on your Smartphone, you can do transactions anytime, anywhere.

Bitcoin came into existence around 2009, and is believed to be created by Satoshi Nakamoto, which can be a person or a group of persons. It once gained value steadily, peaking at about $1,100 per bitcoin in November 2013, then its value slid and is approximately $227 per bitcoin now. Also, no government regulates bitcoins yet.

Bitcoins are earned by churning data on the computer, which is also called “mining.” This is done in order to verify transactions.

“I find it (bitcoin app) extremely useful because I can buy online discount coupons and gift vouchers in exchange for my bitcoins,” said Harin Pandya, who works with an event management company in Hyderabad. “I can redeem these from Amazon, Ola and a host of other e-commerce websites.”

Despite all the shiny positives, RBI governor Raghuram Rajan doesn’t seem so convinced about the positive aspects of bitcoin. The main reason being that bitcoins fall outside the purview of regulated financial environment.

Calling them “Crypto currencies”, RBI Deputy Governor, R Gandhi, emphasized that these can be involved in money laundering, tax evasion and terror funding.”

Despite the red flag given by RBI, bitcoin’s popularity continues to rise. Banks and other financial middle-men-organizations are completely out of the picture.

“I have family in New Zealand and I can send money immediately to them using my bitcoin wallet, which they can encash there, making the transaction hassle free,” says Himanshu Sisodia, chief operating officer at Greenleaves Management.

“Though it has depreciated significantly, the value of bitcoins are bound to climb up by next January, because virtual currency is the future and the world will only get more digitised from now on,” said Pandya, adding that he is expecting to get almost 100% return on his investment in bitcoins by this year-end.

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Despite the concerns raised regarding usage of bitcoins, experts believe that with the steady pace of digitization, money is bound to become online sooner or later, and that the world cannot escape bitcoins when such a thing happens to the completion. Since digitizing India means an enhanced push into the direction of cashless transactions, bitcoins will climb up.

Citing the example of Greece, experts have also pointed out that for volatile economies undergoing crisis, bitcoins offer a good alternative.

 

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Is investing in Bitcoin safe? Get the basics first!

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India has not legitimized bitcoin, hence investment returns are totally based on demand i.e. you get your return only if there is another buyer in the market who is ready to pay you more for it. Currently the high-value of the digital currency owes to its high demand, but once people start selling, there is a possibility that rates will drastically fall. Pixabay
India has not legitimized bitcoin, hence investment returns are totally based on demand i.e. you get your return only if there is another buyer in the market who is ready to pay you more for it. Currently the high-value of the digital currency owes to its high demand, but once people start selling, there is a possibility that rates will drastically fall. Pixabay

With the fussy mania of Bitcoin going around and past, your eyes and ears, in the news and peer discussions, you must be having some basic questions about it: What is bitcoin? Is it legal? How can I get it? But most of all, you must be thinking, ‘Is investing in Bitcoin safe?’

Let’s find out!

Pluto Exchange has launched first app that will trade in bitcoins in India
Pluto Exchange has launched the first app that will trade in bitcoins in India. Wikimedia commons

ALSO READ: Bitcoin Worth Millions Stolen Days Before US Exchange Opens

Clearing the basics

  • Bitcoin is the first ever cryptocurrency that existed, it was invented in 2009 by Satoshi Nakamoto.
  • Cryptocurrencies are nothing but computer codes that have monetary value. No Government has any control over them.
  • Bitcoins ‘self-contain’ their value i.e. there’s no need for any bank to move or store the money.
  • Bitcoin currency is completely unregulated and decentralized.
  • Bitcoins are mined, and they can be mined by anyone in the general public who has a strong computer. However, only 21 billion of bitcoins in total can be mined. Currently, there are around 11 million in circulation.
  • Bitcoin has no underlying physical monetary base to support its value, and it is totally subject to its demand in the market.

What are the risks?

  • Low demand: India has not legitimized bitcoin, hence investment returns are totally based on demand i.e. you get your return only if there is another buyer in the market who is ready to pay you more for it. Currently, the high-value of the digital currency owes to its high demand, but once people start selling, there is a possibility that rates will drastically fall.
  • Unregulated: There is no bank or government tax agency that can track your money and its movement. Hence, it can become a tool for money laundering.
  • Irreversible transactions: There is no insurance protection of your bitcoin wallet i.e. if you lose your wallet’s hard drive data or even your password, your wallet’s content is gone forever.
There is no insurance protection of your bitcoin wallet i.e. if you lose your wallet’s hard drive data or even your password, your wallet’s content is gone forever. Pixabay
There is no insurance protection of your bitcoin wallet i.e. if you lose your wallet’s hard drive data or even your password, your wallet’s content is gone forever. Pixabay

ALSO READ: How can you trade in Bitcoin in India?

Status of Bitcoin in India

Finance minister Arun Jaitley highlighted in a statement that cryptocurrencies are not legal tender and have no regulatory permission or protection in the country.

However, there was no announcement banning or imposing any curbs on the same. The government panel is also awaiting a report on tackling cryptocurrencies in India, Jaitley said.

The government has recently cautioned investors to be wary of virtual currencies like bitcoin, saying they are like Ponzi schemes with no legal tender and protection.

“One of the features of cryptocurrency is that there is lack of dependence on the state. It functions with a degree of anonymity. It operates within a virtual community which is created and enjoys the trust of that virtual community,” Finance Minister Arun Jaitley told the Rajya Sabha.

“The government is examining the matter. A Committee under the chairmanship of the Economic Affairs Department Secretary is deliberating over all issues related to cryptocurrencies to propose specific actions to be taken… Instead of taking any knee-jerk action, let’s wait for the report of this committee.” Jaitley added