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Status of Bitcoin in India

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.

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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
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Bitcoin is the most famous cryptocurrency, rising 19-folds in value, it has attracted many retail investors from around the world. However, cryptocurrencies are yet not a legal tender in India and Bitcoin is disapproved as a legal currency.

Government’s take

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.

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. Pixabay
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. Pixabay

No mechanism to prevent misuse

There is no mechanism to prevent the misuse of cryptocurrencies such as Bitcoin by terror groups and other anti-national elements.
“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
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

Some basics on Bitcoin

  • 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.
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Goldman Sachs to enter Cryptocurrency Market

It will trade Bitcoin futures in a principal, market-making capacity and will also create non-deliverable forward products.

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It will trade Bitcoin futures in a principal, market-making capacity and will also create non-deliverable forward products.
Bitcoin, Pixabay

Don’t call Goldman Sachs Group Inc’s long-awaited Bitcoin-trading business a full-fledged desk, and don’t expect it to buy and sell bitcoins, at least at first.

The bank, preparing to pioneer a new cryptocurrency market on Wall Street, plans to start small and offer a limited number of derivatives, according to a person briefed on the decisions. It will trade Bitcoin futures in a principal, market-making capacity and will also create non-deliverable forward products.

Don’t call Goldman Sachs Group Inc’s long-awaited Bitcoin-trading business a full-fledged desk, and don’t expect it to buy and sell bitcoins, at least at first.
Goldman Sachs, Business Standard

Read also: Apple Leads Global Tablet Market, Samsung Second

Wall Street firms began offering clients futures from Cboe Global Markets Inc and CME Group Inc in December. But one issue with buying and selling actual bitcoins is that they can be stolen by hackers. That means any bank looking to facilitate those transactions will have to figure out how to guard such assets, a step that could require a nod from regulators.

Goldman Sachs already hired Justin Schmidt as head of digital asset markets to help clients gain exposure to cryptocurrencies. He will sit on the firm’s currency desk, a source said, discussing internal plans.

The New York Times reported on Thursday the bank’s decision to offer forward products, noting that the business will start in the next few weeks. (Business Standard)