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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

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.

Next Story

Anti-Crypto Law Draft Proposes 10-Year Jail for Dealing in Bitcoin, Cryptocurrencies

Besides making it completely illegal, the bill makes holding of cryptos a non-bailable offence

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Draft, Law, Jail, Bitcoin
Bitcoin is the most popular cryptocurrency in the world. Pixabay

Holding, selling or dealing in cryptocurrencies such as Bitcoin could soon land you in jail for 10 years.

The “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019” draft has proposed 10-year prison sentence for persons who “mine, generate, hold, sell, transfer, dispose, issue or deal in cryptocurrencies.

Besides making it completely illegal, the bill makes holding of cryptos a non-bailable offence.

A cryptocurrency is a digital or virtual currency that uses cryptography for security and is generally based on blockchain technology, a distributed ledger enforced by a disparate network of computers. Bitcoin is the most popular cryptocurrency in the world.

Draft, Law, Jail, Bitcoin
) Holding, selling or dealing in cryptocurrencies such as Bitcoin could soon land you in jail for 10 years. Pixabay

Given the high chances of cryptocurrencies being misused for money laundering, various government bodies such as the Income Tax Department and the Central Board of Indirect Taxes and Customs (CBIC) had endorsed banning of cryptocurrencies.

The draft bill for banning cryptocurrency has been in the works for some time with Economic Affairs Secretary Subhash Chandra Garg leading the exercise.

While strict law would soon be in place to deal with people indulging in trade of cryptocurrency, India is likely to have its own digital currency.

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“A decision on the launch of Digital Rupee would be taken after consulting the Reserve Bank of India (RBI),” said an official. (IANS)