Bitcoin is a cryptocurrency or virtual currency. A cryptocurrency is a digital asset which aims at functioning as a means of exchange in which individual coin ownership records are stored in a database which has been computerized using powerful cryptography in order to secure transaction record entries and maintain the formation of additional digital coin records. Bitcoins were illegal in India. RBI had then said that any institution it oversees, such as banks, wallets, etc should not deal with or provide services for the purchase or selling of cryptocurrencies to any person or business entity. Indian investors have since then been cautious of Bitcoins. This article will be portraying the journey of Bitcoins from illegal to being legal in India.
Origin of Bitcoins
The origins of Bitcoin date back to the early 1980s, when it first developed algorithms that support modern cryptocurrency. Bitcoin’s first public record dates back to October 2008, when a corporation named Satoshi Nakamoto released a white paper with the technical specifications for a modern, decentralized cryptocurrency. In January 2009, Nakamoto launched the open-source code for Bitcoin, marking the launch of commercial mining and trading, and shortly afterwards ceased commercial contact.
Benefits Of Using Bitcoins
Bitcoin is sort of a virtual currency. Bitcoin functions like a data file and is saved on a smartphone or computer in a ‘digital wallet’ device. People can submit bitcoins to the digital wallets of one another. Each activity is documented in a database ledger called the blockchain. This allows tracing the past of Bitcoins to discourage people from wasting coins that they don’t own, making backups or undoing transactions. After Bitcoin, the number of cryptocurrencies such as Litecoin, Ethereum, Zcash, Dash, Ripple etc has been increasingly growing. Bitcoin is a currency not connected to a bank or government which allows users to anonymously invest their money. The bitcoin network is not controlled by any single institution. One can purchase many products and services using bitcoins. One can purchase bitcoins using real cash and sell the items as well and get paid with bitcoins. Bitcoins can be created with the help of computers. Bitcoins have become a valuable resource because they can be used to exchange for cash, goods and services. Bitcoin has made it convenient to send and receive money from anywhere in the world and at any time. The owner of bitcoin is the only one who has control over it, there is no involvement of central authority in the bitcoin network. Moreover, the blockchain makes it possible for anyone to have a look at the transactions made.
Disadvantages Of Using Bitcoins
Just a very small number of online retailers do welcome bitcoins. This makes relying entirely on Bitcoins as a currency impossible. There is also a risk that governments can compel merchants not to use Bitcoins to make sure transactions of users are trackable. On the other hand if a hard drive crashes, or a virus corrupts data, and the wallet file gets corrupted, Bitcoins are lost. There is nothing that can be done to get it back. Those coins are orphaned in the network forever. This can bring a wealthy Bitcoin investor into bankruptcy within seconds without any form of recovery. The coins owned by the investor will be permanently orphaned, too. If Bitcoins sell merchandise and the vendor does not give the promised items, nothing can be done to undo the trade. The problem can be overcome by a third-party escrow service like ClearCoin, but otherwise escrow firms will play the position of banks, rendering Bitcoins equivalent to a more conventional currency. The Bitcoin system might have unexploited flaws. Since this is a relatively modern technology, if Bitcoins were broadly accepted, and a loophole was discovered, it might grant the exploiter enormous wealth at the cost of undermining the Bitcoin economy. This will cause deflation as the total number of bitcoins is capped at 21 million. As the cumulative number of Bitcoins maxes out, each bitcoin will eventually be worth it. This program is for early adopters to be compensated. Because with each day each bitcoin can be worth higher, the issue of what to invest becomes important. This will cause very sudden and erratic buying spikes that will cause the Bitcoin economy to fluctuate. Since Bitcoins have no physical shape it can not be used in physical stores. It would need to always be converted to other currencies. Cards have been proposed with Bitcoin wallet information stored in them but there is no consensus on a particular system because there will be several competing schemes, retailers will consider accepting all Bitcoin cards unfeasible and so consumers will be required to exchange bitcoins instead, until a standardized scheme is introduced and enforced. Since Bitcoins are not governed by a central authority, no one can guarantee their minimum valuation. If a big number of retailers want to sell Bitcoins and leave the network, their value will decline significantly, affecting customers who have spent a huge amount of money in Bitcoins. Bitcoin’s decentralized nature is both a curse, and a blessing.
Status Of Bitcoins In India:
As you all know there was a time when bitcoins were illegal to use in India. Not only bitcoin but the Indian Government has made a ban on all the cryptocurrencies. The Committee submitted its report on 23rd July, 2019, together with a proposed bill, Cryptocurrency ban and Official Digital Currency Bill regulation, 2019. In addition to the injunction, the committee had recommended a Rs 25 crore fine and up to 10 years imprisonment for any virtual currency-related crime undertaken by individuals or businesses. The Reserve Bank of India ( RBI) had warned the Indian public about cryptocurrencies in the past, and the central government had vowed earlier to eradicate the use of digital currency as they considered it unconstitutional. In the case Internet And Mobile Association vs Reserve Bank Of India the Supreme Court has made the use of Bitcoins legal in India. The Supreme Court struck down the prohibition that was imposed by the RBI on the use of cryptocurrencies in India. The Supreme Court has claimed that various courts in different jurisdictions have defined virtual currencies as belonging to specific groups ranging from land to asset to non-traditional currency to payment to capital to assets.The Reserve Bank Of India argues that cryptocurrencies do not lie under the regulatory framework from the beginning. But the Supreme Court mentioned that various countries have accepted the virtual currencies without it being legal tender. So India can also follow the same. Today the cryptocurrencies are legal to use in India as well.
According to my view, the government has taken measures to have greater cryptocurrency protection for a common man. The Supreme Court’s decision of legalizing the virtual currencies in India has made it convenient for the people today to purchase various products and services. Moreover, bitcoins can be created using computers and people can send and receive money from anywhere. Although bitcoins have brought various benefits along with them, it is true according to the RBI that it doesn’t fit best to the needs of Indian economy. Butthe flaws can be outweighed by inventing possible ways.
- Who was the inventor of bitcoins and when was it introduced?
- When was the cryptocurrency ban removed from India?
- Why were the bitcoins not legalized initially in India?
- What are some of the benefits of using bitcoins?
- How are the bitcoins as per Reserve Bank Of India not suitable for our country?
- Faridi, Omar. “Landmark Cryptocurrency Ruling: Supreme Court of India Lifts Reserve Bank of India’s Ban on Virtual Currency Transactions.” Crowdfund Insider, 4 Mar. 2020, www.crowdfundinsider.com/2020/03/158286-landmark-cryptocurrency-ruling-supreme-court-of-india-lifts-reserve-bank-of-indias-ban-on-virtual-currency-tranactions/.