IASNOVA
BITCOINS
Bitcoin (₿) is a cryptocurrency, a form of electronic cash. It is a decentralized digital currency without a central bank or single administrator that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries.
Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain.
Bitcoin has been criticized for – its use in illegal transactions, its high electricity consumption, price volatility, thefts from exchanges, and the possibility that bitcoin is an economic bubble.Bitcoin has also been used as an investment, although several regulatory agencies have issued investor alerts about bitcoin.
Units
The unit of account of the bitcoin system is a bitcoin. Ticker symbols used to represent bitcoin are BTC and XBT. Its Unicode character is ₿. Small amounts of bitcoin used as alternative units are millibitcoin (mBTC), and satoshi (sat). .
BlockChain
The bitcoin blockchain is a public ledger that records bitcoin transactions.It is implemented as a chain of blocks, each block containing a hash of the previous block up to the genesis block of the chain. A network of communicating nodes running bitcoin software maintains the blockchain.Transactions of the form payer X sends Y bitcoins to payee Z are broadcast to this network using readily available software applications.
Mining
Mining is a record-keeping service done through the use of computer processing power.Miners keep the blockchain consistent, complete, and unalterable by repeatedly grouping newly broadcast transactions into a block, which is then broadcast to the network and verified by recipient nodes.
Important Points Regarding its Regulation-
Bitcoin does not have a central authority and the bitcoin network is decentralized:
– There is no central server, bitcoin network is peer-to-peer.
– There is no central storage, bitcoin ledger is distributed.
– The ledger is public, anybody can store it on their computer.
– There is no single administrator,the ledger is maintained by a network of equally privileged miners.
– Anybody can become a miner.
– The additions to the ledger are maintained through competition. Until a new block is added to the ledger, it is not known which miner will create the block.
– The issuance of bitcoins is decentralized. They are issued as a reward for the creation of a new block.
– Anybody can create a new bitcoin address (a bitcoin counterpart of a bank account) without needing any approval.
– Anybody can send a transaction to the network without needing any approval, the network merely confirms that the transaction is legitimate.
Privacy
Bitcoin is pseudonymous, meaning that funds are not tied to real-world entities but rather bitcoin addresses. Owners of bitcoin addresses are not explicitly identified, but all transactions on the blockchain are public. In addition, transactions can be linked to individuals and companies through “idioms of use” (e.g., transactions that spend coins from multiple inputs indicate that the inputs may have a common owner) and corroborating public transaction data with known information on owners of certain addresses.
Virtual currencies are risky because:
– the exchanges are not regulated or supervised by a government agency
– the exchanges may lack system safeguards and customer protections
– large price swings and “flash crashes”
– market manipulation
– theft and hacking
– self-dealing by the exchanges
Bitcoins Regulation In India
Finance minister Arun Jaitley, in his budget speech on 1 February 2018, stated that the government will do everything to discontinue the use of bitcoin and other virtual currencies in India for criminal uses. He reiterated that India does not recognise them as legal tender and will instead encourage blockchain technology in payment systems.
“The government does not recognise cryptocurrency as legal tender or coin and will take all measures to eliminate the use of these cryptoassets in financing illegitimate activities or as part of the payments system,” Jaitley said.
In early 2018 India’s central bank, the Reserve Bank of India (RBI) announced a ban on the sale or purchase of cryptocurrency for entities regulated by RBI.
In 2019, a petition has been filed with the Supreme Court of India challenging the legality of cryptocurrencies and seeking a direction or order restraining their transaction.
However, this doesn’t immediately render these currencies illegal.
Not being legal tender is not the same as it being illegal.The difference is that if it’s a legal tender that means it is recognised in the country as a currency and can be freely accepted for payments and settlements. On the other hand, if it is not a legal tender that means that it may not be accepted for making a financial transaction. For instance, gold or a share certificate. These are not legal tenders but some people may accept it as they see value in it.
