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    What is Bitcoin?

    A cryptocurrency is a digital or virtual currency.IT uses cryptography to secure its transactions.It is extremely difficult to counterfeit. It is not issued by any central authority, rendering it theoretically immune to government interference.

    The first cryptocurrency to capture public eye was Bitcoin. Currently, more than 1000 cryptocurrencies are there in the world. Bitcoin is a cryptocurrency and worldwide system. It is the first decentralized digital currency, as the system works without a central bank or single administrator. A pseudonymous software developer going by the name of Satoshi Nakamoto proposed bitcoin in 2008, as an electronic payment system based on mathematical proof. The idea was to produce a means of exchange, independent of any central authority that could be transferred electronically in a secure, verifiable and immutable way.

    Legal Status of Bitcoin

    The legal status of cryptocurrency was murky therefore the Finance Minister in the Union Budget 2018-19 said that “The government does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate the use of these crypto-assets in financing illegitimate activities or as part of the payment system.”

    The government will set up a panel to examine trading of crypto assets in unregulated exchanges. The panel is expected to submit its findings in a report by the end of March 2018. However, Bitcoin trading is hugely popular among Indians and has surged in recent months across the country.

    What does it mean for Investors?

    • Cryptocurrencies are not considered to be legal tender by financial institutions.
    • This means that it cannot be used as a substitute for currency.
    • This does not restrict the holding of cryptocurrencies and doing online trading.
    • The risk of more Government/ Regulators worldwide declaring them illegal is a strong possibility.
    • The future of cryptocurrencies thus remains largely undefined.

    Benefits of Cryptocurrency

    Following mentioned below are the benefits of using cryptocurrency:-

    1) Cryptocurrency is readily available to the general public.

    2) Making payments using cryptocurrency can be done in seconds.

    3) There aren’t usually transaction fees for cryptocurrency exchanges.

    4) No need to share your identity or the details of the transactions made.

    5) Transactions are extremely secure as it is using NSA created cryptography.

    6) The inter-country transaction is extremely easy with cryptocurrency

    Problem with Cryptocurrency

    Legal and regulatory hazards aside, as both an investment and currency, bitcoin is very risky therefore their many issues while using bitcoin, few of them are mentioned below:-

    1) Digital currencies, being in electronic format, are prone to losses arising out of hacking, loss of password etc

    2) Lack of any authorized central agency to regulate the payments or to turn to for redressal of grievances.

    3) Value is a matter of speculation, as there is no underlying of an asset for Digital Currencies.

    4) Jurisdictions are tricky as Exchanges are located in various parts of the world.

    5) It can easily be used for illegal and terrorist activities anonymously.

    6) It is heavily used in black and grey markets.

    Conclusion

    Cryptocurrencies are extremely popular all over the world and Indian Investors have opened up their arms wide open to welcome the digital currency. At least five million active traders in India, transacting via regulated banking channels. Bitcoin, which started the last year at Rs. 60,000/- was trading near Rs.14,00,000/- by the end of the year. By all means, it is a fascinating speculative investment. However, the majority of the investors still prefer assets they can value using dividends, income or earnings.

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