Everything you need to know about Bitcoins, Know the details

Everything you need to know about Bitcoins, Know the details

What is Cryptocurrency?

Cryptocurrency is a digital currency based on blockchain technology. There are few Cryptocurrencies which gained huge popularity due to sharp hike in their value in a short period of time. Some of the Cryptocurrencies include Bitcoin, Lite coin, Erytheum and Ripple.

What are Bitcoins?

Bitcoins are virtual currencies. They are created by an unknown person who used the name Satoshi Nakamoto in 2009. The characteristic feature associated with Bitcoins is that they do not involve middle men, banks or any other regulatory agency in their transactions.

Basic facts of Bitcoins:

• It is the first decentralised currency
• They are the digital coins which can be send through the internet.
• They can be transferred directly from person to person via the net without going through a bank or clearinghouse.

How can we get Bitcoins?

Bitcoins can be acquired mainly through three sources. They are:

1. Buy on an Exchange: Several marketplaces called “bitcoin exchanges” allow people to buy or sell bitcoins using different currencies.
Mt. Gox in Tokyo is the largest bitcoin exchange.
2. Transfers: People can send bitcoins to each other using mobile apps or their computers. It’s similar to sending cash digitally.
3. Mining: People compete to “mine” bitcoins using computers to solve complex mathematical problems. This is how bitcoins are created. Currently, a winner is rewarded with 25 bitcoins roughly every 10 minutes.

What is the number of Bitcoins that are in existence?

The total possible number of bitcoins are around 21 million. A bitcoin was valued at $10 on October 2012 but it leaped to around 14089.41 US Dollar (INR 902004.03) as of December 2017.

Advantages

1. The Bitcoin software is completely open source and anybody can review the code.
2. Several currency exchanges exist where you can trade your Bitcoins for dollars, euros and more.
3. Bitcoins are a great way for small businesses and freelancers to get noticed.
4. It doesn’t cost anything to start accepting them, there are no chargebacks or fees and you’ll get additional business from the Bitcoin economy.

Disadvantages

1. They are not backed by tangible entities such as land.
2. It consumes more computer power.
3. It also enables crime.
4. It may lead to anarchy.
5. It’s very much still an experimental currency and is a high-risk environment for consumers and investors at the moment.

There is a need for investors to spend time educating themselves about bitcoin and technology behind it. In many western countries, they are treated as property and capital gains tax is imposed on it. India should also treat it as property and impose capital gains tax. There is a need to bring bitcoins under the oversight of SEBI. Implementing strict KYC norms and eliminating secrecy of transactions.