What is a Bitcoin
How Bitcoin Works
What is Bitcoin Mining
Consensus: Bitcoin follows a standard majority consensus, where each miner may choose which block in the chain to append to, and eventually the longest chain sustains. It is widely believed that as long as honest parties control majority of the computing power, the longest chain will grow and outperform other forks.
Can I purchase Bitcoin?
The answer is yes. Bitcoins can be purchased from different bitcoin currency exchange networks online. These networks allow users to buy and sell Bitcoins from their chosen form of currency including INR, USD, and Euros. In India, you can purchase BTC currency from following exchanges.
Why RBI warned the usage of Bitcoin in India
- VCs being in digital form are stored in digital/electronic media that are called electronic wallets. Therefore, they are prone to losses arising out of hacking, loss of password, compromise of access credentials, malware attack etc. Since they are not created by or traded through any authorised central registry or agency, the loss of the e-wallet could result in the permanent loss of the VCs held in them.
- Payments by VCs, such as Bitcoins, take place on a peer-to-peer basis without an authorised central agency which regulates such payments. As such, there is no established framework for recourse to customer problems / disputes / charge backs etc.
- There is no underlying or backing of any asset for VCs. As such, their value seems to be a matter of speculation. Huge volatility in the value of VCs has been noticed in the recent past. Thus, the users are exposed to potential losses on account of such volatility in value.
- It is reported that VCs, such as Bitcoins, are being traded on exchange platforms set up in various jurisdictions whose legal status is also unclear. Hence, the traders of VCs on such platforms are exposed to legal as well as financial risks.
- There have been several media reports of the usage of VCs, including Bitcoins, for illicit and illegal activities in several jurisdictions. The absence of information of counterparties in such peer-to-peer anonymous/ pseudonymous systems could subject the users to unintentional breaches of anti-money laundering and combating the financing of terrorism (AML/CFT) laws.
Is buying Bitcoin legal in India?
In the recent press release, Reserve Bank of India advises that it has not given any licence / authorisation to any entity / company to operate such schemes or deal with Bitcoin or any virtual currency. As such, any user, holder, investor, trader, etc. dealing with Virtual Currencies will be doing so at their own risk
Bitcoin – Recent Developments in India
IDRBT released a white paper titled, ‘Applications of blockchain technology to banking and financial sector in India’. The white paper concluded that the overall proof of concept provided a good demonstration of the use-cases and helped broaden the understanding of the technology and its potential to other real-life applications.
The technology partner for the project was New York-based MonetaGo, which provided the actual platform for test cases including payments with its proprietary enhanced information payments system (EIPS) and trade finance. MonetaGo said that the project was believed to be the first ever end-to-end test of blockchain using existing banking protocols, including regulators, banks, financial institutions and clearing houses.