Bharat SainiLast Updated on February 25, 2017 by Bharat Saini
Bitcoin the cryptocurrency has reportedly hit highest levels, trading at a two-year high of $788.49 or Rs. 53,210 per bitcoin, the price had surged above Rs. 68,000 a unit after India sparked a cash crunch as a consequences of Prime Minister Narendra Modi’s major assault on black (untaxed) money, fake currency and corruption with sudden announcement of demonetisation of Rs. 500 and Rs. 1,000 currency notes on November 08, 2016. A cascade of other global uncertainties that began with Brexit (British referendum in June to exit the European Union) and leading to a weak Chinese Yuan and Trump’s win boosted this new fondness for bitcoins. A majority of bitcoins users are millennials with ages between 18 & 35. With the precariousness of the local gold and real estate markets, this digital currency, emerging as an alternative asset class, now appears a surer bet to investors, even those with a somewhat delicate appetite for risk. Bitcoin is a cash alternative that can be used for moving money across the globe quickly and anonymously. Bitcoin, the cryptocurrency or code mimicking a virtual currency, operating independently of a central bank, is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds. In India, only a few companies, mostly large e-commerce firms, accept bitcoin payments and that too as indirect transactions made through the exchanges. Despite being propagated by some as digital money of the future, it is often dismissed as a currency that is too volatile to invest in.
India has about 20 bitcoin startups, of which merely three have secured funding, ZebPay has $1 million, Unocoin has $1.5 million, and Coinsecure has $1.5 million. In the past month, India’s these three funded bitcoin trading platforms have registered a surge in new users.
Zebpay’s trade volumes touched Rs. 120 crore in November, up by 25% compared to October, and revenue grew 25%. Zebpay is Ahmedabad based bitcoin wallet and exchange, which has raised seed funding from a few individual investors. It added 50,000 new users in November, 2016 higher than its typical monthly average of 20,000 new users. Overall, Zebpay has about 250,000 users.
Unocoin, which recently secured funding from Blume Ventures and US-based trading firm Digital Currency Group, among others, has registered a threefold spike in users in the past month, to 120,000. Trading volumes have doubled to about 300 bitcoins a day.
Coinsecure founder Benson Samuel said the company registered a 300% increase in sign-ups in November and now has 90,000 users.
Bitcoin is a cryptocurrency and a payment system invented by an unidentified programmer using the alias Satoshi Nakamoto. Bitcoin was created, rather introduced on 03 January, 2009. Satoshi left the project in late 2010 without revealing much about him. The community has since grown exponentially with many developers working on bitcoin. It is a decentralized peer-to-peer payment network and transactions take place between users directly, without an intermediary and with no central authority. These transactions are verified by network nodes and recorded in a public distributed ledger called the block-chain, which uses Bitcoin as its unit of account. From a user perspective, bitcoin is pretty much like cash for the Internet.
Bitcoins are created as a reward in a competition in which users offer their computing power to verify and record bitcoin transactions into the block-chain. This activity is referred to as mining and successful miners are rewarded with transaction fees and newly created bitcoins. Besides being obtained by mining, bitcoins can be exchanged for other currencies, products, and services.https://en.wikipedia.org/wiki/Bitcoin – cite_note-bitpay130916-33 When sending bitcoins, users can pay an optional transaction fee to the miners. This may expedite the transaction being confirmed. Bitcoins can also be acquired from several marketplaces called Bitcoin Exchanges that allow people to buy or sell bitcoins using different currencies. Mt. Gox is the largest bitcoin exchange. People can send bitcoins to each other using mobile apps or their computers, similar to sending cash digitally. Bitcoins can be used to buy merchandise anonymously. In addition, international payments are easy and cheap because bitcoins are not tied to any country or subject to regulation.
Bitcoins are stored in a digital wallet, which exists either in the cloud or on a user’s computer. The wallet is a kind of virtual bank account that allows users to send or receive bitcoins, pay for goods or save their money. Instances of servers having been hacked and companies having fled with clients’ bitcoins are there. As wallet is on computer, bitcoin can be accidentally deleted. Viruses could also destroy them. There is anonymity, although each bitcoin transaction is recorded in a public log, names of buyers and sellers are never revealed, it operates only on their wallet IDs. While that keeps bitcoin users’ transactions private, it also lets them buy or sell anything without easily tracing it back to them. That’s why it has become the currency of choice for people online buying drugs or other illicit activities. The future of bitcoin is unknown. It is mostly unregulated, but that could change. Governments are concerned about taxation and their lack of control over the currency.
The European Banking Authority and other sources have warned that bitcoin users are not protected by refund rights or charge backs. The use of bitcoin by criminals has attracted the attention of financial regulators, legislative bodies, law enforcement, and media. Criminal activities are primarily focused on dark net markets and theft, though officials in countries such as the United States also recognize that bitcoin can provide legitimate financial services.
