It’s more of an informative article than the publishing post. I wanted to purchase some prototype boards and the seller wanted payment in Bitcoins. Not that I hadn’t heard of Bitcoins, but I never owned one.Then I came to know there are many people around me who doesn’t have Bitcoin. More than that who (may) doesn’t even know which led to this post.Bitcoin. While writing this post I have studied several sources (listed below) and compiled the post so as to give the reader general overview in single read.
1. Bitcoin meaning
Bitcoin is the cryptocurrency. Means, it is not a physical currency controlled by any centralized agency (like Rupee controlled by RBI, India; this centralized control). Bitcoin is first implementation of the concept cryptocurrency. Cryptocurrency is basically a digital currency which exists over the internet and be accessed by password, digital signature or eWallet etc. So, Bitcoin is a digital currency which flows onto internet like cashless transfers. However, there is not a centralized agency who controls Bitcoin transactions. Users and users only have command over Bitcoin transactions. Bitcoin can be used for any purposes: transferring Bitcoin to someone else, purchasing goods or paying for the services offered much like online shopping. If you need one liner: Bitcoin is cash on internet.
From the perspective of user, Bitcoin is like a mobile app or a software that provides electronic wallet that allows user to send or receive Bitcoins.
2. Bitcoin Origin
The term cryptocurrency was proposed by Wei Dai in 1998. However, Bitcoin is the first attempt to make the concept real in late 2008. Bitcoin concept was coined by Satoshi Nakamoto in 2009. However, nobody has seen the person. He had sent the paper via email and later left the project 2010. He later said to be vanished since not much information is available about him. However, Bitcoin had gained popularity among users worldwide and increase in transaction has been found since 2010 (as published by various sources).
3. Bitcoin system working
From the perspective of user, Bitcoin is like a mobile app or a software that provides electronic wallet that allows user to send or receive Bitcoins
Common terms users come across reading about the Bitcoin are:
1. Block chain: shared public ledger (book of financial accounts); maintains balances
2. private key: secret mathematical identity of original owner of wallet
3. mining: distributed system that confirms the transaction by including it into block chain
When any user wants to pay another user by Bitcoin, he/she has to enter the recipient’s address, paying amount and send it. It doesn’t require any merchant gateway for payment. The codes (addresses) can be shared either by QR codes or by NFC (touching two phones together).
Now Bitcoin addresses are generated as per the transaction; one address = one transaction. That is why Bitcoin transactions are secure, irreversible and do not contain any personal information about the user. Besides, the biggest claimed advantage of Bitcoin transaction is, it is impossible for merchants to force unwanted or unnoticed charges as can happen with other payment methods. Users find Bitcoin trustworthy because, it is fully open-source and decentralized.
4. Bitcoin advantages and disadvantages
Bitcoin advantages:
1.Payment freedom: no limits
2.Low fees: no or extreme small fees
3.Secure: secure, irreversible and do not contain user information
4.Transparent: all information about Bitcoin money is available on block chain
Disadvantages:
1.Degree of acceptance: less awareness
3.Ongoing development: not mature yet
Legality issues
Many discussions are going on around the world, among financial regulators about how to integrate this currency with formal currency. Some countries have banned the Bitcoin transactions and some countries have welcomed it. The list of countries in this regard can be found here. However, many supporter of Bitcoin put the forth the view that, “it’s the money, and money has always been used for good purposed and bad purposes.”
5. Indian Scenario
You might be wondering all this time what is cost of one Bitcoin in Indian currency
Since Bitcoin is not a fiat currency with legal tender status under any jurisdiction, but the tax liability comes regardless of the medium used for transaction. In India, however, the press release by RBI, Bitcoin transactions are not authorized central bank or monetary authority. RBI, in the same press release has cautioned the traders and users about the security risks and issues that may arise.
Technically speaking, Bitcoin is a computer program. The Indian CopyRight Act defines computer program as, ‘a set of instructions expressed in words, codes, schemes or in any other form, including a machine readable medium, capable of causing a computer to perform a particular task or achieve a particular result.’ If we read point #3 Bitcoin working, it can be observed that it a computer program as per the definition. There is another support to Bitcoin; as per Forward Contracts (Regulation) Act, 1952, goods is ‘every kind of movable property other than actionable claims, money and securities.’ So Bitcoin may be defined as goods.
As per the paper by Pranesh Prakash,following can be the concerns about Bitcoin in India.
1. Mining: Bitcoin mining seems like making our own computer program or writing a software code. Since, writing the software code is not a legal offence, hence, Bitcoin mining doesn’t look illegal.
2. Bitcoin transaction India: If Bitcoins transactions are done by the Indian, with the Indian in exchange of Indian Rupees then it would fall under Sale of Goods Act, according to Pranesh Prakash.
3. Transactions where Bitcoin recipient is in India but sender isn’t: Since, Bitcoin can be seen as computer program, this transaction may come under import of computer programs and will be liable to customs duty. However, if import of this ‘computer program’ is done via internet (like downloading the paid software), it doesn’t have to pay import duty since no physical shipment involved.
4. Transaction outside India, but in exchange of Indian Rupees: Situation discusses above will also be applicable for person buying Bitcoins from online exchange based outside India. In Pranesh Prakash’s words, ‘ This situation would also be applicable to any person buying Bitcoins from an online exchange based outside India. The only documentation that would be required for buying Bitcoins from an online exchange abroad would be that which the bank may insist upon for exchanging Indian rupees into a foreign currency and then transferring it to an overseas account. This documentation would involve filing of Form A-1 if the total value of the money being exchanged is greater than USD 5,000.’
This is all I had studied about Bitcoin scenario in India, from several sources and tries to summarize here. Thank you!
Source : https://ajinkyasthorts.wordpress.com/2015/06/21/bitoin-general-introduction-and-indian-scenario/
Click on the bitcoin logo below to buy, use or accept bitcoin. Unocoin is India’s most popular bitcoin wallet.
To read the bitcoin white paper, visit: https://bitcoin.org/bitcoin.pdf
