8 points you must know about Bitcoins!

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8 points you must know about Bitcoins!

As we all know, bitcoin is a virtual currency which is revolutionising the world. There has been lot of fluctuation in value of bitcoin over last few years. Lot of applications have been foreseen for use of bitcoins, and infact Bitcoins are now creating stories around the world.

Let us have a brief look at 8 important points you must know about Bitcoins:

  1. WHAT IS BITCOIN?

Bitcoin is a Cryptocurrency (digital asset used as medium of exchange or payment) decentralized in nature. Bitcoins do not exist in tangible form, only balances associated . The smallest unit of Bitcoin is called ‘Satoshi’ after its inventor Satoshi Nakamoto. Bitcoins can be transferred from one user to another without any third party intervention or regulator.

  1. How did Bitcoin came into existence?

Bitcoin was created by a programmer called Satoshi Nakamoto in year 2008. Though the identity of the said person has always been a topic of debate, many people have claimed to know him.

  1. How does it work?

Bitcoin system is designed as a peer-to-peer transaction system. The transactions are verified and recorded in Blockchain. Bitcoin offers the lower transaction charges than conventional online fee mechanisms and is operated through a decentralized authority, unlike authorities issued currencies.

These balances are maintained using public and private keys which are alphanumeric strings linked by algorithms.

  1. What are units of Bitcoins?
 10−3 millibitcoin
 10−6 microbitcoin, bit
 10−8 satoshi
Symbol BTC, XBT,  (B͈̎),  Ƀ
 millibitcoin mBTC
 microbitcoin, bit μBTC

 

  1. How to earn Bitcoins?
  • Mining: Bitcoins are offered in exchange of verifying and recording bitcoin transactions into the blockchain. Person performing this activity are is called ‘miner’ and is awarded with transaction fees in form of newly generated bitcoins.
  • Exchange: Bitcoins can be obtained by exchanging other currencies . This exchange takes place by buy bid and sell orders. The system then matches the buy and sell bid price and transaction takes place. Currently, the currencies that can be exchanged for bitcoins are- US Dollars, Euros, Japanese Yen, Russian Rubles, Pound Sterling, Pecunix Gold.
  • Bitcoins can also be obtained in exchange of other products and services.
  1. What are the Pros of Bitcoins?
  • Lower Transaction Fees: Bitcoin transactions are cheaper compared to the conventional methods of fund transfers.
  • Paperless: Bitcoins exist only in digital format.
  • Privacy: Bitcoin transactions are not linked to any entity in real world. All the transactions are attached to the virtual bitcoin address. Also a new address can be created for every transaction.
  • Decentralized: Bitcoin transactions are decentralized. Hence there are very low chances of corruption.

 

  1. What are the Cons?
  • Lack of regulation: Bitcoin system are not regulated by any of the authority in the world.
  • Volatility: Bitcoins are 7 times more volatile than gold. This volatility can be attributed to lack of stabilization mechanism and liquidity.
  • Legal status: Legality of Bitcoins vary from country to country. While some countries have allowed its use, some other nations have banned it.
  • Involvement in Criminal activities: Bitcoins are unregulated and highly secured by end to end encryption. Hence they prove to be a easy way for Money Laundering

 

  1. Are Bitcoins legal in India?

Yes! Bitcoins are not declared illegal in India. RBI has not yet taken any specific stand regarding Bitcoins. RBI does not regulates bitcoin transaction in country. Though the transactions may come under scanner for provisions in FEMA (Foreign Exchange Management Act)

 

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