What is Bitcoin?This is a new terminology which has become the talk of the town and is being considered as a threat to dollar and to companies like Western Union which are into funds transfer. We will first understand that what is a Becton and to make it simple in layman words we can say that it is a digital signature and it is “mined” through an algorithm. The algorithm of Bitcoin looks like something as shown below in the image.
How a Bitcoin Functions?As a bitcoin owner, you will have a wallet with a public key and private key. People can send you bitcoins using your public key, and you send bitcoins using your private key. Every transactions of every bitcoin is publicly stored in a “block chain”. Only thing is - the people doing the transaction may be hidden or it may be difficult to get to them. But from a bitcoin, you can find out which wallet it now belongs to.
The world’s first Bitcoin ATM opened in Vancouver on 1 November 2013. The machine allows “users to exchange their credits of the digital currency for cash and vice-versa.”
Pitfalls of Bitcoin
If bitcoin isn't issued by the government, it cannot be overprinted into oblivion, nor can it be tracked or subject to income tax. Currently only 25 bitcoins are generated roughly every 10 minutes as it is being generated using the most powerful computers and even some companies are into selling these high profile configuration computers but it will not be worth for an individual as its cost factor will be high.
The price of a Bitcoin can increase or decrease with a great speed over a short period of time due to its young economy and limited availability. The impact of Bitcoin economy can be gauged from the fact that its price has fallen from $1120 per bitcoin to $600 per bitcoin moment Chinese Govt imposed sanctions on sending and receiving money through Bitcoin. Now it has recovered to $750. Practically one can not put a correct price for the Bitcoin as its supply is limited and demand may soar as more black money gets routed into it.
Our Take on the Bitcoin
Indians are also not far behind as a site has popped up in Bangalore which is allowing you to buy or sell anything using Bitcoins. We will like to advise that online store in India that RBI has clamped down on any form of unregulated organized virtual stores of wealth and using it as a currency may land the store owner including buyers and sellers in trouble as RBI will consider it to be illegal.
One should avoid going in for Bitcoins as we see it leading to more Hawala operations and illegal transfer of money and it may be used for terrorist funding in India and other parts of the world.
A parallel internet economy may lead to tracking of the originator may be difficult and this is the reason that China has declared it illegal and we see it same happening in India. For the sake of security of the nation we should avoid Bitcoin transactions as at the end of the day; the unaccounted money or black money is going to get into as an investment in Bitcoins. Check out Black money in India here and lets get it back in India to make our nation a force to reckon with and we will be proud of our nation.