Biting the Bitcoin

When sizzling-hot Cryptocurrency talk is all over the place and then you see the world’s richest man Elon Musk going all praises about it, you just can't ignore it, right? So what exactly is this Bitcoin thingy that promises to be replaced as the new currency for the future? Let’s find out…

Bitcoin started out as a form of virtual currency on the internet and was created in 2009 by Satoshi Nakomoto. It basically relied on a decentralized technology to make instant end-to-end transactions on the web. But the better side of it was also that it behaved as equity, and enabled users to buy/sell bitcoins as investments. The best way to explain its exponential growth in recent years is by looking at its current value. Bitcoin when started in 2009, was just equivalent to $1. But if we have a look at its current value, it amounts to around $54000! It is just mind-boggling the way Bitcoin has grown over the past few years, and that explains why everyone is talking about it. The main reason why people are so drawn to Bitcoins is the lack of middlemen and the hefty commission charged by the banks. The process is completely online and the only information that exists in its database is the Wallet ID, which stores all the transactions made with it.

In addition to these, you can also mine Bitcoin. Yes, you read it right, just like Gold and other hard metals, Bitcoin can be digitally mined and can also make a good source of revenue. How do we mine it? Well, it seems complicated but I'll try my best here to simplify it. Basically, Bitcoin depends on a technology called Blockchain, a smart database that stores all the important data safely and also enables all its users to get secure access to its details. This is made to run in a decentralized way, so that no single person or group has control over it, and instead, all users collectively retain control of the database. So when it comes to mining Bitcoin, the Blockchain comes up with complex mathematical problems and is made public for mining. The miners of the internet use special software and hardware to process this data and then send it back to the blockchain. In simple terms, they carry out the job of a bank auditor, where every transaction in the database is verified by solving that mathematical puzzle. And in return for solving the problems, the miners are offered Bitcoin as a reward. But one thing to note is that Bitcoin is limited - there are only 21 million Bitcoins available on the internet and the rewards are given can vary as time progresses.

Also, Bitcoin is not the only cryptocurrency lying around, we’ve got other popular ones like Ethereum, and LiteCoin as well. But one interesting cryptocurrency that has been through a lot of talks recently is Dogecoin. The cryptocurrency that was once started as a joke now stands as one of the most sought-after forms of currency on the internet. Created in December 2013 by software engineers Billy Markus and Jackson Palmer, it's a copy of Bitcoin made using the technology of Blockchain. Its logo features the picture of a Shiba Inu dog, often referred to in memes on dogs of sorts. Well, what fueled its popularity was the very fact that it was made to make fun of Bitcoin. The idea of Dogecoin felt so silly but the admiration it received all over was impressive. Elon Musk himself has voiced his interest in Dogecoin and of course, when the world’s richest man is getting into it, you know it’s worth looking into, right? So did others and it has grown so much that it is now ranked #7 in the world of cryptocurrencies. Amazing, isn’t it?

All of this might have definitely got your interest in putting your money in cryptocurrencies. But let’s also look into the legalities in India. There are many crypto-investors but what’s holding the other people back is whether buying cryptocurrency is legal or not. A circular from the Finance Ministry mentions that -

“The Government does not consider Cryptocurrencies “as Legal Tender or Coin” and will take all measures to eliminate the use of these Crypto Assets in Financing “Illegitimate Activities” or a Part of the Payment System The Government will explore the use of Blockchain technology proactively for assuring in Digital Economy.”

It does suggest people not use it as a form of currency in exchange for service, but there are no restrictions made right now in buying or selling them as a digital currency. In fact, the govt. is also looking at how Blockchain technology can be used to improve the digital banking experience in India. So, as long as there is no ban on cryptocurrency, one can easily open up a digital account and start investing in Bitcoin or any other form of coins available on the internet.

Well, that’s it for now. Keep reading and stay safe.

See ya!