Bitcoin is a cryptocurrency or in simpler terms a form of electronic cash. Although bitcoin is the first established cryptocurrency, there were two other online currencies which came in light, namely, B-Money and Bit Gold. However, these two could never be fully developed. In 2009, a paper called Bitcoin- A Peer To Peer Electronic Cash System was circulated by someone who was referred as “Satoshi Nakamoto”. The real identity is still a mystery.
Thus, in 2009, Bitcoins were made available to the public for the first time. Mining, the process by which it is created also began and the transactions were recorded on the Blockchain. In 2010, they were given monetary value and they were sold for the very first time. In 2011, the business boomed. Competitors rose their heads in the market. The idea of online currency was decentralized and alternative cryptocurrency was launched in the market. Altcoin, Namecoin, Litecoin are few of them. Currently, more than 1000 cryptocurrencies are in circulation.
Year 2013, was a bad year for crypto currencies. The year witnessed crash in its price. 2014, witnessed further downfall. Scams and theft became a trend realting to it.
However, in 2016 with the arrival of Ethereum platform. The Governments all over the world went against the crypto currencies. Chinese government even banned it. Coming to 2017, it started gaining popularity again. Even the prominent banks like, Deutsche Bank, Citi Bank etc are devising and analyzing ways in which they can incorporate Bitcoins in the system. Meanwhile, the technology behind Bitcoins that is “Blockchain Technology’” has sparked a scientific revolution as to how it culd be incorporated in other sectors as well.
Some service providers in some of the countries have started accepting cryptocurrency along with the bitcoins. The issue attached to these cryptocurrencies is their volatility. The volatile nature makes it unsafe for retail investors. Also, since the bitcoins are finite, they are inherently “deflationary” in nature.
POSITION IN INDIA
Ministry of Finance has very clearly specified that cryptocurrencies, including “bitcoins”, are not legal tenders in India. These virtual currencies are not backed by government fiat. So, this implies that transactions using Bitcoins is not permissible in India. Even, the Supreme Court has upheld the ban of cryptocurrencies. However, The income tax department might ask you to pay capital gains tax , if you have gained any profit from Bitcoins.
Thus, in the era of digital revolution, it would be interesting to witness any changes with respect to Bitcoins and other cryptocurrencies. At the same time the technological development of “blockchain”, would lead to various other digital inventions.