What is bitcoin? Is it legal to invest in cryptocurrency in India?

Bitcoin has given stellar returns since the start of this financial year. If you want to know more about the cryptocurrency here are a few FAQs.

What is Bitcoin?

After the subprime mortgage crisis in 2008 many governments had to print billions of dollars in order to bailout banks and insurance companies. This excess liquidity without counter economic activity led to recession in many countries. It was then Satoshi Nakamoto (a name used by an unknown person) launched a crypto currency named as Bitcoin. He launched virtual money which could be sent directly to each other without an intermediary.

How is Bitcoin different from fiat or physical money?

While the physical money is printed, in case of Bitcoin the bots are supposed to mine the cryptocurrency. Currently, over 18 million are in circulation out of a pre-decided number of 21 million bitcoins that will ever exist. It is expected to be fully mined by 2140.

Who regulates Bitcoin?

Unlike fiat currency which is governed by the regulator, crypto currency is governed by the simple rule of demand and supply. It functions more like gold which is similarly governed by demand and supply rule.

What is BlockChain Technology?

The underlying technology of Bitcoin is based on Blockchain. It is a distributed database that maintains a list of transactions called blocks. It is secure by design and cannot be modified once recorded.

How many cryptocurrencies are there?

After Bitcoin hundreds of altcoins have been launched using the same block chain technology. Currently, Bitcoins have around 50% market share of cryptocurrencies in the world, in terms of value.

What is the legal status of Bitcoin?

Trading in Bitcoin is legal in India. On March 4, 2020, the Supreme Court set aside a RBI circular, issued on April 6, 2018, which banned cyrptocurrency trading in India. All the banks that were already providing such services were told to exit the relationship within three months with the cryptocurrency trading platforms.