Bitcoin: The King of Cryptocurrency

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Bitcoins saw explosive growth in India after Prime Minister Narendra Modi recalled high-denomination banknotes in November, 2016. Indian bitcoin exchanges have received a lot of attraction in the past few months with more than 1 million active crypto-currency users.
According to Hesham Rehman, Chief Executive of Bitcoin Exchange Bitxoxo, they crossed 100,000 active users and are adding 10,000-20,000 users per month. For the first time, the governments and the central banks have found an economic concept challenging their authorities and their power to design the monetary policies of their countries.

On 1 August 2017, there was a split from normal Bitcoin to Bitcoin Cash. It has more than double value i.e. jumped from $300 to $600 and investors are wondered if its popularity poses a serious threat to the Bitcoin throne. Bitcoin Cash is a clone of the existing Bitcoin block chainwith feature of additional block size capacity. The problem with Bitcoin was only seven transactions per second whereas with Bitcoin cash up to 50 transactions per second are now possible. Now Bitcoin users have not to wait for hours until their transaction was carried out. Since bitcoin cash is the same block chain as normal bitcoins, all Bitcoin owners also benefit from it. At least if they had bitcoins at the time of the split. You get 1: 1 the same number of Bitcoin Cash. Anyone who wants to trade Bitcoin Cash cannot do so at all trading venues. Trezor, Ledger and Buy and Sell Bitcoins, Bitcoin Chart on Bitcoin supports Bitcoin Cash. Many Bitcoin traders like Coinbase, Wallet Electrum, Bitmex and Bitstamp have announced that they will not support the new crypt diet.

Introduction to Bitcoin:

Bitcoin is a digital or decentralized virtual currency. It is an online payment system invented by Satoshi Nakamoto on 31st October 2008 and introduced as open-source software in 2009. Satoshi left the project in late 2010 without revealing much about him. The community has since grown exponentially with many developers working on Bitcoin.

It is the first implementation of a concept called crypto-currency. Crypto-currency is the idea of a new form of money that uses cryptography to control its creation and transactions rather than a central authority. This means that Bitcoin is encrypted in a way that prevents it from being copied or counterfeited. In a digital money transaction, there is always the threat of counterfeiting digital currency. This is called the risk of double-spending – the risk that a digital currency can be spent twice. Anyone having computer with Internet connection can get benefit from it and can make transactions. It is basically fundamental software used to perform transactions in peer to peer fashion. In bitcoin system transactions take place between users directly without any intermediary like bank, credit card companies etc.

The solution to the problem of double spending is Block chain technology which is used to verify and record bitcoin transactions. The miners can pool their computing power and consolidate to seize control of the block chain. The block chain is distributed; to independently verify the chain of ownership of any and every bitcoin amount, each network node stores its own copy of it. Approximately six times per hour, a group of accepted transactions, a block, is added to the block chain, which is quickly published to all nodes. Besides being created as a reward for mining, bitcoin can be exchanged for other currencies, products, and services in legal or black markets. Miners connected to bitcoin network confirm transactions by solving complex math problems. Bitcoins are stored in a digital wallet. These wallets may exist in the cloud, on your smartphone or computer. Most of the exchange also provide digital wallet. Yet, you can setup your own wallet in your cellphone or computer. The Unit of Bitcoin is BTC, XBT, ,mBTC, µBTC and satoshi.

Bitcoin would be converted into any other currency. Many digital wallets offer bitcoins conversion from one to another currency form. You can Purchase bitcoins through an exchanger. Some of which are 1.Nirnay 2.Block chain 3.Zebpay 4. Union 5. Coinbase 6.Coinsecure 7.Unocoin. At the same time beware of technology. Zebpay holds your wallet address along with its private key. If someone from Zebpay got corrupted enough, he could easily flee away with as many private keys (and address pairs) as he can. Also, if hackers got hold of the private keys by some means, Zebpay could do nothing about it and yet they would be blamed.

Future of Bitcoin:

Harshad Gawde first invested in bitcoins in 2013, when one coin was worth Rs. 28,000, whereas as on August 30, 2017, one bitcoin was worth Rs 2, 91,822. Bitcoin is gaining popularity worldwide and accepted by many popular merchants like Expedia, Dell and Microsoft. The currency is very volatile and mostly unregulated. Governments are concerned about taxation and their lack of control over the currency. Bitcoin has not been made illegal by legislation in most jurisdictions. However, some jurisdictions (such as Argentina and Russia) severely restrict or ban foreign currencies. Other jurisdictions (such as Thailand) may limit the licensing of certain entities such as Bitcoin exchanges.

A Chandigarh-based online vendor, who calls himself Letsmine, is one such ‘miner.’ He has built and sold 90 mining rigs through eBay at a base price of Rs 3,00,000 each. Some companies Hashflare, Genesis and Bitconnect among them have even set up so-called farms to collectively mine crypto currencies for individuals unable to assemble their own machines, for a fee.

Demand for bitcoin and ethereum from Japanese and South Korean investors remained strong, according to Crypto Compare. Bitcoin had the largest share at nearly $75 billion, while ethereum was second with a market value of $34.7 billion. According to CoinMarketCap, market value of gold is $7.5 trillion whereas all digital currencies reached $160 billion.

To conclude, Bitcoins have many disadvantages and might not become that popular. Bitcoin may fail. The governments may decide to ban it, punish its users, and close the exchanges. However, none of this would matter as the message has already been conveyed. The idea of a free currency, regulated by no one but by the simple principle of demand and supply, protected by no one but by the crypto logical algorithms, has already been placed in the minds and consciousness of the dreamers and innovators. But, the technology behind bitcoin (block chain) can have applications in many areas and have profound implications for commerce. Financial organizations are exploring the possibilities of using this technology. Interestingly, the reason why the price is increasing drastically is because of the fact that in every four years, the productions of Bitcoins are cut-down to half; which directly increase the demand by supply-demand concept. Bitcoin production may come to an end in 22nd century and till that time; one Bitcoin will be equivalent to crores of INR.

 
Ms. Arpana Chaturvedi

Department: IT

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