Bitcoin has been doing rounds in the internet communities and among the net-geeks for some time now.But the most important factor that is virtually less discussed is its legality. Legality of Bitcoin in India is yet to come up under the mainstream radars of the top governing bodies like RBI . But in the coming days you can expect it to happen soon.
What is a Bitcoin?
To understand Bitcoin you need to understand the concept of money.
What is money? Money is a form of instrument that is used by us to buy things ( in simple words). This is part of the idea that the 100 rupee note we give the seller guarantees him the payment.Who guarantees the payment ? The central authorities like Government of India and RBI guarantees the value of the 100 rupee note in India.So basically the worth of the 100 rupee note is only because of the fact that the payment is guaranteed by an external body ( RBI).
Bitcoin is a form of digital currency where there are no notes and coins and there are no central authorities to control and regulate it.It uses cryptography to control the creation of the currency and also regulate it.As you read this article, Bitcoins are being generated automatically in the world through computer processing.
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The concept of Bitcoin as a form of currency is attributed to Satoshi Nakamoto, though no one seems to know who this man is.
Bitcoin vs Normal Currency
1. The Anonymous Nature
The transactions done via Bitcoin are totally anonymous. When you transfer the bitcoin money from one user to another, no records of who sent the money to whom will exist anywhere in the database.There is a public listing of the transactions ( for verifying the proper transactions) which will only show the amount of money transferred and the transaction ID.
In normal currencies whenever you make a payment to anyone, you will need to provide all the details like your name, address and such details will be available in the database forever. Bitcoin does away with this and you can send money to another bitcoin user anywhere in the world and no one will ever know about it.
This simple concept of providing anonymity to the transactions adds a layer of misuse to it. This form of money transfer is prone to be used illegally for funding illegal activities like terrorism and so on.This encompasses the legality of Bitcoin in India.
2. Cushion against inflation
Since the government regulations and government policies interfere in the value of the currency, inflation is looked upon by many finance professionals as the worst disaster for any currency. Bitcoins are free from that. Whatever the policies and interference seems to be, the value of money in bitcoins are never affected. Thus bitcoins are looked upon as a cushion against inflation.
3. Cost of transactions are lower
Sending money from one bitcoin user to another is cheaper than to send money to another person via banks.Banks charges service charges annually or monthly for the services they provide and they also fine you with certain money whenever you make a mistake on your part knowingly or unknowingly. There is no service charges or penalty in the case of bitcoins and the only cost you will need to incur is the cost of running a computer.
The Legality of Bitcoin In India
The uproar for the legality of the bitcoins arose when the Canadian government started developing their own form of digital currency in the name of MintChip along the lines of the Bitcoin. It seemed to many that in the coming days many more countries would join the bandwagon and start adopting bitcoin legally.
But even if the countries start developing their own forms of digital currencies , the chances of them adopting bitcoin officially will be very little.No government bodies would ever like to leave the control of the money out of their hands. So in the future, even if a form of digital currency arises, it would still be controlled by the respective governments directly or indirectly.
Also Governments always looks upon to have a record of every financial transactions somewhere and the concept of total anonymity of bitcoins beats them.What may happen in the future is a form of digital currency which is properly recorded like every other financial transaction but not accessible to anyone( or perhaps accessible only to the buyer and seller).
The road to the Bitcoin ban
The number of bitcoins generated is increasing day by day and in the coming days when the usage of bitcoins becomes more and more popular, the only option for the governments will indeed be to ban e usage of this form of currency.Even now bitcoins are used popularly only in the internet communities of the geeks and there are only a handful of websites which accepts bitcoins as a form of payment for the purchase or sale. You can expect bitcoins usage to spike up to a peak level soon and then there will be the debacle of the bitcoins once the respective governments decides to take action.