What are BItcoins?
Bitcoin is a cryptocurrency which is a new and unique financial tool. It is referred as cryptocurrency as it uses cryptography for its creation and transfer of money. Bitcoin is an electronic form of money contrary to its name, there are no coins in this system.
How does it work?
Bitcoin is a peer to peer digital currency. It was launched in 2009 by Satoshi Nakamoto. He worked on the project for 2 years and later released the software to the public. Bitcoin solves the problem of double spending as the entry of transaction is done in a public ledger called the blockchain. When a person sends certain Bitcoins to another person, the Bitcoin network records the transaction in the blockchain. The Bitcoin is transferred from the online wallet of the first person to the wallet of the second person.
The two persons who wish to send and receive Bitcoins need to have a bitcoin address. There are no middlemen or authorities to govern the transactions. The person who intends to send the bitcoins needs to be online until the transaction is done. The person receiving the Bitcoins need not be online.
How to Get Bitcoin Address
In order to get a Bitcoin address, we need to either download the bitcoin client or by getting an online wallet. The bit clients which are popularly used are Bitcoin-qt and Multibit. The basic difference between the two client applications is the amount of storage required to save the blockchain. One needs to spare 10 GB of space for the Bitcoin-qt client application for storage of blockchain. Multi-bit is a lighter app in comparison to Bitcoin-qt.
Trading Bitcoins in India
First of all, to get the bitcoins we need to buy them at an online exchange. There are three main bitcoin exchanges with different fee structures and exchange rates. Apart from the exchanges, bitcoins can also be purchased from auction sites such as ebay.
Before beginning the trading of Bitcoins, it is to be noted that the prices of bitcoins are highly volatile. Bitcoin prices may rise or fall drastically (up to 30%) in one day.
The first option to trade bitcoins is to buy them. Bitcoins can be purchased by credit card. Coinbase.com and coindesk.com are prominent exchanges. Bitcoins can also be purchased from Zebpay which has an android and IOS App which links the bank account of the user for quick transfers. One can buy bitcoins by making a payment to Zebpay’s bank account. There is also an option to withdraw the money to ban the account.
The user needs to verify the KYC documents and need to verify the id by clicking on a photo of PAN Card.
Another App named Unocoin also helps to buy, sell and save bitcoins. Unocoin has around 1,50,000 customers in India at present. After the decision of Demonetization, the usage of Bitcoins is said to have increased by 25%.
RETURNS IN BITCOIN TRADE
The Central Bank has warned the Indian people about the high volatility of Bitcoins and the lack of recourse on customer problems or disputes and the lack of legal status. However, the RBI hasn’t banned Bitcoins in India. It implies that people can trade Bitcoins at their own risk.
Bitcoins can give good returns in normal cases, but it’s a highly volatile market. The value of the decentralized virtual money has increased up to 300% in the past one year. Its value is going up gradually. The users of Unocoin are also said to have tripled to 1,20,000. However, there have been ups and downs in the price of Bitcoins over the time.
It is very rare for the value of Bitcoins to come down, as there are limited Bitcoins in the market and the number of people interested in Bitcoins is growing day to day. So, there are more chances for the Bitcoin prices to go high in future.