Skip to main content

All You Need To Know About Bitcoins

Since Early 2009 people have been listening about Bitcoins. Some people have been using Bitcoins and have made profits too whereas there are many people who are still not aware with what Bitcoin really is and how it works.

After reading this post, you would be well-verse with:
  • What Bitcoin really is?
  • How does Bitcoin work?
  • How to purchase Bitcoin?
  • How are Bitcoins created?
  • Are Bitcoins Legal or Illegal in your Country?


What is Bitcoin?
  • Bitcoin is a consensus network that enables a new payment system and a completely digital money. It is the first decentralised peer-to-peer payment network that is powered by its users with no central authority or middlemen.
  • From a user perspective, Bitcoin is pretty much like cash for the Internet. Bitcoin can also be seen as the most prominent triple entry bookkeeping system in existence.


How does Bitcoin work?
  • From a user perspective, Bitcoin is nothing more than a mobile app or computer program that provides a personal Bitcoin wallet and allows a user to send and receive bitcoins with them. This is how Bitcoin works for most users.
  • Behind the scenes, the Bitcoin network is sharing a public ledger called the "block chain". This ledger contains every transaction ever processed, allowing a user's computer to verify the validity of each transaction. The authenticity of each transaction is protected by digital signatures corresponding to the sending addresses, allowing all users to have full control over sending bitcoins from their own Bitcoin addresses.
  • In addition, anyone can process transactions using the computing power of specialized hardware and earn a reward in bitcoins for this service. This is often called "mining".


How to Purchase Bitcoin?
  • The easiest way is through a digital asset exchange.
  • The Digital Asset Exchanges varies across countries.
  • Coinbase is one of the largest U.S.-based bitcoin companies that facilitates not only buying bitcoin, but also the storage of bitcoin. 
  •  In India, bitcoin can be purchased from digital asset exchange like
o   Unocoin,
o   ZebPay,
o   CoinSecure,
o   And many more…


How are Bitcoins created?
  • New bitcoins are generated by a competitive and decentralised process called "mining".
  • This (mining) process involves that individuals are rewarded by the network for their services. Bitcoin miners are processing transactions and securing the network using specialised hardware and are collecting new bitcoins in exchange.
  • The Bitcoin protocol is designed in such a way that new bitcoins are created at a fixed rate. This makes Bitcoin mining a very competitive business. When more miners join the network, it becomes increasingly difficult to make a profit and miners must seek efficiency to cut their operating costs. No central authority or developer has any power to control or manipulate the system to increase their profits. Every Bitcoin node in the world will reject anything that does not comply with the rules it expects the system to follow.
  • Bitcoins are created at a decreasing and predictable rate. The number of new bitcoins created each year is automatically halved over time until bitcoin issuance halts completely with a total of 21 million bitcoins in existence. At this point, Bitcoin miners will probably be supported exclusively by numerous small transaction fees.


Are Bitcoins Legal?
  • To the best of our knowledge, 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.
  • Regulators from various jurisdictions are taking steps to provide individuals and businesses with rules on how to integrate this new technology with the formal, regulated financial system. For example, the Financial Crimes Enforcement Network (FinCEN), a bureau in the United States Treasury Department, issued non-binding guidance on how it characterises certain activities involving virtual currencies.
  • "But at present what we are saying is neither we regulate them nor we support them", RBI Deputy Governor KC Chakrabarty said. He also added "Whether it is... legal or illegal, we don't know. If it crosses the limit of legality then people may face a problem. So people should be cautious, should understand."

  • You can check this link to see if Bitcoins are legal in your country or not.
If you are interested in knowing more about Bitcoins, Nishith Desai Associates, India’s leading international law firm, have published above white paper which concludes that bitcoin is legal in India. You can find it here...




References:
·       www.bitcoin.org
·       www.wikipedia.org
·       www.timesofindia.com


Labels:

Comments

Post a Comment

Popular posts from this blog

Who provides IP Address to ISP?

Most of us are familiar with IP Address. We know our Internet Service Provider provides us with a unique IP Address. But who provides these IP Addresses to the ISP? This is a question which isn't thought about most of the times. There exists an organisation known as IANA since 1988 which is responsible for a few things. One of them is providing IP Addresses to the ISP. After reading this post, you would be well-verse with: What is IANA? What are the responsibilities of IANA? How does IANA distribute and allocate IP Addresses? What is IANA? The Internet Assigned Numbers Authority (IANA) is a department of ICANN, a nonprofit private American corporation that oversees global IP address allocation, autonomous system number allocation, root zone management in the Domain Name System (DNS), media types, and other Internet Protocol-related symbols and Internet numbers. What are the responsibilities of IANA? IANA is responsible for coordinating some of the key el
Post a Comment
Read more