Oxford defines the term ‘currency’ as – the fact or quality of being generally accepted or in use. With the growth of the digital media ever since the onset of the new millennium, we have seen a rise in several digital only attributes. One such attribute is cryptocurrency. Cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.
Before the modern era, cryptography focused on message confidentiality (i.e., encryption) and conversion of messages from a comprehensible form into an incomprehensible one and back again at the other end, rendering it unreadable by interceptors or eavesdroppers without secret knowledge. Secrecy was enhanced in communication. The science of Cryptography saw a significant increase during the Second World War when cryptoanalytic efforts at Bletchley Park in the United kingdom spurred the development of more efficient means for carrying out repetitious tasks. Cryptocurrency is designed such that it remains anonymous in most of the cases. The first cryptocurrency was bitcoin which was created in 2009 and is still the best known. There has been a rapid increase of crytocurrencies in the past decade and there are now more than 900 available on the internet.
Sataoshi Nakamoto, a secretive internet user, invented bitcoin in 2008 before it went online in 2009. Many attempts to identify Satoshi have been made without conclusive proof. Due to its anonymity, Bitcoin has been seen as a tool for private, anonymous transactions, and it’s the payment of choice for drug deals and other illegal purchases. There are around 16.5 million bitcoins in circulation as of July 2017. In August 2017, one Bitcoin was valued at $2,700 or Rs.174374.55.
Bitcoin is on the rise and there are several reasons for this rise. Bitcoin has a lower transaction fees (zero). There is no charge-back risk. There is a stronger privacy compared to other transaction mediums like Paytm. A Bitcoin account cannot be frozen or seized. There is no currency exchange fees, Capital controls in many countries and the Central Bank of the country fixes an exchange rate which are below the black market exchange rates. The traditional banking services cannot be accessed by everyone, unlike Bitcoin.
The info-graph shows that the value of bitcoin against the value of an ounce of gold through March 2017.
Several marketplaces called “bitcoin exchanges” allow people to buy or sell bitcoins using different currencies. Japan-based Mt. Gox is the largest bitcoin exchange. It was launched in July 2010, and by 2013 was handling 70% of all bitcoin transactions. People can also send bitcoins to each other using mobile apps or their computers in the same way people send cash digitally. A single unit of the cryptocurrency has exceeded the value of an ounce of gold. The previous highs this year have been attributed to surging demand in China, where authorities warn it is used to channel money out of the country.
Bitcoin is shaping up to be the future of online trading. Although there is an uncertainty regarding its future, no one knows what will become of Bitcoin as it is mostly unregulated, but that could change as governments are concerned about taxation and their lack of control over it. So its’ USP – the anonymity – could eventually prove its downfall. While it keeps Bitcoin users’ transactions private, it also lets them buy or sell anything without easily tracing it back to them. That’s why it has become the currency of choice for people online buying drugs or other illicit activities and not many governments will put up with that for long.
There are many cryptocurrencies, Bitcoin is one of them. Zebpay is an Indian Startup that deals with the exchange of Bitcoins. After careful analysis of the exchange of Bitcoin cryptocurrency, the Government of India could legalize Bitcoin in India. This would enable the government to levy a tax on Bitoin investors and Bitcoin would fall under the purview of RBI’s 1934 Act. Trades from India have been accounted for 10% of global cryptocurrency trade in May 2017. Bitcoin certainly has a long way to go, with Bitcoin receiving public interest it would surely be exciting to see where it’s headed next.