The acceptance of bitcoin is likely to grow, but without regulations, investing in cryptocurrency could be a game of luck.
Its value has more than tripled in less than a year, making even the strong run in the equity markets look lack lustre. One bitcoin, available for around ₹52,000 in November last year, now costs about ₹3,30,000 on bitcoin exchanges like Zebpay and Unocoin.
The bitcoin, a digital currency, is said to have been invented by a Satoshi Nakamoto in 2009. But, as it is open source, no person, company or country owns the bitcoin network. In fact, no one even knows who Satoshi Nakamoto is. Moreover, bitcoin doesn't come under the regulation of any monetary authority in the world, unlike say the rupee, which is controlled by the Reserve Bank of India or the US dollar, which the Federal Reserve controls.
Bitcoin works on a peer-to-peer network, where users transact directly across borders and there is no intermediary, like a bank. Also, being an electronic currency, it cannot be printed. Bitcoins need to be mined online through a software programme, based on mathematical equations.
Moreover, trading in bitcoins offers anonymity. You can have multiple bitcoin addresses, none of them linked to your personal information. When a person trades in bitcoin, a private key linked with his bitcoin wallet is used to create code, and that code allows the anonymous transaction.
Transactions done on the bitcoin network are stored on the blockchain (a list of digital records). People may know how many bitcoins a publicly used address holds, but no one will know whom it belongs to. Also, a bitcoin can be divided into parts for transactions, the smallest being one hundred millionth of a bitcoin, according to coindesk.com.
This story is from the September 24, 2017 edition of THE WEEK.
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This story is from the September 24, 2017 edition of THE WEEK.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
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