What is Bitcoin? How to buy bitcoin in India?

It’s gonna be a long post. But will definitely worth reading. So, let’s get started

By now you all might have heard about it. Even the terms ‘cryptocurrency’ and ‘blockchain’ are consistently in news a lot lately.

However, people are still confused about its real purpose. What is a bitcoin? Is it a currency, asset class (to invest) or simply a transformation factor from the old monetary system to new one.

What is bitcoin?

In simple words, bitcoin is a virtual currency made by people with no central authority.Huh, what does it mean? To understand it better, let’s compare it first with the normal currency. In India, we have a fiat money.( Fiat money is a currency without intrinsic value established as money by government regulation. It has an assigned value only because the government uses its power to enforce the value of a fiat currency)

The Indian currency is printed in the name of RBI and people believe in this currency because of it and exchange in the name of the government.On the other hand, bitcoin is not generated by any government or authority. People exchange bitcoin only because they believe this as a kind of money (no central authority to implement it). It has no physical value.

Now, let us understand bitcoin in details

It is the first and the most popular cryptocurrency. However, it’s not the only one as there are a number of other cryptocurrencies available in the world .Bitcoin was invented in 2008 by Satoshi Nakomoto. However, no one knows who is Satoshi Nakomoto. It might be a dummy name used by the creators of the bitcoin. Bitcoin is a decentralized currency, which means that no central bank or government is controlling it.

In India, we have a fiat system. This means RBI decides the number of notes to print. They have their own rules on how much notes can be printed and when to print next notes.However, for bitcoin, there will only be 21 million coins (This restriction is imposed by the creators to limit the bitcoin that can be generated).Hence, it can be considered similar in attribute to gold (which is also finite). As there is fixed number of bitcoins, hence it’s worth will be more over time. The current fiat system leads to inflation.

The currency notes can be printed more in future. Hence, their number will keep on increasing an, therefore, the currency notes value will worth less in future.On the other hand, bitcoins are limited in number. It cannot be created more once a fixed number of coins has been generated. Hence, this will lead to ‘deflation’ which means that the bitcoins will worth more in future.

How does bitcoin works?

The bitcoins are generated and stored in a form of mathematical code called cryptography. This is the private encoding of the data.Similar to bank accounts, wallets are used to store bitcoins. Wallets have a unique address which is a personal crypto address that only the individual can access.This unique address helps to confirm that the money has been sent/received to the right address. Further, the transactions can be checked but cannot be altered or tempered.

Now, if there is no central authority, how to confirm that the transaction happened between two people? What if one lied?

Can’t a person just lie that he didn’t receive the coins if there is no central authority to check and the transaction happened peer-to-peer?Or he can just say that he sent the coin (although he didn’t in actual). If there is no central authority, how will one proof the transactions between people-to-people?Well, all the transactions are recorded in ledgers which you (or anyone) can see. When you perform a transaction, you send this information to a number of people. Although there is no single centralized authority, however, this group of people maintains the transactions record. The best point is that anyone can become one of these people who keeps the track of transactions.

In this way, no one can cheat. If one people changes the transaction record, then it won’t match with the remaining other’s record and the dissimilarity will be found. Hence, this makes bitcoin one of the most secure currency.

Is bitcoin legal in India?

Yes, bitcoin is legal in India.

Can you make ‘internet’ illegal? The internet is also decentralized which means it is not authorized/regulated by any central government/authority. And that’s why the government has no control over it. The same goes for bitcoin.The government of a country can restrict it but cannot make it illegal.Bitcoin is not regulated by any authority in India. This means that nor government or any authority makes rules, regulations or guidelines for resolving any disputes regarding bitcoins. You cannot approach the government if you have any mis-happenings while dealing with bitcoins.

How to buy bitcoin in India?

You can buy the bitcoin against real current price from digital currency exchanges. Just pay the price and get the quantity of bitcoins that you want. You can use your credit card to buy bitcoins from https://www.coinbase.com/, https://www.coindesk.com/

Further, there are few mobile apps that you can use in India to buy/sell bitcoins:

1. Zebpay

2. Unocoin