Bitcoin and its legal aspects in India

Learn more about Bitcoins and its legal aspects in India.

Everybody have been talking about Bitcoin and its uses lately. Though the number of people who are aware of the existence of Bitcoin is increasing, still proper knowledge of Bitcoin is not known to much of the population. It is bit complicated and at the same time you can say it is groundbreaking. It is also breaking all kinds of records as well and this has been possible only due to the individuality that Bitcoin has maintained. It is not regulated by any government body or any private organization, Bitcoin is on its own and it is nothing but a simple bit of data.

Mining of Bitcoin

The process of creation of this unadorned bit of data through computers is known as Mining. Bitcoins are generated when you are able to solve an algorithm through the help of computer programs. If you want to start a transaction with the help of Bitcoins then you need to open a Bitcoin wallet. Once you have created the account, two keys will be provided - one is public and the other one is private. The public one is your identification or you can say your address proof. If by any chance your computer crashes and you didn't take a backup of your wallet then you will lose out on all your Bitcoins, it doesn't get transferred it just vanishes and you will lose out all your investment. Therefore, when you create your wallet it is advisable that you keep proper backup so that you do not lose out on Bitcoins.

How it works

When you are transacting with Bitcoins all the online users will come to know of your public key or your address. When some purchasing is done electronically, then Bitcoin comes into action. You can use it for the following purposes –
  • Digital transaction

  • Transferring amount

  • Pay different people

  • The whole transaction will be completed in three simple steps and that too if you have the wallet then –
  • Add the address of the recipient

  • Now enter the amount you want to transfer in the form of Bitcoin

  • And just click OK

  • In this way Bitcoin operates and the transaction takes place. The most interesting part is that it doesn't have any particular control head instead the users from all over the world actively control the Bitcoins. There are developers who are developing much better software, but they have no control over the Bitcoin protocol.

    Legality of Bitcoin in question

    This is one question which is in the mind of every Bitcoin user. The answer to this question is related to the use of Bitcoins. If you have a shady background and you are using it for all wrong purposes, then obviously it is not legal, but if you are using Bitcoins for legitimate purpose then you don't need to be concerned about anything.

    In Canada, Bitcoin has been termed illegal and the officials have issued a statement saying that only Banknotes and coins are considered to be legal tender. In other parts of the world Government is keeping an eye on the consequences of Bitcoins as they are concerned about usage of Bitcoins as a tool for money laundering. The Law is concerned mostly about the nature of transaction that takes place with Bitcoins as you can anonymously carry out the transactions, therefore it can easily be used to carry out any form of illegal activities without the fear of getting identified.

    Bitcoins walking down the Silk Road

    The government officials and the law enforcers are concerned about one thing only and that is whether Bitcoin is going down the Silk Road or not. The decentralized nature is enabling the users to keep their identity under wraps and carry out the transaction. This very feature of the anonymous transaction increases the risk of using the Bitcoins for some illegal activities.

    Silk Road was used to sell products which were legal in some countries and not all, and the products including narcotics which forced the FBI to close down the site. The Silk Road was also an anonymous market where the transactions were carried out keeping the identity under wraps.

    It is said that if it is found out that some sort of illegal activities are being carried out then it will have to close down.

    There is no such regulatory board for Bitcoins but every national financial board is keeping a close eye on the transactions made through Bitcoins so that they can understand the potential of this cryptocurrency.

    Bitcoins growing popularity is mainly due to a cheaper and faster way of transferring the money. Moreover, Bitcoins are limited in supply and is not debt based therefore you cannot term it as fiat currency. The transaction is secured and potentially anonymous and as it is decentralized therefore one cannot destruct the whole system by attacking a central point. Bitcoins are easy to use, secure and is fun to transact keeping your identity under wraps.

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