Bitcoins – What exactly are they? Is it World Wide Web currency? Is it safe? Is it valuable? How long till it is accepted fully around the world?
What is a Bitcoin?
Bitcoin is a form of digital currency which is created, stored and transacted electronically. It is not controlled by anyone. They are not printed unlike Dollars, Rupees or Euros. It is a pioneer for a type of currency called Cryptocurrency.
It was invented in 2008 by a programmer or group of programmers under the pseudo name Satoshi Nakamoto. It is open sourced and its system is based on Peer to peer architecture. There is no intermediary or middlemen between 2 users transacting. Bitcoin transactions are recorded in a public distributed ledger called Blockchain of which Bitcoin is the unit of account.
The biggest difference that Bitcoin has over other electronic currencies is that no single institution controls Bitcoin. Also as the identity of transacting parties remain anonymous,
Some important features:
- Anonymity: As a user can have multiple bitcoin addresses, not linked to any name or personal info
- Transparency: It stores details of every transaction in a general ledger called Blockchain
- Decentralized: Not controlled by a single authority. If one network shuts down, the other takes over
- Ease of set up: Merchant accounts can be setup or exchanged at various websites within seconds
- Speed: Transfer of bitcoin happens within minutes as soon the bitcoin network processes it.
Bitcoin in India
An RBI press release however, recommends careful use of virtual currencies. The risks involved can be operational, legal, and financial in nature. Virtual currencies like Litecoins, BBQCoins, DogeCoins also fall into this bracket. Banks are not authorized to use Bitcoins as currency in India.