All about Cryptocurrencies including Bitcoin

All about Cryptocurrencies

By Dr. Lalit Kumar Setia |  @drlalitsetia  |  drlalitsetia@gmail.com  |  Created Jan 26, 2018

Updated Jun 30, 2019

The Government of India (GoI) treated the Crypo-currencies as ‘ponzi scheme’and banned it to safeguard the interest of investors. A lot of debates are carried out to decide whether it should be allowed in India or not. The Crypto currencies such as Bitcoins are considered by the ‘Investor Education and Protection Fund (IEPF) Authority’ under ‘Corporate Affairs Ministry’ and thereafter banned.

What is Cryptocurrency?

During Jan 2017 to Nov 2017; the Bitcoin has jumped from under $1000 to $10000 which means a return of over 900% and it made the minds of speculators work for more trading in Bitcoins. Before understanding Bitcoin, one should also understand block chain. Block chain is a name given to a tamper-proof digital ledger used to record financial transactions. And the technology involved in block chain made possible the functioning of cryptocurrencies like Bitcoin. Who is behind the surge in prices of Bitcoin? Apart from Bitcoin, there are other such currencies in international market i.e. Ethereum, Ripple and Litecoin but there is not such upwards trend in their prices. Due to surge in the prices of Bitcoin, the interest of investors in currencies based on block-chain technologies is continuously increasing.

In India, the consensus is upon protecting the interests of investors; and as the ‘Corporate Ministry’ considers its viability in long-term and associated risks, keeping in view steep fluctuations in its prices; declared it as banned. However, the crypo-currencies are digital units with encryption used to trade in currencies independently of a central bank.

In the modern age of Information Technology, the speculation has also been transformed. The bad habits are making youth oversee the value system and be greedy. The virtual papers like bonds, currency agreements, virtual currencies i.e. cryptocurrency have become a point of attraction particularly for those people who are not earning money with making hard-efforts. Very few people are aware of Crypto-currencies or digital currencies created and stored electronically in blockchains. The people having trust in digital life are adopting these currencies with using encryption techniques to transfer the money at various locations of the world. There is need to aware people for ethics and values by organizing campaigns. The cyber crimes are also taking place due to mal-practices in routine works. With the surge in price of Bitcoin, massive gains are being made by hedge funds.

What is Bitcoin?

In 1998, Wei Dai suggested an idea to form money using cryptography without involvement of any central authority. It is interesting to know that nobody owns the network of Bitcoins however the Bitcoin users require use of software by complying the rules of Bitcoin protocol. The Bitcoin is basically a mobile app providing personal Bitcoin wallet for sending and receiving Bitcoins. Behind this wallet, there is shared digital public ledger known as block chain. The transactions are recorded in the ledger and can be verified by the user with use of digital signatures. There is also facility of “mining” which gives opportunities to users processing transactions with computing power of specialized hardware to earn rewards in form of Bitcoins.

The Bitcoin is basically peer to peer e-cash secured with messages, emails, digital signatures on the basis of cryptography and the recording of transactions on digital ledger normally called block-chain. 

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*Copyright © 2018 Dr. Lalit Kumar. All rights reserved.  

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Speculation with Bitcoin and Currencies

Speculation with Bitcoin and Currencies

By Dr. Lalit Kumar Setia |  @drlalitsetia  |  drlalitsetia@gmail.com  | Created Dec 01, 2017

Investment in Bitcoin:

In the modern age of Information Technology, the activities relating to speculation have also been transformed. Honourable Finance Minister Shri Arun Jaitley declared the investments in Bitcoin in speculative transactions and not accepted Bitcoin as legal tender, however the Bitcoin is being considered as lucrative investment due to its acceptance in various countries of the world. The bad habits are making youth oversee the value system and be greedy. The virtual papers like bonds, currency agreements, virtual currencies i.e. crypto-currency have become a point of attraction particularly for those people who are not earning money with making hard-efforts. Very few people are aware of Crypto-currencies or digital currencies created and stored electronically in block-chains. The people having trust in digital life are adopting these currencies with using encryption techniques to transfer the money at various locations of the world. There is need to aware people for ethics and values by organizing campaigns. The cyber crimes are also taking place due to mal-practices in routine works.

Virtual Currency at Risk:

In 2009, a virtual currency came in the market known as Bitcoin, the world’s first decentralized currency. The Bitcoin isn’t controlled by any government or bank. Even the currency can be transferred without paying taxes or at lowest cost than other means of transferring money.

Disadvantage of Cryptocurrency:

The greatest disadvantage is its volatility, in January 2013, one Bitcoin was valued at around $14 and in November 2013, its value peaked at $1,124. It is well known that good currencies have low volatility, those who are owning unstable currency (Bitcoin) or accepting it as a form of payment are taking huge risk. Using Bitcoins need e-wallets, exchanges, and payment processors and even these IT-based services are still in question due to increasing cyber crimes. The surge in the price of Bitcoin is due to its illegal use particularly in online dark net marketplace Silk Road.

Bitcoin is private and totally anonymous however its popularity has opened the doors for several other crypto-currencies like Lite-coin, Doge-coin, Peer-coin, and  Quark-coin.

These crypto-currencies have no safety mechanisms and the investors or buyers get a private key or random words to protect their wallet. In case the key or random words are lost, the funds are also gone as there is no support to recover or change the password. If the Bitcoins are stolen and there is no authority to approach.

Let's recall the case of Mt Gox. when he went to bankruptcy, no one took care of thousand of people which bitcoin was stolen (according to them). Even the japanese government took actions against Karpeles and the company.

Even after such happenings, people are increasingly preferring to be rich by making investments in Cryptocurrencies. Do you think this as a proper way of earning money? What would you like to share upon it?

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*Copyright © 2017 Dr. Lalit Kumar. All rights reserved.