BITCOIN (A CRYPTOCURRENCY)

Every year the word "BITCOIN"is on the top search on google,

now what is bitcoin and what does it mean and how is it used.

WHAT IS BITCOIN?

Bitcoin is a cryptocurrency(digital currency).

Well if see all over the world ,when someone gives you money?we get money only when we are doing some work for someone or something,in the sense we are adding some value for it .

In offices also we get our salary only when we are working for the company,

a shopkeeper also get money only when we are buying something from him /her.

Hence when we add some value we get money 

MONEY = VALUE

HISTORY OF MONEY

At older times we used to use the barter system for trade but this would create a problem as the exchange could be imbalance or could not be equal,then at the time came when people started trusting the things which would not get bad for long time and has value like gold.

But carrying gold is not also practically possible for someone to make trade .

Then government gave an option to the people that people can deposit their gold to government and in exchange the government would give a receipt .With the help of the receipt you can make transactions and the receipt has some value all over the area this helped i making trade easy.

By the time the receipt got converted into paper money which we are using today .

Then people instead of representing money on the things people started trusting the promise of government.

"I PROMISE TO PAY THE BEARER THE SUM OF (X) RUPEES"

RUPEES 2000 (Indian currency)

By this promise government told that when you get this money to anywhere you will get value.

But if it would be like this then why didn't government print more money and solve the economic problem of the people.

Let us take an example, cost of 1 kg of potato is 1000 and every one has 1000 rupees , now the potata will be sold only to the one who will have more than 1000 rupees,

So if the government would print the currency the problem will not solve only the prices will rise,

problem would solve only when resources will be fulfilled.

THE CONVERSION OF PAPER MONEY TO DIGITAL MONEY

By the time the paper money converted into digital money, but in digital money there was a great challenge to keep track on the transactions.

However if you have purchased something and paid it digitally or online the money must be withdrew from your account and the withdrew money must be deposited in shopkeepers account .

Not like the shopkeeper received the money and the money did not withdrew from your's.

To keep track on such transactions a centralised bank system was introduced .

But however when we save our money in the bank the bank makes an investment of our money ,

but if the investement is on loss our money is now on risk .

The same was the situation of the PMC bank ,people who had an account on this bank were not able to  withdrew the money .In todays date if everyone asks bank to give their money back then bank cannot give it .

In your account you see the balance it is actually a number whos existence is kept by the bank by rotating.In another way you are giving the control of your money into another ones hand.

And some selected institutes are part of these process there is risk of corruption ,also the government has the power that it can also remove the legal status.

THE CENTRAL BANK TO BITCOIN

In october 2008 ,a document was published by Satoshi Nakamoto in which it was suggested that our current bank system should be replaced by bitcoin currency.

We have a centralised banking system which checks our transaction ,also it has an alternative that is bitcoin a cryptocurrency 

For an instance , when we use paytm for trasaction we get some reward pints which has some value on paytm ,if that reward point would be used outside the paytm also ,the demand for the point will be increased also it is depend on how people accepts it and how many people uses it .

The same is in the case of bitcoin ,as it is a digital currency it does not has any physical state.

When you are purchasing any bitcoin you are  puschasing a specific bitcoin address  by which you are making transactions.

Bitcoin is a automated structure which does not need any coding or programming.

Its algorithm also autoworks ,but to run this algorithmn it need system and computer .

At this higher level it needs 1000 of systems ,and to maintain it ,it requires 3 party,

but when 3rd party is said to be involved it again comes on bank system .

To avoid this the concept of bitcoin mining was introduced.

BITCOIN MINING

In this, when someone is making transactions through bitcoin many people are ready with their computers to verify the transactions .And when transaction is successful as a reward a bitcoin is given .

In this no third party is involved and also helps in direct transactions from one party to other party .

But when bitcoin miners would continue to make bitcoin ,it would create a situation like the potato situation(prices will rise)

To avoid this,it is already conformed that no bitcoin will be generated after 21 millions of bitcoin.

How much does bitcoin minors will get bitcoin as a reward?

It depends upon how many people are doing mining at same time.

In 2009,you could made 200 bitcoin in 2-3 days .

But today if you want to generate one bitcoin you requires 1.5 years!

DISADVANTAGES OF BITCOIN

1)Bitcoin is not acceptable everywhere 

2)No government is involved in it ,hence causes illegal activities

3)It  is voletile in nature (in every 30 second its value changes

For example 

     If you bought a product from shopkeeper and you need to replace it  ,then the price would have changed .Now shopkeeper has the problem that how much money should be given back, also there is no mechanism for this and because this is a open source , in future it would have possibilities to gegt mechanism in future.

IS BITCOIN LEGAL IN INDIA?

Yes bitcoin is legal,but government does not recognize it.

As in any trading the whole risk comes on you, you are yourself responsible for any risk.

Government is working on its renewation but there is no outcome.

On 5 april 2018 ,RBI has passed a notice to every bank that the entities who are trading through cryptocurrency should not be given service .This means that you cannot withdrew your money through bitcoin .

Then cryptocurrency challenged this thing in supreme court .Then the case was in the hands of cryptocurrency and won.

By this RBI had to remove its guidelines.

You can use bitcoin for trading but it depends on the person that he had to accept it or not.

You also can make a investment through bitcoin.

It also has many return of investements ,

but also can make our investment in loss .

CONCLUSION.

Bitcoin and many other cryptocurrency are heading our society in more modern way .

How ever it has many advantages and disadvantages .

After all it depends on one how to trade smartly 

"SUCCESSFUL INVESTING IS ABOUT MANAGING RISK , NOT AVOIDING IT"

THANK YOU 

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@sharalvishvkarma.