Bitcoin is the first decentralized digital or virtual currency that largely exists online
The price of Bitcoin, the first digital currency, is highly fluctuating. According to experts, investing in cryptocurrencies involves a high risk as prices are extremely volatile. The sceptics of bitcoin have rung alarm bells for the current and potential investors and this has stoked conversations that a rapidly swelling bubble could be set to burst. Dhirendra Kumar, CEO, Value Search told NDTV that Bitcoin is a bubble. It is unregulated and has no intrinsic value and is just a large electronic ledger, he said. "Bitcoin is a speedy money order, nothing else. Don't fall for it," Mr Kumar advised. Bitcoin's supply is limited to 21 million - a number that is expected to be reached around the year 2140. Around 12.5 new bitcoins are released roughly every 10 minutes via a process called "mining". As of January 13, nearly 80 per cent of the total number of bitcoins have already been mined. As more and more coins got mined, its prices also rose higher. Despite a series of warnings issued by the Reserve Bank of India (RBI) and finance ministry against the growing interest in bitcoins, the cryptocurrency operators continue to stay upbeat about the bitcoin's future in India.
All your FAQs about the largest cryptocurrency, Bitcoin, are answered here:
What is Bitcoin?
Bitcoin is the first decentralized digital or virtual currency that largely exists online. No government or traditional banks print it and it has no physical appearance anywhere in the world.
The system of Bitcoin works without a central bank or single administrator. It is a cryptocurrency and the transactions take place between users directly through the use of cryptography, without an intermediary.
Who Invented Crypto Currency Bitcoin?
Bitcoin was invented by an unknown person or group of people under the name Satoshi Nakamoto and was released as open-source software in 2009.
Despite many attempts to find the creator of bitcoin, and a number of claims, it's still not known who Satoshi Nakamoto is, or was. It is not clear whether Satoshi Nakamoto, assumed to be a pseudonym, was a name used by a group of developers or by one individual.
What Is Bitcoin Mining?
Bitcoins are created as a reward for a process known as 'mining'. Bitcoins follow a technology called blockchain, which is the collection of several blocks. For adding one block to the chain, miners are awarded 12.5 bitcoins. The reward will decrease by half every four years, as per the bitcoin protocol. This means in another two years, the miners will get 6.25 bitcoins for every block they mine. As the reward continues to decrease every four years, it will plunge to zero in the year 2140 by when all 21 million coins would have been mined.
Can I Buy The Digital Currency Bitcoin?
If you want to buy bitcoin, you can buy it online but you do not need to buy a whole one. Bitcoin's smallest unit is a Satoshi, named after the elusive creator of the cryptocurrency, Satoshi Nakamoto. One Satoshi is one hundred-millionth of a bitcoin, making it worth around $0.0002 at current exchange rates.
Are Virtual Currencies Like Bitcoins Legal In India?
The Indian government has made it clear that while it doesn't recognise Bitcoin as "legal tender" like paper money, there are no guidelines on Bitcoin trading.
The Reserve Bank of India advises that it has not given any licence / authorisation to any entity / company to operate such schemes or deal with Bitcoin or any virtual currency. As such, any user, holder, investor or trader dealing with virtual currencies will be doing so at their own risk.
Why Has Bitcoin's Price Gone Up So Fast?
A limited supply and unlimited demand is one of the reasons. It is believed that most people are buying Bitcoin in the belief that others will want it even more in the future. It is being looked at as a financial investment.
Why Is Cryptocurrency Getting So Popular?
Cryptocurrency and its widespread usage across the globe as a viable payment option is one of the key driving forces for its popularity. The convenience it offers for online transactions is a huge bonus. It is widely being considered as a safe, decentralized digital asset that offers high security against the credit and debit card frauds.
How Many Bitcoins Are There?
Bitcoin's supply is limited to 21 million - a number that is expected to be reached around the year 2140. So far, around 16.7 million bitcoins have been released into the system, with 12.5 new ones released roughly every 10 minutes via a process called "mining", in which a global network of computers competes to solve complex algorithms in reward for the new bitcoins.
Where Can I Buy E-currency Bitcoin?
The easiest way to get bitcoin is by using an online exchange and buying just like one would at an e-commerce site. Some of the Indian exchanges from where you can buy the bitcoin are Unocoin, BuyUCoin, Zebpay, Coinsecure, LocalBitcoins.
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What Should I Do After I Get Bitcoin?
After you get your bitcoin, transfer them to an offline wallet right. A desktop-based wallet is the best option, though you can also store them using a mobile application. The most popular desktop application is Electrum, and for Android users, Mycelium seems to be the most recommended app.
How can I store Bitcoin offline?
The most convenient way to store Bitcoins is by using an online wallet, which allows you to quickly transfer money in and out of the wallet, or turn Bitcoins into alternative cryptocurrencies such as Ethereum, Monero, Litecoin, and others. But the safest option is known as 'cold storage', which stores your Bitcoins offline away from any Internet access. Here's how you can store bitcoin in cold storage: Read here.
What Is Cryptography?
Through cryptography, information is kept a secret by written or generated codes as it converts data into a format that is unreadable for an unauthorised user. This allows the data to be transmitted without anyone decoding it into a readable format. Cryptography is used at several levels for information security. The information cannot be read without a key to decrypt it. The information maintains its integrity while being stored and during transit. In cryptography, neither the creator, nor the receiver of the information may claim they did not create or receive it.
How Can Cryptography Help Secure My Money?
Cryptography prevents third parties or the public from reading private messages. Various aspects in information security such as data confidentiality, data integrity, authentication and non-repudiation are central to modern cryptography.