Current status of digital currency of bitcoins

1. What is Cryptocurrency?

Cryptocurrency is a digital or virtual currency that uses cryptography for security. It is not issued by any central authority, theoretically making it immune to government interference or manipulation. The first cryptocurrency that was launched was the Bitcoin.

2. What are its unique features?

A cryptocurrency is difficult to counterfeit. It can be bought, sold online and remitted abroad without paying any fees to a bank or other over-charging financial intermediaries. However, its anonymous nature of transactions makes it well-suited for nefarious activities like money laundering and tax evasion.

3. What is Bitcoin?

Bitcoin is a virtual currenty, which operates as public and private keys— long strings of numbers and letters linked through an encryption algorithm. The Bitcoin balances are kept on a public ledger, along with all Bitcoin transactions, that is verified by a massive amount of computing power.

4. Are Bitcoins legally accepted in India?

Bitcoin deals are not illegal in India but are currently unregulated. The RBI wants to understand and learn about the developments of this virtual currency before regulating it. It has emphasised the need for preparedness on the part of regulators and policy-makers to respond to these innovations and has spoken of understanding the potential of these technologies for remodelling the business and service delivery models to reduce costs, increase efficiency and promote financial inclusion.

5. What is the status of Bitcoins in other countries?

Few governments have announced any explicit intention to prevent bitcoin use completely. In the US, the regulations for Bitcoins differ in each state. The only countries that seem to have some kind of ban in place are Iceland, Bolivia, Ecuador, Kyrgyzstan and Vietnam while others like Russia and Thailand outlawed digital currencies and then backtracked.

6. Apart from Bitcoins, are there any other cryptocurrencies?

The Bitcoin’s success has spawned a number of competing cryptocurrencies such as Litecoin, Namecoin and PPCoin.