An Introduction to the Crypto Revolution – The Bitcoin

The bitcoin can be and is actually is the world’s first digital currency that has been de centralised and acts as a great payment network. How the product bitcoin came in to the being, is still almost a mystery but the bitcoin first of all came in to the existence in the year 2009 by a person or the group of the people who were operating under the name Satoshi Nakamoto. After this, the bitcoin was then adopted by the small clutch of the enthusiasts. But after this, the Satoshi Nakamoto dropped off the map as the bitcoin began to attract the wide spread attention. But according to the proponents, all this does not matter as in any of the case the currency always will obey its own internal logic. It was in the year of the 2016, a citizen of the Australia came forward claiming that he is the founder of the bitcoin and he is the one who introduced the world to the bitcoin but he was not able to prove this to the world. The main use of the bitcoin is that it acts as a major source for all of us to connect financially, in a similar way all of us have been connected socially with the help of the internet. In the other terms it can be referred to as the today’s modern way in order to send the money and has enabled the world to have an access to the whole wide world of the finance irrespective of the borders of the country and also there is no requirement of taking any type of the permission from any type of the authority from any of the country. If it is to be under stood and explained clearly, it can be said that like in this world we are connected financially mainly by the various types of the currencies that are being used by the various countries but when ever we move from the one country to the another or even when we import of export some type of the product or in any such type of the scenario where foreign exchange id required, there are a large no of the set of the rules that have been formed for governing such type of the financially transactions but this is not the case for the bitcoin. So as a result of this the bitcoin acts as the perfect type of the money as it is scarce and also divisible in the nature. Also the other property of the bitcoin is that it is very durable and also very portable in the nature and it can be said that the bitcoin is the internet of the money. Another property of the bitcoin is that this type of the digital currency is the one that is said to have the encryption techniques that are very widely used for the regulation of the generation of the units of the currency and is also very help full in the verification of the transfer of the funds, operating independently of a central bank. So it will be very wise to term bitcoin as the on line means of carrying out the various types of the transactions between the various individuals in the same country or in any other country of the whole world.

The process that is followed in the case of the bitcoin is that the coins are created with the help of the users them selves who then mine the coins that have been created by lending the computing power in order to verify the various transactions that have been made by the various other users from this whole world. The bitcoin is not at all at any of the level, connected to a bank or the government and as a result of this allows the users to spend the money anonymously. The bitcoins can be received in the exchange and these types of the coins can also be bought and also be sold on the exchanges with the U.S dollars and the other currencies. So it can be said that the bitcoin is the new kind of the money. The bitcoin enables the world to experience the fastest of the fast peer to the peer financial transactions that can be done world wide and that too with the experience of paying very low processing fees compared to the various types of the other financial transactions that can be done for the transfer of the money from one end to the other. The bitcoins can also be defined as the basic lines of the computer code, which are signed on the digital plat form every time they travel from the one owner to the other and to the next and this chain continues. As these financial transactions that can be made with the help of the bitcoins can be made anonymously, this makes the bitcoins a very famous form of the currency with the libertarians and also with the tech enthusiasts and also with the spectators and the criminals.

The value of the bitcoins have the ability to swing very sharply. Recently one case that appeared in the lime light was of the bitcoin that was traded for $ 1734.65, according to the coin base. The coin base is the company with the help of whom, the users are able to exchange the bitcoins from the one end to the other. A year ago, the value of one bitcoin was of the worth $ 457.04 and this clearly suggests that its nearly quadrupled in the last one year as it has clearly given the appearance that shows that the value of the bitcoin plunged by about 23 percent against the value of the dollar and all this happened in just a span of the 7 days i.e. the time period was just of 1 week this past January, 2017. But as the two sides of the coin, the same value of the bitcoin again fell by the same amount in the next days to follow in the month of the march, 2017.

The financial transactions and the accounts that can be done with the help of the bitcoins can be at any level be traced but the only problem that has occurred is that the owners of the account aren’t necessarily known but the investigators can be in some of the cases be able to track down the owners when the bitcoins are converted to the regular form of the currency. Up till now, it has been observed that the 3 types of the accounts tied to the ransom ware attack have been untouched and as a result of this, it is and will always be very difficult for the various types of the perpetrators to cash in any time soon with out getting caught. if in any of the cases, the security experts are to be believed, the amount of the ransom that has been collected so far is very small relative to the what was the extent of the out break that had occurred. According to Mr. Tom Bossert, who is the adviser of the home land security of the president of the united states of the America, Mr Donald Trump, says that according the various type of the sources and the trends that have appeared, it can be assumed that the all most not more than $ 70000 has been paid in the ransoms. But also explains that there is every type of the possibility that there may be the presence of such accounts, which are beyond the three identified. It will be very fair to say that in the present day scenario, the awareness about the term bitcoin is not that much but the product is expanding its wings very quickly and specially in the metro cities of the India. In India, there have been a large no of the businesses that have jumped on to the bitcoin band wagon and as a result of this, a flurry of the media coverage has also taken its place. There is one plat form that is doing a great and a very fast job regarding the bitcoin is the overstock.com. This is the one of the plat form that is able to accept the various types of the payments in the form of the bitcoins. For the better under standing, we need to take an example here. The currency has surely become famous and also popular enough that it can be said that more than 300000 daily transactions have been occurring in the recent times, as it has been reported by the bitcoin wallet site blockchain.info. This activity of the exchange of the bitcoin was just close to 230000 transactions per day, about a year ago. To be fair, the bitcoin is still not that much popular and not being used that much compared to the cash and the cards as many of the individuals and the businesses are not at all accepting the bitcoins for the payments.

The major phenomenon that works in the case of the bitcoin is that the net work of the bitcoin works just by the harnessing of the greed of the individuals for the collective good. The miners which are the net work of the tech savvy users have the responsibility of keeping the whole system of the bitcoins honest and clear just by pouring their computing power in to a block chain, which is global running tally of the every transaction of the bitcoin. The benefit and actually the function of the bitcoin is that with the help of the block chain, the rogues can be prevented from spending the same bitcoin twice and the miners are then rewarded for the efforts that have been put in by them just by gifting them with the occasional bitcoin. The counterfeiting can never be an issue in the case of the financial transactions made with the help of the bitcoin until and unless the miners are in such a position that they keep the block chain secured.

The profit that is achieved form the sale of the bitcoin is taxable capital gains for the investor. In India, the bitcoins are not regulated but are also not at all illegal but from time to time, the reserve bank of the India has always performed its duty by always cautioning the investors of the various inherent risks that may accompany the financial transactions that are made with the help of the bitcoins. This cautioning by the reserve bank of the India comes as a result of the fact that now India also is not at all isolated from the rising of the popularity of the bitcoins and this popularity got a huge amount of the boost during and after the demonetisation. If the facts that have come into the lime light from the various types of the sources of the industry, about 300 plus enthusiast of the crypto currency have been found to be trading daily on the Indian bitcoin exchange plat forms and also maximum no of these plat forms boast of the user registrations of more than a lakh. Hence it can be said that the large no of the tax payers in the India should under stand the information technology nuances of the financial transactions of the bitcoin. In India, the curiosity for the bitcoin compelled one of the citizens of the India residing in Bangalore and working as a techie, to invest in the bitcoins. He was able to sell his investment during the financial year 2016-2017 and with the help of this he earned a good amount of the profit. But the problem that comes in to the picture is that how the profit that is earned should be considered. As a salaried employee, he has to file his income tax return by July 31. The central board of the direct taxes has up till now not issued any type of the guidance in this regard like in many other countries like the United States of The America, have always treated the bitcoins a type of the capital asset that is in the hands of the investors who are keen to invest and with the sale, resulting in the capital gain. The department of the income tax can always catch up in any of the case when ever some one tries to evade the tax on the sale of the bitcoins. In India, one of the few plat form for the trading of the bitcoins, coin secure, points out that when ever there is the selling of the bitcoins over an exchange such as the coin secure, the flow of the money is always directly towards the account of the bank and as a result of all this, the financial transaction that is made on the plat form is very clear and transparent in the nature as the various plat forms that have come in to existence in the recent times have always tried and have actually kept specific care of the KYC norms for its customers during the exchange or any type of the financial transactions using the bitcoins.

A committee that is an inter disciplinary committee and has been formed by the government of the India is keenly working on the examination of the virtual type of the currencies and the meaning of this that although the bitcoins are not legal in the India as of now but the income that is earned like the other types of the incomes, needs to be declared and hence the tax is to be paid to the government. But the taxability of the bitcoins will always depend on the facts and the figures of each of the case and as there are no guide lines of the CBDT, the only logical conclusion that comes in to the affect is that the profits that are achieved after the sale of the bitcoins are to be treated as the capital gains, until and unless the individual is in the business of the trading of the bitcoins, in which the case, the income earned will be grouped under the category of the business income as very commonly in a large no of the cases it has been observed that the investors always prefer to treat the income from the trading of the bitcoins, as the income from the other sources, mainly to be on the safer side as the relevant slab rate of the income tax applies as opposed to a 20 percent tax with the indexation on the long term capital gains. But one point that should be kept in the mind here is that in the case of the capital gains that are short term in the nature are taxed at the applicable income tax slab rate, while in the cases for those with a taxable income of more than the Rs 10 lakh is about 30 percent plus applicable surcharge and the cess. Given the very wide nature of the definition of the capital assets under the section 2(14) of the income tax act, the purchase of the bitcoins, it has been brought in to the system only and only for the need of the investment. Hence it should be treated as the capital asset. While on the other hand, the long term capital gains often pull a rate of the tax of only about 20 percent. The time period for which an asset is held before its sale is able to determine the fact that whether it is a long term asset that is eligible for a lower rate of the tax on the sale of the bitcoins. On the other hand, the period of the holding prescribed is just of the 12 months and hence in the other words it can be said that the period of the holding of the bitcoins should be like any other form of the property as if they are kept for the duration of the 3 years or the more, the bitcoins should be put in the class of the long term and is held for a shorter duration of the time, should be put in the bracket of the short term.

The benefit of the indexation, which is an adjustment to the account for the inflation for the period between the purchase and the sale of a capital asset, can be availed of. This would surely lead to the reduction of the total tax out go on the capital gains. The cost inflation index figure is given by the CBDT every year and the formula given needs to be used for the calculations that are to be done. Now one thing that comes in to the picture here is that the one who is dealing with the bitcoins, whether he or she is doing the financial transactions or any other related transaction, he will be referred to as the investor or the trader? The CBDT in the past had issued a circular after taking in to the consideration and making an in depth study of the bitcoins and its working, which under laid the various tests in order to find out whether the shares are held as an investment or the stock in the trade. This procedure can be applied in the same way to the case of the bitcoins. The transactions that are made by the users or the traders are substantial in the nature and also very frequent in the nature, it clearly depicts that the trader or the investor is trading in the bitcoins and in such a case, the income that is made after the sale of the bitcoins, will come under the bracket of the business income and to this the applicable rates of the slab of the income tax will be applicable. Hence it can be said that the investors or the traders who are possessing a taxable income that is more than the level of Rs 10 lakh, including on the bitcoin sales, the rate of the slab of the income tax will be applicable with 30 percent of the surcharge and the cess and this is higher than the rate of the tax of the 20 percent on the LTCG’s.

A peer to peer crypto currency and this is the reason why the bitcoin is said to be the future of the money but is it really the same or is just the dream of the speculator. There is nothing wrong with the on line money transfers and they are very convenient for the most of the part. One is able to pay with the credit cards or the debit cards or with the bank accounts and now days even with the various types of the digital wallets like the pay tm that helps you to scan a bar code and then finally transfer the money from the one end to the other. With the things like the Samsung and the apple pay, it seems that the world is heading towards an even more seam less future where all you will ever have to do is just wave your phone. But apart from the cash transactions, in all these modes of the payment there is a middle man who is taking a part of the spend as fee for his efforts in the delivery of the money and hence ensuring that there is no type of the miss use, or for the book keeping. With the credit cards, you have the companies like the visa and the master card taking up to all most 3 percent of the transaction value as the fee and the situation is very similar with the players like the pay tm and the mobikwik. More often than not, this cost has to be borne by the seller. So is there some thing that could remove the middle man all together but at the same time ensure the security and the accuracy. bitcoin operates with the help of the intermediary and for under standing this let us take up a scenario where if you give some one the cash, you ease to have that bank note in your possession any more. But that isn’t the case with the digital currency. What if you made two copies of the same and sent it to the different people. What if you made 100? That would make any type of the digital currency a non starter. So perhaps there could be a ledger maintained that would keep a track of what you had and what was sent. The question would then be two fold: who would maintain such as a ledger and could that person be trusted? bitcoin answers all these questions with a remarkably simple, yet secure set up. There is such a ledger but instead of trusting one person with the book keeping, a copy of this ledger is shared with every one. When ever bitcoin is spent, a corresponding entry is made in every one’s ledger and hence this ensures that no one can cheat the system. The code on which this ledger runs is of the open source, which means that it is maintained, secured, improved and checked in the public domain under every one’s watch full eyes. There are a no of the ways you can come in to the possession of the bitcoin, the first method is to devote a considerable amount of your computer’s resources to keeping a copy of the ledger described above and as reward for the same you would be awarded the bitcoin. In fact, this is the only way the bitcoins can be created. The second and the easiest method is to simply buy it from an on line bitcoin exchange. If you wish you can also sell some thing and accept the bitcoins as the payment or simply trade the local currency with some one offering the bitcoins as the barter. To store them, you will need some thing and this is referred to as the bitcoin wallet. The manner in which its founder Satoshi Nakamoto, envisioned the bitcoin puts a cap on their total no at 21 million. The greater the no of the bitcoins in the circulation, the lesser will be the speed at which they can be mined or created. While this means the inflation will not at all be an issue with the bitcoin, it does have its own set of the challenges. Since it is divorced from the governments or the various central banks of the various countries, it is not backed by any type of the thing. If any of the case, you loose a bitcoin because of the hack or for the various other types of the reasons, there is no getting these bitcoins back. Further as they have no inherent value of their own, their worth exists only because there are people very willing to accept them. In the month of the April 2013, bitcoin went from the trading at $ 266 to about $ 50 and then again rose to $ 100. In the month of the October 2013, when the dark web portal the silk road was seized by the FBI, the price crashed from $ 140 to as low as the level of the $ 110. When people attempted to capitalise o the fall, the price again rose to the level of the $ 200 in a few weeks. By the month of the November 2013, it was seen that the bitcoin was trading at over US $ 200 in the early phase of the year of the 2015. How ever in the last few months, the bitcoin has really rallied to climb to over $ 3000 in the month of the August 2017.

In addition to being quicker, cheaper and also much more reliable, the bitcoin also eliminates the middle man and hence as a result of this provides a layer of the secrecy to the transaction. In fact it lets you remain largely anonymous and this is one of the reasons why it is so popular on the dark web. People used it to buy the drugs and the arms and even the services of the hit men on the silk route before it was shut down. Even the demonetisation hit the country, a no of the people turned to the side of the bitcoin in hopes of staying out side the net of the tax.

Things like these make it very clear that the bitcoin will never been favoured by the government but if you have the appetite for the risk, the bitcoins are some thing that may grow in the value even more after all there can only be 21 million of them in the total ever. From $ 50 in the year 2013 to being over the level of the $ 3000 currently is an exponential rise that has made many millionaires. bitcoins acceptability is also growing very rapidly with the main stream companies like the expedia getting on the board. The digital currencies are so hot right now that an off shoot of the bitcoin called as the bitcoin cash that was only created on the August 1, 2017 crossed a valuation of the $ 7 billion in a day.

The main advantage of the bitcoin is that these involve very low fess as compared to the various other types of the product that are used for carrying on the various types of the physical transactions from one person to the other in India or even abroad. In the present scenario, in the India, there is either no type of the fees in this type of the physical transaction or in some of the cases, there is some type of the fees but it is al most negligible in the nature as with such type of the bitcoin transaction, the users might involve the basic fees that is required just for the processing of the transactions on the faster mode. The exchanges that take place in the form of the digital currency help in the exchange with the help of the merchant process transactions just by the conversion of the bitcoins in to the fiat currency. As there is no particular way to for the third parties to identify and event track or intercept the financial transactions that are done in the form of the bitcoins and as a result of this the sales tax are not at all added on to the purchases made in such a manner. Only the standard wire transfers and the foreign purchases mainly involve the fees and the costs of the exchange. This is the reason why this type of the currency has appealed and is still appealing to a variety of the people but still these are very early days for the bitcoins as the bitcoins have a way to go before becoming a serious alternative to the present existing electronic transaction systems. In other words it can be said that the bitcoins are very much in the infancy but this is such a type of the currency like no other and that has been able to provide solutions to the many of the problems our current currencies suffer from. The bitcoin allows us to go through the financial transactions in such a way that one can send or receive the money any where in the world at any given time. There is no need to worry about the limits of the borders and its crossing, scheduling according to the holidays of the bank is not at all required. There is complete type of the control on the money with the help of the bitcoin as there is no type of the central authority to figure in the net work of the bitcoin. Hence allowing the users to possess the complete control over the various types of the financial transactions that will be done by the individuals respectively. So helps the bitcoin to play very safely. The merchants are not allowed to charge any type of the fees on any part of any type of the transaction with out being noticed. The merchants are to bring to the notice of the clients before charging any type of the fees from the user. The various types of the financial transactions that are done with the help of the bitcoin are and can be finalised with out giving any type of the personal information. So in the other words it can be said that the bitcoin helps in providing the protection against the any type of the theft of the identity. The bitcoin allows the users to get the back up and can also be encrypted and this in turn helps in ensuring the safety of the money of the user. The information in the case of the bitcoin is very transparent in the nature and hence this property of the bitcoins allows the users to move and work in the right direction with more confidence and with a better under standing of the processes. With the chain blocked, all the types of the transactions that are finalised are possible for every one to see but the personal information of the user is not visible. Only the public address is visible but to this the personal information is not at all attached in any of the cases. Any time and any one is able to verify the financial transactions in the bitcoin block chain. Also the protocol of the bitcoin can not in any of the circumstances be manipulated by any of the people or any of the organization or any of the government. This is because of the reason that the bitcoin is crypto graphic in the nature and as a result of this it is cryptographically secure in the nature. The financial transactions that have been made with the help of the bitcoin can not be reversed in any of the cases and hence they are not carrying any type of the personal information with them and hence are very secure because the various merchants are protected from any of the potential losses that might take place as a result of the fraud. The merchants in the financial transactions that are done with the help of the bitcoin are able to do the business where the tares of the crime and of the fraud may be very high. So it can be said that it becomes very hard to cheat or con any one in the bitcoin as a result of the public ledger, in other words called as the block chain.

To under stand the concept of the bitcoin in the detail, it is very necessary that we get through the in depth analysis of the term mining. It can be said that bitcoin currency is such like no other type of the currency, but as two faces of the coin, like any thing else, the bitcoins also have some of the disadvantages.

The one of the major disadvantage of the bitcoin is that the awareness of the same is very less. People are still not aware of the various digital currencies that are available for the use and same is the case for the bitcoin. The major requirement at the present moment is of educating the people of the bitcoin so that the same can be applied by them in their lives and this can be done with the help of the net working as it is must to spread the word on the bitcoin. The list of the businesses that are using bitcoin is very less and very small as compared to the physical currencies. Some of the companies that can be named who are accepting the bitcoin in today’s world are tiger direct and the over stock as the payment in these cases id very great. But it is very critical and important here that the companies are having such a staff that are possessing complete knowledge of the digital currencies including that of the bitcoins other wise if the staff it self will not be knowledge able, they will not be able help the customers in a proper way and this will not at all help in convincing the people to start using the digital currencies including that of the bitcoins. The bitcoin is volatile in the nature and this volatility is mainly due to the fact that there is a limited no of the coins and the increase of such coins with gods grace is increasing day by day. But the experts are still of the belief and are hoping against the hope that this volatility of the bitcoins will decrease with more of the time goes on. With the passing time as the demand for the coins is increasing, a day will certainly come when the price of the coins will eventually settle down as more and more businesses and the Medias and the trading centres begin to accept the bitcoin. In today’s time, the situation is such that the price of the bitcoin bounces every day and this trend has been observed mainly due to the fact that these current events are related to the digital currencies. Another disadvantage if the bitcoins is that the most of the features of this digital currency is that the most of the features are still in the development stage as the various features and the various tools and the services are currently being developed as this is very necessary and vital to make the use of the digital currency more secure and easily accessible. By doing all this, the bitcoin will be able to show some increase in the growth standards as then only the bitcoins will be able to come to its full and final potential and will be able to express it self in a much better way. The bitcoin is just starting out and on a practical side it really needs to work on the various types of the problem just like how the any type of the currency in its beginning would need to.

So to be fair it can be said that the bitcoin is not at all perfect. Although it has a large amount of the advantages that the various types of the physical currencies are not able to provide the users but as discussed above it also has a large no of the disadvantages. This is the just because of the reason that the bitcoin is still very young and is newest of the new currency. People have begun to show there interest in knowing about the digital currencies, including the bitcoin and some have shown there interest in the bitcoins and have invested in the form of the bitcoins. If the bitcoin is to succeed, more and more people need to under the bitcoin and the pre conceived notions should not be allowed to distort the concept and the view of the digital currencies. For any thing that has its presence in this beautiful world, has some advantages and also some of the disadvantages like the two sides of the coin. There are always the pros and cons to any of the situation in the life of any of the individual or any other thing and same is the case of the bitcoin. One needs to weigh the good decision after analysing the various good and the bad factors thoroughly before taking any type of the final decision. As the bitcoin is the decentralised and the peer to peer crypto currency system that has come in to the existence in order to allow the various on line users to process the various transactions with the help of the digital units of the exchange known as the bitcoins. It has often be referred to as the third type of the currency and as an alternative to the government flat currencies like the Unites States dollar or the euro or the pure commodity currencies like the gold or the silver coins. The payments made by the bitcoins take place with the help of the private network of the computers linked with the help of the shared program. The each of the transaction is recorded in a block chain simultaneously on each of the computer that helps in the updating of the all of the accounts and then informing all of the accounts. The bitcoins are referred to as the mined by a computer through a process of solving increasingly complex mathematical algorithms or the purchased with the standard national money currencies and placed in to bitcoin wallet and this is accessed with the help of the computer or even with the help of the smart phone. The purchases made by the bitcoins are very discrete in the nature, until and unless any of the user publishes his bitcoin transactions voluntarily, the purchases made by him are never ever associated with the personal identity all most like the cash only purchases and these can not be traced back to the user. So it can be said that the anonymous bitcoin address that is generated for the user purchases changes with each of the different transaction.