It’s been only 8 years since the digital currency named Bitcoin was invented. In this short span, its staggering rise to prominence has been notable. 2017 was a seminal year for Bitcoin, during which a massive surge in its valuation was witnessed worldwide. It’s evident why this crypto currency is believed to be reshaping the global economy.
Some see this dramatic augmentation is being viewed as a positive sign for the market, but few people have expressed their doubts in this digital currency. According to ET, BTCChina – a Shanghai based Chinese Bitcoin exchange firm, most bodies have stopped trading in crypto-currency, citing tightening regulation as the primary factor. ViaBTC, YoBTC and Yunbi followed suit, announcing similar closures. This brings us to the question: How many of these concerns are really valid?
But before that, let us address a basal concern: What is Bitcoin?
Bitcoin, and How it Works
Invented by Satoshi Nakamoto in 2009, Bitcoin is a kind of a decentralized digital currency which aligns with the rules of cryptography for regulation and generation of units of currency. It’s a completely virtual currency, with no regulations from banks on how it can be stored or moved. This crypto currency can be used for purchase of goods and services online, or you can hold it in the hope of gaining higher value over the years. Bitcoins are traded from one wallet to another wallet.
Bitcoins in India
When INR 1000 and INR 500 lost its value in the famous demonetization ordeal, many people decided to minimize their dependency on the country’s legal tender, which is operated by government. The obvious alternative, the first choice was Bitcoin. This sudden upheaval led to an exponential level of interest being generated in the Bitcoin wave, which helped it gain value in virtually no time.
RBI and the central banks have been skeptical about the use of Bitcoin and its regulations. Currently, no centralized rulebook is in place, and there are no taxes applicable on the purchase of the crypto currency or holding it, unless it is sold or exchanged to avail other benefits in cash or kind.
Soon, the Ministry of Finance would introduce the Bitcoin regulations, in which any crypto currency related dealings will come under the purview of Income Tax Act. If the speculations are correct, then all crypto currencies would be eligible for capital gain taxes. Short-term holdings may incur a tax of 30% on profits, whereas gains from long-term holdings could be taxed at 20%.
The Rise of Bitcoin
When Mr. Nakamoto invented Bitcoin, he described it as an imaginary metal which has one magical property that it can be transported over a communication channel. Money becomes subjective and it will be valued as a medium of exchange. Investors jumped on this and started foreseeing Bitcoin as the first universal currency.
The gigantic rise of this digital crypto currency comes with an exponential increase in a network’s value for each additional participant or layer. Bitcoin has become the preferred brand amongst all crypto currencies available in the market only because it arrived first, like Google in search and Facebook in social networking site.
In the light of recent unbelievable upsurge in valuation, the Bitcoin phenomenon is speculated to be worth $10 trillion in the near future. Many organizations are moving towards crypto currency technology by hiring and motivating programmers and business people to dedicate time and effort in #Bitcoin-related projects. Companies like AngelList are starting #cryptocurrency-specific hedge funds. With so many new technologies emerging, Bitcoin’s market share is expected to be headed in only one direction – up north.
The biggest question perhaps is: Are you ready to take the proverbial leap of faith and start investing in a largely speculative but extremely rewarding construct? The ball is in your court!