Bitcoins
Can You Imagine A Thing That Was Worth Zero ! Ten Years Ago, But Today It Has Reached Almost 15 Lakhs !
I’m Talking About Bitcoin, Which Recently Hit Its High Price, Which Makes It Talk About It, And Explain What It Really Is Represents Bitcoin ? What Is Its History ?
Bitcoin History
12 Years Ago, On October 31, 2008, A Man Named Satoshi Nakamoto Published An Article On The Internet. Satoshi’s Main Motive Was Clearly Visible From The First Line Of The Article – “This Is A Version Of Electronic Money That Would Allow Payments To Be Sent Directly From One Side.“
On The Other Hand, A Cryptocurrency That Does Not Pass Through A Financial Institution Is A Digital Asset Over Which Central Banks Or Financial Institutions Have No Control Or Regulation. For Example, The US Dollar Is Controlled By The Central Bank. The Indian Rupee Is Controlled By The RBI, But There Is No Central Bank Or Any Main Financial Institution To Control The Bitcoins/Cryptocurrencies, Then The Cryptocurrency Was Just An Idea In This Person’s Mind.
But Now, Hundreds Of Thousands And Crores Are Traded On His Crypto Exchange, Just Like Stocks Are Traded On Regular Stock Markets, To Understand The Satoshi Paper And The Context Of The Cryptocurrency, We Will Need To Understand Some Concepts Of Our Economic History.
Economic History
Our Financial Systems Are Built On Trust. Currency And Coins Have Value In Our Society Because They Are Guaranteed By The Government And The Central Bank. Pay Attention To Any Note In Your Wallet.
For Example, A Banknote Of 500 Hundred Rupees. It Says: “I Promise To Pay The Bearer 500 Hundred Rupees.” This Is A Promise Made By The Governor Of The Central Bank, That Is, The Reserve Bank, His Signature Is Right Below It. The Note Has No Value Without This Promise/Guarantee. The Note Will Be Converted To Plain Paper If It Does Not Have The Signature On It.
There Is A Small But Interesting Story : After The Second World War, America Became The Most Powerful Country In The World, And The Rest Of The Countries Had To Align Their Currency With The US Dollar, And That Was Reconciled With The US Dollar Or Something Else Was Guaranteed ? Gold Reserve.
The Actual Value Is Gold Or Silver. But Carrying Gold Or Silver In Your Pocket Is Impractical. Banknotes Are Printed For Convenience, But We Abandoned That Gold Standard Rule Back In 1971. After That, The Central Banks Of The Rest Of The Countries Could Print Their Banknotes At Will, But What Does Cryptocurrencies And Bitcoins Have To Do With This ?
It Helps You Guess How Strong The Government And The Banks Are, Especially The Country’s Central Banks When It Comes To Monetary Policy. The Point Is, When You Put Money In Banks, You Give Permission To The Banks To Play With This Money. On The Other Hand, Using These Deposits, Banks Provide Loans To Companies And Individuals. This Is What Generates Income, That Is, Interest On The Money You Recently Invested.
We Have Seen How These Banks Use These Savings And Deposits In A Very Irresponsible Way. It Often Happens That Banks Lend To Large Industrialists Without Due Diligence And Then These Loans Turn Into Bad Debts/ NPAs, And Who Is The Victim In Such Cases ? Investors Like Us. Three Depository Institutions Have Collapsed In The Past 15 Months – Yes Bank, PMC Bank And Laxmi Vilas Bank, But Even Government Decisions Can Endanger The Common Man.
Remember November 2016 ? Demonetization ! The Government Promised To Squander 500 And 1000 Banknotes In One Blow 86% Of Indian Currency Has Become Unusable. In Favor Of Bitcoins And Cryptocurrencies Because They Do Not Want The Government Or Central Banks To Exercise Such Strict Control Over Their Money Or Currency.
Now Do You Understand Satoshi’s Original Idea/Vision ? Satoshi Presented Bitcoin As An Alternative Financial System That Would Be Based On Software Technology And Would Not Be Controlled By Third Parties. You May Recall The 2008 Global Economic Crisis. Big Investment Bankers Like Lehman Brothers Went Bankrupt. Bitcoin Of This Scenario Was The First, And Then Many Other Cryptocurrencies Appeared – Ethereum, Litecoin And Ripple. In Fact, There Were Over 2,000 Cryptocurrencies Available Online At The Beginning Of This Year.
How Do Crypto Technologies Work ?
To Understand This, You Need To Have Knowledge In The Field Of Higher Mathematics And Computer Science, Which I Do Not Have, But If You Want To Start Investing Or Trading, Then Basic Knowledge Will Be Enough. Let’s Take An Example. Bitcoins There Is One Public Digital Account For All Bitcoin Transactions – This Is Called The “Ledger“. A Copy Of This Ledger Exists On All Systems That Are Part Of The Bitcoin Network.
Those Who Use This System Are Called “Miners”. “The Task Of Miners Is To Verify Transactions.” Let’s Say “A” Has To Transfer 2 Bitcoins To “B“. The Miners Will Need To Confirm Whether “A” Really Has 2 Bitcoins In His Account, Or If The Miners Will Have To Solve A Difficult Problem In Order Not To Complete The Transaction. The Math Equation You May Have Learned About Variables In High School. Each Bitcoin Transaction Has A Unique Variable, The Task Of Miners Is To Calculate It. It’s Not That They’re Sitting With A Pen Or Paper Solving Equations.
All Of These Calculations Are Done Automatically On Computers. Because, They Are Extremely Complex And Can Be Performed In Combinations Crore, Such Miners Require Computers With Very Complex And High Computing Power. Once The Equation Is Solved, Other Computers On The Network Validate It And This Transaction Is Added To The Chain And A Block Of Transactions Is Created.
Hence, The Technology Is Called “BlockChain” And What Do Miners Get For It? They Get The Most Valuable Thing – Bitcoins ! This System Is Called “Proof Of Work”. Miners Must Prove Their Computational Work In Order To Receive Bitcoins In Return. Don’t Worry ! Since Understanding The Philosophy, Vision And Future Of The Crypto Technology Is Much More Important Than Understanding How The Crypto Technology Works ? How To Use Cryptocurrency And Bitcoins ? Is Now Extremely Important To Understand.
Since, On The Other Hand, Some People Use Bitcoins As An Investment, And On The Other Hand, Some People Use Cryptocurrency As An Alternative Currency, Many People Want To Replace It With Currency And Use Bitcoins Instead Of Rupees And Dollars, But The Main Use Of Cryptocurrency Now Is Investment.
We Invest Money In Cryptocurrency, Hoping For Higher Returns In The Future, And Therefore We Receive More Money In Return, Then It Becomes A Store Of Value Like Gold. Just Like We Do Not Use Gold In Our Daily Transactions, But Instead Buy It And Store It In Bank Lockers As A Guarantee Of More Income In The Future, Because The Price Of Gold Continues To Rise Gradually. People Are Doing The Same With Bitcoins And That’s Why Bitcoins Are Also Called “Digital Gold“, But Like Any Other Investment, They Also Come With Risks And Those Who Criticize It As A Form Of Investment Say Bitcoin Is A Digital Currency. It Has No Intrinsic Value, For Example, You Can Physically Touch Gold With Your Hands. If You Buy A Home As An Investment, It Will Be Physically Available To You. On The Other Hand, Bitcoins Are Not Physical. Everything Happens On The Computer. It Can Still Be Called A “Niche Product” That Has Not Been Widely Adopted In Society.
Cryptocurrency Is Not Yet A Medium Of Exchange, Meaning You Cannot Go To Nearby Stores And Buy Bread And Eggs With Bitcoin, But This Trend May Change In The Future As There Are Several Restaurants And Hotels In Western Countries That Have Started Accepting Bitcoin As An Alternative. Forms Of Payment. There Is A Technical Issue Here That Makes It Difficult To Use Bitcoin As An Alternative. Daily Transaction Environment It Takes Time To Confirm Bitcoin Transactions On The Blockchain. The Process Of Calculating One Block Takes About 10 Minutes For Computers, So You Can Understand That It Is Not Recommended To Wait 10 Minutes For A Transaction To Complete In Day To Day Life, But At The Same Time There Are Some Modern Use Cases For Bitcoins Where They Perform Better Than Ours Traditional Methods. The Best Example Of This Is Transferring Our Funds From One Country To Another, When You Need To Transfer Money From One Country To Another, Banks Deduct A Lump Sum For The Overseas Transfer Fee, They Charge Large Fees, And It Will Take A Long Time To Transfer Money From One Country To Another In This Case, Bitcoins Are More Economical. Bitcoins Do Not Charge A Transfer Fee And Ten Minutes Is Much Less Time Compared To 1-2 Days Spent By Banks, Similar Things Apply To Credit Card Fees.
Cryptocurrencies Can Be More Economical Than Credit Card Fees. This Is Why Banks, Credit Card Companies, And Money Transfer Companies Have Opposed Cryptocurrencies And Have Done So Even Today, Because, Over The Past Few Months, Cryptocurrency May Become A Competitor To Their Business Model, Especially Due To The Covid Pandemic, The Situation Has Changed. While Several Industries And Mutual Funds Were Struggling, The Value Of Cryptocurrencies Such As Bitcoin And Ethereum Surged From March 1 To November 30, The Value Of Bitcoins Increased By More Than 120%, That Is, Increased In November, The World’s Largest Digital Payments Company, More Than Double The Cost Of PayPal, Introduced The Cryptocurrency Transaction Feature.
Jp Morgan Bank Has Been The Main Opponent Of Bitcoin. When Bitcoin Was On The Rise In 2017, That Is, When Its Price Was Rising Exponentially, The CEO Of JP Morgan Said It Was A Scam And Now, Just A Few Months Ago, Jp Morgan Has Opened Corporate Accounts For Well-known Cryptocurrencies. Exchanges Like Coinbase And Gemini Trust So You Can See Doors That Were Previously Closed To Cryptocurrency Now Open. When It Comes To Cryptocurrency, The General Public And The Financial Industry Have An Open Mind About Cryptocurrency, They Talk About India, About Changes. This Year The Same Attitude Is Observed In India. In April 2018, RBI Froze The Crypto Industry From The Banking System. RBI Instructed Banks Through A Circular To Refrain From Transactions With Cryptocurrency-related Platforms Or Transactions Reported By Mainstream Media. This RBI Has Imposed A Ban On Cryptocurrency, But It Would Be Technically Incorrect To Claim That Cryptocurrency Was Never Banned Directly In India. RBI Simply Blocked Banking Access To The Crypto Ecosystem, With The Result That The Public Could Not Deal With Inr, That Is, In Indian Rupees On Crypto Platforms, Banks Were Very Tough On Crypto Platforms With Frozen Platform Accounts, They Could Not Pay Their Employees Or Pay Rent To Lessors.
The Question Is – Why Did RBI Do This ? The Reality Is That Cryptocurrency Also Has Some Negative Aspects, Which Are Mainly Related To Money Laundering And Security On The Darknet. On The Internet, People Started Accepting Bitcoin Payments For The Purchase Of Weapons And Drugs. This Has Become Very Difficult For Law Enforcement Agencies. Tracking Transactions Outside The Traditional Financial System. There Were Also Hacking Problems. Another Reason Is That Anyone Can Create Their Own Cryptocurrency. This Is Why Many Fake And Fraudulent Companies Took Money From The Public With The Promise That Once They Started Trading In That Particular Currency, The Value Of Their Money Would Double / Triple, So They Stated That The Money Invested Would Double / Triple Per Person. Named Amit Bhardwaj, He Came Up With A Similar Cryptocurrency Scam Called “Bitcoin Mining.” Bhardwaj Bhardwaj, Who Claimed To Have “Mining Farms” In China, Is Charged With Rs 2,000 Crore Fraud. This Is The Place Where Several Computer Servers Solved The Equations And Said That The Bitcoins Received From Mining Would Be Given To Investors As Profit, But All His Promises Were Empty. He Took Money From Many People And Fled India. There Were Such Accusations Against Him. Finally, In April 2018, He Was Arrested In Accordance With The Latest Update, He Was Released On Bail And The Case Is Being Considered In Court, So For Such Reasons, There Was A Negative Opinion About Cryptocurrency And Bitcoins, And In Response: RBI Decided To Introduce A Bank Ban On Exchanges Cryptocurrencies, That Is, Platforms Where You Can Invest In Cryptocurrency And Convert Rupees To Bitcoins, Have Been Operating In India Since 2013.
Some Of The Founders Of The Exchange Decided To Challenge The Ban On Banking In Court. It Was Not Only A Question Of Their Livelihood But Also A Question Of Principles By Which They Can Explain How Crypto Technologies And Blockchain Work, To The Government And RBI, In Their Opinion, Negative Points Regarding Cryptocurrency Are Also Valid For Other Assets. Classes Property-related Money Laundering Can Occur, Counterfeit Banknotes Can Be Printed, And Money Laundering Can Also Take Place. There Are Many Fraudulent Schemes Operating In Many Other Areas. The Software Of Banks Or Stock Exchanges Can Also Be Hacked, There Is A Possibility. So, The Problems That Exist With Bitcoin Exist With Other Things, In Response To This, The Famous Indian Platforms Include Many Guarantees. For Example, The KYC (Know Your Customer) Process Became Mandatory After Registration. The Case Was Referred To The Supreme Court. Several Prominent High-profile Lawyers Refused To Open A Case Because There Was A Lot Of Negative NEWS About Cryptocurrency In The Media, There Were Rumors And Hearings Were Postponed. Some Exchanges Did Not Manage To Survive During This Time, And Therefore They Were Forced To Cease To Exist. In January 2020, Three Judges Reviewed The Case, And The Court Agreed With The Exchanges’ Position And Concluded That RBI‘s Ban Was “Disproportionate.” “Since RBI Was Unable To Prove In Court That Investment And Cryptocurrency Trading Interfered With Financial Systems Or Banks In Accordance With Article 19 (1) (g) Of The Indian Constitution, This Is The Fundamental Right Of Every Citizen To Engage In Any Business / Occupation Or Trade. The Court Ruled That The Rbr’s Ban On Banking Operations Violated This Fundamental Right. This Is A Huge Thing, Because It Is Not Customary To Beat RBI In Court. So It Was A Historic March 4th For The Indian Crypto Industry. The Court Has Clearly Stated That There Are No Legal Prohibitions On Cryptocurrency Trading And Investment In This Business. The Legal Agency And The RBI Will Have To Lift The Ban On Banking In General, Which Is a Good NEWS.
Now We Can Freely Invest In Cryptocurrencies If We Want Us To Have Such An Opportunity To Diversify Our Financial Investments, You Can Invest A Little Money In Cryptocurrency As An Experiment After The Decision Of The Supreme Court, Several Exchanges Have Grown, And This Process Has Become Extremely Simple And In India Is Easy, Of Course, You Have To Follow Some Common Sense Rules. For Example, Do Not Trade By Taking Loans From Banks Or Other Organizations. If You Need To Take Out A Loan, Invest In Cryptocurrency Or Bitcoin, Don’t Do It. Then It Is Not For You, Invest Only The Money That You Can Safely Lose, Because This Is An Extremely Risky Investment. The Price Of A Cryptocurrency Fluctuates A Lot And It Is Extremely Volatile. So It Is Clear That This Is Both An Opportunity And A Risk. Your Risk Appetite And Investment Goals Determine Whether You Want To Play The Short-term Or Long-term Game In General, It Can Be Said That Cryptocurrencies And Bitcoins Can Play An Important Role. An Important Role In The Future Of Finance. It Remains To Be Seen If Cryptocurrency Will Be Able To Become A Medium Of Exchange That Will Be Widely Used, Or Will It Remain A Store Of Investment Value? In The Future, Will You Be Able To Buy Bread And Eggs From Nearby Stores With Bitcoin? Or Will It Be Impossible? This Day May Be Very Distant, But It Cannot Be Ruled Out As Impossible.