The Indian government and the Reserve Bank of India have been taking a hard line against Bitcoin and other cryptocurrencies. Due to their anonymous nature, they are considered an excellent tool for money laundering and tax evasion. That’s why the Indian government has been working on plans to introduce its own cryptocurrency called Lakshmi Coin. But despite this, interest in Bitcoin and other digital currencies continues to grow in India.
What is Bitcoin and cryptocurrency?
Bitcoin is a decentralized digital currency that was created and introduced in 2009 by pseudonymous developer Satoshi Nakamoto. It’s called a cryptocurrency because it uses cryptography to control the creation and transfer of funds.
Bitcoin is built on open source software, so anyone can contribute to its development and use. The first Bitcoin specification was published in 2008 by an unknown individual under the name Satoshi Nakamoto – in fact, this could be anyone or a group of individuals using this pseudonym. Cryptocurrencies are bought and sold on exchanges just like stocks. The price fluctuates based on supply and demand for bitcoin but is mostly set by market forces rather than any government authority like regular money (fiat).
Bitcoin and cryptocurrency basics
Bitcoin is a cryptocurrency. Cryptocurrencies are virtual currencies that can be used to buy goods and services online, or exchanged for other types of currency. Cryptocurrency is not regulated by any government or institution; it’s controlled by the people who own and use it.
Anyone can start using bitcoin in India once they have purchased some through an exchange. You can also trade bitcoins and other cryptocurrencies on Indian exchanges like Zebpay, Unocoin, Coinsecure and more.
When compared to traditional forms of payment such as cash or credit cards, crypto transactions are much faster because there’s no need for intermediaries like banks that slow down the process of transferring money from one account to another
Difference between bitcoin and cryptocurrency
While Bitcoin is a cryptocurrency, not all cryptocurrencies are Bitcoin. The term ‘cryptocurrency’ refers to any digital currency that uses cryptography to secure its transactions. Cryptography is the practice of creating and using algorithms in order to convert legible information into an unreadable format called ciphertext, or vice versa.
Cryptocurrencies use cryptography to ensure that the currency can only be used by its rightful owner. This means there needs to be a mechanism for ensuring that no one else can spend your money without your knowledge and consent. You will hear this referred to as ‘proof-of-work’ or ‘mining’ – it’s just another way of saying ‘crypto mining’!
Popularity of bitcoin and other cryptocurrencies
Bitcoin is the most popular cryptocurrency in India and across the world. It is the first decentralized currency, which means it’s not controlled by any government or central bank. Bitcoin was introduced in 2009 as an open-source software by Satoshi Nakamoto (an anonymous person). The total circulating supply is currently 17 million bitcoins, with approximately 4 million mined every year.
Bitcoin has gained popularity due to its decentralized nature and anonymity when transacting cryptocurrencies. It can be used to purchase items online using peer-to-peer transactions without incurring transaction fees or delays associated with credit card payments.
Is investing in cryptocurrency legal in India?
Cryptocurrency is not legal tender in India. It does not have any intrinsic value and is not backed by any central bank or government. Cryptocurrency has been defined as a virtual currency or digital currency in the Indian Finance Act 2017, which means that transactions involving cryptocurrency are taxable under the Income Tax Act 1961.
Cryptocurrency is neither regulated nor overseen by Reserve Bank of India (RBI), who regulates financial products and services in India. RBI has previously issued multiple warnings against dealing with cryptocurrencies due to risks involved with trading them such as volatility of prices, hacking risk and lack of transparency in trade.
Cryptocurrency is also not considered a financial product, security or commodity by RBI because they do not have all three essential elements required for these classifications: underlying assets; investment contract; external regulation
How are bitcoins regulated in India?
Bitcoins and other cryptocurrencies are not regulated in India. This means that you can buy, own and use bitcoins with no restrictions. However, there are some other important things to note about the cryptocurrency space:
- Bitcoins are not a legal tender in India. They do not have any government backing or regulation like fiat currencies like USD, INR etc.
- Bitcoin is not a currency according to the Reserve Bank of India (RBI). As per the RBI’s official website: “Cryptocurrencies such as Bitcoin and others do not have any intrinsic value and are not backed by any assets or gold reserve; their worth is based entirely on supply and demand created by an economic bubble”
- Bitcoin cannot be used as payment method under Section 8(1)(b) & 8(2)(e) of FEMA 1999 since it doesn’t qualify as ‘currency’. You cannot pay taxes using it either!
Here’s how you can regulate Bitcoins in your country:
Buying bitcoins in India?
There are 3 ways to buy bitcoins in India –
- Buy bitcoins from a bitcoin exchange:
There are many bitcoin exchanges in India that you can use to buy and sell bitcoins, but most of them do not allow you to trade with INR, so you will have to convert your money into another cryptocurrency like Ethereum or Litecoin first. Some popular exchanges include Unocoin, Coinsecure and Zebpay.
- Buy bitcoin from a Bitcoin ATM:
A bitcoin ATM is an easy way for newbies as well as experienced users to buy BTC instantly without having to sign up anywhere or make any online payment; however there aren’t many ATMs in India yet where this feature is available
1. If you want to invest in cryptocurrency, you can use a crypto exchange platform like ZebPay, Coindelta, Koinex, etc.
In the first place, you need to download and install an app of your choice on your smartphone. After that, you can start trading in cryptocurrencies.
There are a few things that you should keep in mind while choosing a Bitcoin exchange platform:
- Check if the exchange is registered with SEBI (Securities Exchange Board of India)
- Check if they have all the required documents to be legally operationalized in India
- Have a look at their fee structure and compare it with other exchanges too.
Cryptocurrencies like Bitcoin are a great investment opportunity, and India is one of the countries where they were first introduced. The country’s crypto currency market is still very young and the Indian government has not yet developed any regulations for it. Cryptocurrencies have been legal since 2013 but, in February 2020, all banks stopped supporting them after the RBI ordered them to do so. With this new regulation, you can buy and sell bitcoins through peer-to-peer exchanges only.