In just one year, the value of bitcoin got increased up to 300 per cent, indicating that it could stand as a well a kind of investment you may be looking for.
However, many of us got confused if it is safe to buy, store and sell bitcoins in India.
As per some recent news, Bitcoins for being the only payment method to pay ransoms to WannaCry attackers, can be used for a host of other things. And countries such as Japan and South Korea are leading the way.
One of Japan's biggest electronics retailers, Bic Camera, began accepting bitcoin at two stores in Tokyo last month.
Recruit Lifestyle, another Japanese firm announced to add bitcoin acceptance to its mobile point of sale tool AirRegi, which is used in 260,000 merchant and restaurant locations across Japan.
How are Bitcoins created?
Bitcoins cannot be minted, unlike paper currencies, they can only be mined. There are only 21 million bitcoins that have been created.
At present, only 16.8 million or 80 per cent of all the bitcoins have been mined.
How to buy Bitcoins?
You can look for various digital currency exchanges to buy bitcoin.
You can purchase Bitcoins with a credit card. The two online companies Coinbase.com and Coindesk.com are the most popular exchanges. They also offer tutorials for beginners on digital currencies.
You can purchase Bitcoin from Zebpay exchange, in India. Zebpay also has Android and iPhone app which allows you to link your bank account for quick transfers.
You are allowed to buy Bitcoins by paying into Zebpay's bank account. You can also withdraw the money to your bank account, and track data on Bitcoin valuation in the country.
There is a KYC requirement and you need to verify your ID by simply clicking a photo of your PAN card.
Unocoin, another India-based exchange, lets you trade Bitcoins. The company can help you buy, sell, store, use and accept bitcoin.
As the company claims, to have a total of 1,50,000 customers.
With Prime Minister Narendra Modi-led government going the whole hog to make India a less cash economy, digital cryptocurrency has caught the attention of many Indians.
After the period of demonetization, leading Bitcoin exchanges in India witnessed a rise in user base by up to 250 per cent.
To be able to store Bitcoins, you'll need a wallet which can be in your computer or smartphone. You can back up the wallet at another location so that you don't lose data if your hard drive crashes. Depending on your requirement, you can choose a wallet.
How much returns can you get if you invest in Bitcoins?
The decentralized virtual currency that took the world by storm has witnessed a 300 per cent rise in value in just one year. When Japan passed a law to accept bitcoin as a legal payment method, its value hit an all-time high.
Despite RBI's reluctance to recognize the cyptocurrency, the interest in Bitcoins in India has not waned. An Ahmedabad-based bitcoin trading start-up Zebpay witnessed a 25 per cent surge in revenue, after demonetization step by Indian Prime Minister Narendra Modi.
Another bitcoin trading firm Unocoin, had received funds from Blume Ventures, saw a threefold rise in its user base to 1,20,000 following demonetization.
It may now not be possible that value of Bitcoins may not degrade as there are limited number of Bitcoins and everyday more and more people are showing interest in investing in the cryptocurrency.
Are Bitcoins legal in India?
Even as economies like Japan and Russia move to legalize the use of Bitcoins, India, despite being at the cusp of a digital revolution is yet to officially recognize the cryptocurrency.
India's central bank, the Reserve bank of India or the RBI, which regulates Indian rupee, had earlier cautioned users, holders and traders of Virtual currencies (VCs), including Bitcoins.
The central bank had said that The creation, trading or usage of VCs including Bitcoins, as a medium for payment are not authorized by any central bank or monetary authority. No regulatory approvals, registration or authorization is stated to have been obtained by the entities concerned for carrying on such activities.
The RBI Deputy Governor R Gandhi of India warned against crypto-currencies such as Bitcoin in March. He said, "They pose potential financial, legal, customer protection and security-related risks," Gandhi said. "Payments by such currencies are on a peer-to- peer basis and there is no established framework for recourse to customer problems, disputes, etc. Legal status is definitely not there".
Although, Bitcoin hasn't unequivocally banned in the country by the central bank.
Blockchain, the technology behind Bitcoin
Although Bitcoin is yet to become mainstream in India, the underlying technology behind it, the blockchain technology has caught the attention of several Indian banks. ICICI Bank announced in previous year that it successfully executed transactions in international trade finance and remittances using blockchain technology.