Internet Cash that cannot be Demonetised; Swiss bank account in your pocket

Bitcoin is digital cash available on internet. It uses peer to peer payment technology with no requirement of trusted intermediary like bank or any central authority to manage transactions. Bitcoin is open-source; its design is public, nobody owns or controls Bitcoin and everyone can take part. The transactions are managed collectively by the network. Because of the monetary autonomy it brings to its users its valuable over legacy systems. Bitcoin seeks to address the root problem with fiat: all the trust that's required to make it work be it bank or country. With trust it makes the whole systems brittle, opaque, and costly to operate. For e.g. Zimbabwe country’s ongoing political, financial and monetary woes due to hyperinflation has made their currency worthless. Citizens, investors flocked to bitcoin as “store of value”. It’s like having swiss bank account in your pocket. It’s easy to protect, hide & does not have any storage cost. Being digital, still it can’t be duplicated, counterfeited hence extremely valuable.

Bitcoin transactions are secured by military grade cryptography.

Cryptocurrencies like bitcoin use various timestamping schemes to avoid the need for a trusted third party to timestamp transactions added to the blockchain ledger. The first timestamping scheme invented was the proof-of-work scheme that run difficult hashing algorithms (expensive computer calculations also called mining) to validate electronic transactions on the network. Bitcoin follow this way of consensus to make sure the authenticity of the blockchain is good.

 Just like with email, you are not forced to use the same software or the same service providers, we use our own favourites. Similarly for bitcoin wallets; they are all compatible as they use the same open technology. The Bitcoin network never sleeps, even on holidays! Sending bitcoins across borders is as easy as sending them across the street. There are no banks to make you wait three business days, no extra fees for making an international transfer, and no special limitations on the minimum or maximum amount you can send. Bitcoin is an emerging market of new customers who are searching for ways to spend their bitcoins. Accepting them in business instead of fiat is a good way to get new customers and give your business some new visibility. Accepting a new payment method has often shown to be a clever practice for online businesses. EY Switzerland (formerly Ernst & Young) is the first advisory firm that allows its customers to settle their bills with Bitcoins. Time Inc., publisher of e. g. for People, Sports Illustrated, InStyle and Time, now accepts bitcoin as a payment. Bitcoin also includes a multi-signature feature which allows bitcoins to be spent only if a subset of a group of people authorize the transaction. This can be used by a board of directors to prevent any member to make expenditures without enough consent from other members, as well as to track which members allowed each payment. Many businesses are required to produce accounting documents about their activity. Using Bitcoin allows you to offer the highest level of transparency since you can provide information your members can use to verify your balances and transactions. Non-profit organizations can also allow the public to see how much they receive in donations. The price of a bitcoin can unpredictably increase or decrease over a short period of time due to its young economy, novel nature, and sometimes illiquid markets. Consequently, keeping your savings with Bitcoin is not recommended at this point. Bitcoin should be seen like a high risk asset, and you should never store money that you cannot afford to lose with Bitcoin. If you receive business payments with Bitcoin, you can convert them to fiat rupees for better safety. All Bitcoin transactions are stored permanently on the distributed public ledger network, which means anyone can see the balance and transactions of any Bitcoin address. However, the identity of the user behind an address remains unknown until information is revealed during a purchase or in other circumstances.

 Bitcoin is an experimental new currency that is in active development. Each improvement makes Bitcoin more appealing but also reveals new challenges as Bitcoin adoption grows. The Reserve Bank of India says that it has not given any licence, authorisation to any entity or company to operate crypto schemes or deal with bitcoin or any virtual currency but it does not say it’s illegal. Bitcoin transaction in India are treated as investment in unlisted security or shares. The legal status of cryptocurrencies varies substantially from country to country and is still undefined or changing in many of them. While some countries have explicitly allowed their use and trade, others have banned or restricted it. Likewise, various government agencies, departments, and courts have classified bitcoins differently. Japan officially recognizes bitcoin and digital currencies as a "means of payment that is not a legal currency". In US bitcoin is taxed as a property. Australia has officially confirmed it will treat bitcoin “just like money” on 1 July 2017.

Bitcoin is the first & still the most important cryptocurrency since 2009. Numerous cryptocurrencies have been created after that, frequently called altcoins, as a blend of bitcoin alternative. A commonality of all altcoins is that they each possess their own independent blockchain, where transactions relating to their native coins occur in. Tokens are a representation of a particular asset or utility, that usually resides on top of another blockchain. After bitcoin the most important crypto is Ethereum ETH which is a decentralized platform that runs smart contracts. The value token of the Ethereum blockchain is called ether. XRP Ripple token offers banks and payment providers a reliable, on-demand option to source liquidity for cross-border payments. EOS.IO is world’s first blockchain operating software that is designed to enable vertical and horizontal scaling of decentralized applications. XMR Monero algorithm was invented to add the privacy features Bitcoin is missing. IOTA enables companies to explore new business-2-business models by making every technological resource a potential service to be traded on an open market in real time, with no fees. The main difference between altcoins and tokens is in their structure; altcoins are separate currencies with their own separate blockchain while tokens operate on top of a blockchain that facilitates the creation of decentralized applications. The market of cryptocurrencies is fast and wild. Nearly every day new cryptocurrencies emerge, old die, early adopters get wealthy and investors lose money. Every cryptocurrency comes with a promise, mostly a big story to turn the world around. Few survive the first months, and most are pumped and dumped by speculators and live on as zombie coins until the last bagholder loses hope ever to see a return on his investment.

The revolution is already happening. Institutional investors start to buy cryptocurrencies. Banks and governments realize that this invention has the potential to draw their control away. Cryptocurrencies change the world. Step by step. You can either stand beside and observe – or you can become part of history in the making.

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My article for beginners on Bitcoin was published in Deccan Chronicle in Dec 2017.