A STUDY OS VIABILITY OF BITCOIN IN INDIAN FINANCIAL MARKET

G. Arun Prakash

BBA 2nd year

IFIM College

ABSTRACT: The way bitcoins come into existence about cryptocurrencies. In past few
months, we are observing a lot of controversy on the data structure of Bitcoin. So, “what’s
bitcoin?” this is a question arises in everyone mind. Bitcoin is cryptocurrency created as a
reward for a process known as mining. Mining is a process of adding deal records to public
ledger of post-transaction or blockchain to rest of the network as having place They can be
exchanged for other currencies, products, and services. which was created by an unknown
person or group of people under the designation Satoshi Nakamoto. So, what made it as a big
controversy? It was the value of bitcoin in the market is highly unstable. In 2010 1 bitcoin
was around 5000 INR but in present 2018 its worth went more than 10 lakhs. Now we know
why there is a big fuss about bitcoin

KEYWORDS: Bitcoin, blockchain, cryptography, economy

INTRODUCTION: Bitcoin is a digital currency emitted through the process mining

Bitcoins recent growth has made the money a household name, the idea and technology
behind the money has existed since 2009. Bitcoin was shaped by a programmer, or group of
programmers, calling themselves Satoshi Nakamoto. No individual or group has ever come
forward to claim ownership for creating Bitcoin’s code or identified themselves as
Nakamoto. In the original paper explaining the currency, A Peer-To-Peer Electronic Payment
System, Nakamoto described the digital currency as a reward for mining.

Bitcoin Works person container usage bitcoins towards making expenditures to other
individuals or brokers without including a third-party, like banks, financial institution, for
authentication. As a replacement for, transactions are cleared and validated within the system
through the blockchain. Bitcoin mining is the course of adding transaction deals to the public
book of post-transaction or blockchain to rest of the network as having a place. The
blockchain is a public ledger that records and publicly displays all bitcoin transactions that
have been executed within the Bitcoin system. A block is a permanent record of recent
transactions. The blocks of recorded data build upon each other to form the blockchain which
dates all the way back to the first bitcoin transaction.

The bitcoin transaction for transfer of value among wallets that gets comprised in the
blockchain. B-wallet keeps secret segment of data called has the private key, which remains
used toward sign dealings if mathematical resistant that they have come from the owner of
the wallet

Bitcoin is an open software it refers that no company, no person & no country owns this
network. The system is peer to peer its users can transact directly without any third-party like
bank, credit card company.
LITERATURE REVIEW

Bitcoin: A Peer-to-Peer Electronic Cash System by Satoshi Nakamoto (the paper show how
bitcoin in the various way of the system). Role of Bitcoin on Economy Oct 2014 Anu Singhal
[1] it’s to oversee the impact on society with a special emphasis on Dubai. The overall
response is mixed towards different variables from various groups in the sample. This paper
highlights and deliberates the problems on both sides of bitcoin particularly in the interest of
monetary institutions and economists with a prospective alteration, with a request of
advanced technology, and revolt with a digital money. “Bitcoin” As Emerging Virtual
Currency and Its Related Impact on India July 2017 C.A. Pramod Kumar Pandey the
investigation overlooks at Bitcoins underlying technology blockchain & to evaluate its
impact in India. Bitcoins-A Global Perspective Indian Legal and Tax Considerations April
2015 by Nishith Desai Associates (NDA) it displays the expressions of bitcoin in several
countries. Impact of Bitcoin as a World Currency A. Seetharaman [3] the research sees the
various exchange rate & more views on bitcoin. Bitcoin: Implications for the Developing
World Nov 25, 2015, by Makaria Krause the paper overlooks at all the legal cons. Bitcoin is
likely to be able to send and receive currency from wherever in the world at any given time.
The worry about crossing limits, postponement for bank breaks or any other limitations on
transaction of b-money’s and B-wallet Permits the operators to be in control of their dealings
assistance keep Bitcoin safe for the net & Brokers cannot charge extra fees on anything
without being noticed They need to convert with the customer before adding any charges.
Since personal information is kept concealed from prying eyes, Bitcoin protects against
identity robbery. Bitcoin wallet can be encrypted to ensure the safety of the wallet holder
Information is Translucent With the blockchain, all confirmed transactions are obtainable for
everyone to see, however, personal gen is hidden. Operators public address is what is visible;
however, Operators personal information is not knotted to this. Anyone can confirm
transactions in the blockchain. Bitcoin process cannot be operated by any person,
organization or government. it's due to Bitcoin being cryptographically secure. At Present,
there is no fees or low fees for Bitcoin payments. By transactions, operator’s strength
includes fees to process the transactions sooner. The higher the fee, the more important it gets
within the net and the earlier it gets processed. Digital money is a trade to help the
commercial process dealings by changing bitcoin for fiat currency. This services normally
take low fees than PayPal or credit card. Since B-wallet dealings can’t be upturned, do not
convey with them personal information, and are secure, wholesalers are protected from
potential losses that might occur from fraud. With B-wallet, brokers can do commercial
where lawbreaking rates and fraud rates may be high. it’s because bitcoin is extremely hard to
cheat or scam anyone in Bitcoin due to the public ledger, then known as the blockchain. b-
wallet cannot be frozen like any normal bank account or e-wallets critical situation it could be
frozen by the higher authorities because bitcoin cannot be frozen due to not having any
central authority or any individual.

METHODOLOGY

The data used in the research is based on secondary data through articles, web pages, books,
investigation paper

Primary data: Oral Information through Tele interview from financial teacher & C.A in
Bangalore
OBJECTIVE

To realize the concept of bitcoin

To understand challenges created by bitcoin to the Indian economy

To analyse bitcoin’s fluctuating value in the market

THE WAYS TO GET BITCOIN

Obtaining bitcoins and learning to use the Bitcoin system is a comparatively upfront process.
The four important ways to obtain bitcoins include:

Transactions: Persons and merchants can elect to obtain bitcoins as payment for goods and
services reduced or for peer-to-peer payment transfers.

Digital Currency Exchanges: A digital currency exchange functions in alike fashion to

outdated authorization currency exchanges, allowing individuals to buy and sell bitcoins at
the prevailing market rate. The exchange rate of bitcoins varies based on demand, liquidity
and various other market conditions.

Mining: Miners are the backbone of the Bitcoin ecosystem. They receive monetary rewards
in bitcoin for the services they provide for the network. This includes solving the algorithms
necessary to process transactions, Bitcoin mining is the process of adding transaction deals to
public ledger of post-transaction or blockchain to rest of the network as having a place

Bitcoin ATM: B-ATM is a progressively popular solution for buying the digital currency
because of their convenience and simplicity. Creating a transaction at a bitcoin ATM is
straightforward. ATM users first verify their b-wallet by scanning a QR code on their
smartphone. Then insert cash into the ATM and succumb to complete the transaction. The
appropriate number of bitcoins are then transferred to their wallet based on the current
conversation rate

FACTORS AFFECTING BITCOIN IN INDIA

Lack of Awareness: Fact is several people are still unaware of digital currencies and Bitcoin.
Persons must be cultured about Bitcoin to be clever to apply it to their lives. Schmoozing is a
must to spread the word on Bitcoin. Trades are accepting bitcoins because of the advantages,
but the list is relatively insignificant compared to physical currencies. Companies like
TigerDirect and Overstock Compliant Bitcoin as payment is great. However, if they do not
have a well-informed staff that comprehends digital currencies, how will they help customers
comprehend and use Bitcoin for transactions? The workers essential to be educated on
Bitcoin so that they can help the clientele. This will take some time and effort.
Sources:http://proxy.markets.businessinsider.com/cst/MarketsInsiderV2/Share/chart.aspx?ins
truments=300011,675,149,333&style=intraday_index_colortripleblau_early&period=OneYea
r&timezone=Eastern%20Standard%20Time&height=90&width=149

Risk and Volatility or Fluctuating in value: Bitcoin has volatility mostly since there is a
limited quantity of coins and the demand for them rises by each passing day. However, it is
expected that the volatility will decrease as more time goes on. By way of more businesses,
media, and trading centres begin to accept Bitcoin, its’ price will eventually settle depressed.
Currently, Bitcoin’s price bounces every day mainly due to current events that are related to
digital money.

Still Developing: Bitcoin is still at its beginning stage with incomplete features that are in
development. To make the digital currency more secure then accessible, new features, tools,
and services are currently being developed. Bitcoin has some development to do before it
comes to its full and last potential. This is due Bitcoin remains just preliminary out then it
needs to work available its challenges just like how any currency in its starting stage would
need to.

POSITION OF BITCOIN IN INDIA

The Constitution of India provides for matters in respect of which the Central Government
has powers to regulate and legislate. To understand if Bitcoin is capable of government
review, an analysis of the Indian Constitution has been undertaken. In this regard, Article 246
read with Seventh Schedule of the Constitution enumerates the list of activities that the
Central Government and the State Governments can legislate.
Sources:https://www.usethistip.com/what-is-bitcoin-how-does-bitcoin-work.html

The challenges created by bitcoin to the Indian economy

In the Indian situation, the issues have been mostly legal using bitcoins in money laundering
and transactions for acts of terrorism are the challenges in the use of bitcoin as legal tender.
Money laundering possibilities Bitcoin transactions are highly uncontrollable. The random
nature of the cryptocurrency creates many dodges for Banks and other financial Institutions
from a process angle. Tracking individual transactions that happen using Bitcoins can hurt
economic activities paving way for money laundering and other such illegal activities the
income tax division has asked 5-6 lakhs high net worth people to explain the details of
investment and sales of bitcoins and other cryptocurrencies in India and abroad & bitcoin
doesn’t any centre in charge, so it cannot be taxed. Investors essential to have complete
information on the legal and security features as well as the volatile nature of the bitcoins.
The growth of the digital currencies has enticed the impostors to lure people into Ponzi
systems. Seeing the complexity of Indian economy, bitcoins may turn out to be a boon to
India or a disaster. This rest on their extent of use allowed by governments of the world.

CONCLUSION

The study on the feasibility of bitcoin in the Indian economy has concluded with the
overview of bitcoin review that risk is equivalent to the aid factory for India but it all so
create a lot of opportunity in various scope for mining, blockchain, cryptography nevertheless
there still must have an in-depth investigation towards bitcoin in India.
Reference

 Bitcoin Starter Guide (Bitcoin Basics and Benefits) it bit education

 yourstory.com/author/Rajendra-k-Sinha
 Impact of Bitcoin as a World Currency A. Seetharaman [1], A.S. Saravanan [2], Nitin
Patwa [3] & Jigar Mehta [4]
 Bitcoins-A Global Perspective Indian Legal and Tax Considerations by Nishith Desai
Associates (NDA)
 quora.com/What-are-the-advantages-and-disadvantages-of-using-bitcoin/Siddhar-
devraj-1
 Bitcoin: Implications for the Developing World Nov 25, 2015, by Makai Krause
 Crypto Currency a Need after Demonetization in India Nishad Girish Chavan [1],
Prof. Smita Kapase [2]