Bitcoin is booming, is India ready
The central banks are monitoring it. The investors see it as a lucrative option. The governments too are closely following it. The Bitcoin, a virtual currency, is catching everyone's attention.
Unlike the rupee, which is issued by the Reserve Bank of India and has its presence in the form of notes and coins, the Bitcoin is a virtual currency that exists only online. It is not issued by any central bank or authorities. Created in 2009 by a mysterious genius who remains elusive, the Bitcoin is a completely digital currency that can be used for making peer-to-peer payments and is controlled only by its users.
There are two ways to own a Bitcoin. First is 'mining', which means to find new Bitcoins using powerful computers to solve complex mathematical problems. The second way is to buy them from people who already own it or from Bitcoin exchange providers.
The price of one Bitcoin is rising exponentially. One Bitcoin is approximately equal to $1,200 which is equal to 63,000 rupees! It has soared more than 60 times since this January. Why? This can be answered using a simple economic theory - when demand is high and supply is low, the prices rise (The number of Bitcoins that will be ever generated is equal to 21 million).
However, there are some pitfalls too. The Bitcoin is highly volatile. Also, governments across the world are worried about the use of Bitcoins for illicit activities by drug dealers since it allows funds to be transferred directly between users anonymously. The RBI, SEBI and Finance Ministry are skeptical about it and have adopted a 'wait-and-watch' stance.
India which has a large techie population could soon be one of the largest Bitcoin-using countries. Recently, Forbes reported that 'India could be the next booming market for Bitcoin'. Also, there is Global Bitcoin Conference in Bangalore this week to promote the Bitcoin.
Indians have mostly relied on traditional investments like the gold which has ballooned our Current Account Deficit (CAD) leaving the RBI and Finance Ministry beleaguered and baffled. Looking at the surge in its value, will Indians turn to Bitcoin as an investment and alleviate the stress on the economy? Only time will tell. Picture Credits: policymic.com