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Bitcoins: Mind Map for UPSC Exam

Mind Map for UPSC Exam (Bitcoins)

About Bitcoins

Bitcoin is a cryptocurrency and an electronic payment system, it was invented by a group of programmers, under the name of Satoshi Nakamoto.
It is a system wherein these currencies could be created (mined) by those who could solve some complex algorithmic equations.
Every bitcoin transaction is recorded and verified in an open ledger called block-chains, thus preventing counterfeiting or double spending.
The system is peer-to-peer, and transactions take place between users directly, without an intermediary
Bitcoins work without a central repository or single administrator
Uniqueness of Bitcoin is in the fact that it has its own currency while the other payment systems like Paytm do not have that.
Bitcoin would let transacting parties remain anonymous, keep transactions very secure, and eliminate middlemen fees.

Risks

Bitcoin prices are discovered through exchanges that are unregulated with very lax KYC compliance process.
The value of bitcoin is determined largely by unregulated pools of investors.
With no overseeing authority, instances of price manipulation is common.
If the user suffers a loss due to an unfair transaction charges, he has no one to complain to.
Bitcoins are very highly volatile currency also, which makes it difficult to store.
Governments and central banks have been vocal about the risks involved in dealing with virtual currencies

Situation in India

In 2016, an IT company in Mysuru became the target of a ‘denial-of-service’ attack, the attackers demanded Bitcoins in return.
India’s biggest Bitcoin trading platform, BuySellBitCo.in, suspended its operations, citing RBI public advisory highlighted the risks involved in dealing with Bitcoins.
Despite the programmes like digital India, internet penetration is low in India. Which makes it difficult touse the Bitcoins.

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