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Critically analyzing the Bitcoin Technology and its Legality in India

By 15/05/2021June 8th, 2021No Comments

From bartering to cash to digital payments to cryptocurrencies, the financial industry has evolved through time. In 2009, Satoshi Nakamoto, a mysterious and pseudonymous figure, is said to have invented digital money. Surprisingly, the identity of the person or group of people who devised this technique is still unknown. Bitcoins are significantly simplified by mining, in which a ‘miner’ utilizes his computer ability to solve computationally challenging riddles that are crucial to blockchain technology, therefore assisting in the maintenance of the entire system of blockchains and earning fresh bitcoins as a reward.

Nevertheless, the most common method of purchasing a bitcoin is to use a bitcoin exchange to swap actual money for bitcoins, which are then held in an online bitcoin wallet in digital form. Another option is to accept bitcoins in exchange for selling products and services. Furthermore, Bitcoin promises lower transaction fees than other traditional online payment methods and is operated by a decentralized authority and by virtue of its intangible form, the balances are only kept on a public transparent ledger that everyone has access to, therefore it is a more lucrative currency alternative.

The bitcoin system is made up of a group of machines that execute the bitcoin code and store the blockchain. In simple words, a blockchain may be thought of as a collection of blocks, each of which is a collection of transactions with an identical list of transactions on each system. As the transactions are done in real-time, whether they have a computer running Bitcoin or not, abusing the system is quite unlikely. Somebody would have to control 51 percent of the computing power that makes up bitcoin to scam the system. However, if a cheat assault is likely to occur, bitcoin miners (computer users that participate in the bitcoin network) would most likely split to a different blockchain, rendering the invader’s efforts worthless.

Nonetheless, bitcoins cannot be used to purchase products or services in India, and only a few firms accept bitcoins instead of actual cash for the sale of the goods and services they provide. Individual bitcoins are not valued as commodities since they are not issued or backed by any banks or governments. Bitcoin transactions are not currently guaranteed by any banks, and no central body in India has sanctioned or regulated them. There are no established norms, laws, or standards for addressing disputes that may occur while dealing with bitcoins. As a result, these bitcoin transactions have their own set of hazards. Given this context, it is impossible to conclude that bitcoins are unlawful, given no ban has been enforced on bitcoins in India. 

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