Currency is defined as a value represented digitally that is not issued by
central bank or any public authority. This value is not even attached to any
fiat currency, whereas is accepted by legal persons. It can be used as
a way of payment and also can be transferred or traded electronically.
is one of the famous virtual currency designed to provide the benefit to do
transactions without any restrictions from government and banks. It is also
known as cryptocurrency.
were introduced in 2009 by Satoshi Nakamoto whose identity is not yet
disclosed. Now a days, bitcoins has gained high attention of investors as a
substitute to other kind of Investment opportunities. To become a bitcoin user,
a person has to first create a bitcoin wallet with the help of its brokers.
Decentralization is one of the important feature of bitcoins. It has three main
can be used for online buying of goods and services.
can also be used for online Investment purpose.
paper focusses on various virtual currencies with a special focus on Bitcoins. It
also throw light on growth pattern and
price comparison of Bitcoins from 2008 till 2017 and problems of these
currencies and also the future aspects related to it.
Objectives of Study
To study various kinds of Virtual
To find out growth prospects of Bit
To find out different constraints of
these currencies in India
of Virtual Currencies
of Virtual Currency
Focuses on smart contracts
Works with Ethereum Virtual Machine
It uses special
proof for securing the zk-snark network
Main purpose was to improve upon the bitcoins.
This can be easily used for Windows, Linux,
Ripple was designed for the
purpose of security and for instant execution of transactions.
It can also be used for settlement of trades
on the network.
In bitcoin, one has to reveal
home address for the transactions whereas in Monero, one can use post office
box instead of address.
There are various risks
to investors from virtual currency. Following are some of the risks:
are chances of loss of Virtual currency through a security breach or a
technological failure. Once lost, virtual currency cannot be regained.
As digital currency is
stored in the form of electronic wallets, they are exposed to losses due to
hacking, technical failure, problems with credentials, attacks, etc. The loss
related to e wallet may result in permanent loss of money held by them.
It has been observed by
the researchers that use of digital currencies are largely for the purpose of illegal
activities. These activities could subject to violation of the financing of
As these currencies are
not regulated by government. It is not like fiat currency that is properly
regulated by government. They are mined in terms of the complex mathematical
formulae and is not even backed by tangible asset.
crypto currencies involve huge amount of risks, its market is said to be highly
volatile and this volatility may lead to losses in terms of value to investors.
Virtual currencies are traded under unregulated
market. These currency not even are exposed to legal risks but as well to
Due to the high level
risk to investors in virtual currencies, RBI also show its concern by issuing
time to time warnings. Its first warning was issued on December 24, 2013 in
which it said that the creation, usage or trading of these currencies as a
medium for payment is not an authorized medium by any central bank or any monetary
authority. RBI’s next warning announced in the month of
February 2017 reiterating
that the Reserve Bank has not issued any permission or authorization to any of
the entity to deal with any virtual currency. The banking regulators said that
any investor dealing with virtual currencies will be investing at their own
Bitcoins in News
Bitcoin was first
registered under domain name i.e. bitcoin.org on 18th August 2008. In next year
i.e. 2009 bitcoin network officially opened. In August 2010, susceptibility was
noticed with bitcoin where transactions were not verified properly before they
got included in transactions logs, because of which users were able to create
unlimited number of bitcoins. In the same year in August 2010 bug was
identified and was fixed which create unlimited number of bitcoins. In
September 2010 Bitcoin release its new version V0.3.13.
In January 2011, a
non-profitable group called “The Electronic Frontier Foundation” started
accepting bitcoins, however this didn’t last for long due to legal implications
and they stop accepting the bitcoin in June 2011. After two years i.e. in May
2013 they overturned their decision and started accepting the bitcoin.
including Wikileaks started taking Bitcoin as donations in June 2011.In June
2011, first video on bitcoin got viral named “Weusebitcoin” which got more than
six million views. One month later in July 2011, company named as
Intervex Digital created first Bitcoin App called BitCoins Mobile,
In August 2011, First Bitcoin Conference and World Expo held, in New York city.
In November 2012, Bitcoin was started accepted by WordPress. In December 2013,
People bank of china has restricted Financial Institutes from using Bitcoins.
In July 2014, companies
like Dell, Newegg started accepting bitcoins. After few months in December
Microsoft also started accepting bitcoins to buy its products like Xbox and
some other softwares. In June 2015, license for BIT was released by New York
state. During the same month, in September US Regulators had acknowledged
Bitcoin as a commodity.
In March 2016, the Cabinet of Japan
accepted bitcoin equivalent to real money. In the same year largest South
African online marketplace Bidorbuy, launched bitcoin payments for both buyers
and sellers. In August 2016, a major bitcoin exchange, Bitfinex,
was hacked and nearly $60m Bitcoin was stolen.
Starting year 2017,
bitcoin surges to all time high and crossed $1,000 for the first time in last 3
years. Few months later, in April 2017 government of Japan passed a law where
it has consider bitcoin a legal tender.
On 07th December 2017,
Bitcoin again broke his own record and crossed $16,000 for the first time.
Bitcoin protocol bug causes
Bitcoin.org domain registered Satoshi
Nakamoto implemented the bitcoin software
as an open source code and released in January 2009. First bitcoin
transaction took place and bitcoin v0.1 released
Bitcoin v0.2 released
First market for Bitcoin was established
bitcoin v0.3 released
Hard fork caused by Bitcoin protocol Bug
Bitcoin v0.3.13 release
The Bitcoin economy passed US $1 million
The tonal Bitcoin units were
Market established for exchanging bitcoins to
and from the British Pound Sterling
BTC Bitcoin opens.
First bitcoin put option contract sold
through the OTC market.
The EFF announced that it is not accepting
Bitcoin donations because of legal uncertainties.
First Bitcoin application for ipad released by Intervex
First Bitcoin Conference was held in New York
Acceptance of Word press by Bitcoins
Chinese government has banned its Financial
Institutes from using the Bitcoins
Internal Revenue Service has declared
Bitcoins should be tax properly as a property
Department of Financial Services of New York has released proposed license for Bitcoins
Subsidiary of PayPal Braintree has accepted
Bit License was released by NewYork state
US Regulators had declared Bitcoin as a
South African marketplace, launched bitcoin payments for both the buyers and also
bitcoin exchange named Bitfinex was hacked and about 120000 BTC was stolen
Bitcoin tops $1,000 for the first time in past
three years as 2017 trading begins
Law passed by Japan to
accept bitcoin as a legal payment method.
Reached all-time high of $3,000
Software marketplace steam announced
that it would be no longer accepting bitcoin as a payment for its products,
citing slow transaction speed and high volatility in price
Bitcoin Price Comparison
per Bitcoin (BTC)
December 11, 2017
During 2009 bitcoin price was
almost nil, as it was not treaded in this year. Technically, bitcoin was
started traded in 2010 and it has seen the price of $0.07 USD in June 2010.
During the same year in November it has seen increase to $0.50 USD.
In February 09th 2011,
bitcoin has touched its historic high for $1 USD, in June 2011, bitcoin was
traded nearly at price $15 USD.
In starting April 2013, the price
of bitcoin has seen the downward trend where price was dropped from $264 to
nearly $50, however it gained again in June where it has touched around $100.
In November 2013, bitcoin has seen the peak of over $1100 USD.
In February 2014, major exchanges
were hit with DDoS attack and bitcoin has seen the price level of $717 USD.
During the same year in June nearly 30K government seized Bitcoin, obtained by
US marshal services because of which we saw the price of bitcoin to nearly $600
USD. In December 2014, Microsoft has announced that they had started accepting
bitcoin from US customer for buying their product like games, apps etc. Price
of bitcoin was $313.38 in this month.
In June 2015, New York State has
released the Bit License to regulate bitcoin and other digital currency
businesses. In this month Bitcoin was traded around $220 USD. Price of bitcoin
remain stable until October 2015 when an article on Bitcoin was published in
one of the popular British publication.
Early January 2016, Mike Hearn who
was once working as Developer with Google and was actively involved in bitcoin
community and related project announced that he will not take any part in
bitcoin development going further. Bitcoin was priced at $431 USD in this
month. After few months in June Bitcoin was priced at $673 USD. On 09th
November, 2016 in a surprising move Donald Trump was elected as new President
of the United State. This was like a shock for Global market and market fell
very sharply but Bitcoin had seen sharp increase during this time and was
priced at $730 USD.
Bitcoin breaks all his previous
records at hit all time high $1000 USD in early January 2017. In April, 2017
Japan declared bitcoin as legal tender which has made a positive impact on
bitcoin price and was priced at $2705 USD in June 2017. Recently on 11th
December 2017 it has hit record high at $14594.
Future of Bitcoins
It can be seen from past trends
that in spite of risks involved in these currencies, it is showing a rapid
increase with effect from the year 2014 and it has shown drastic increase with
effect from January 2017. Although RBI also giving warning to bitcoin investors
from 2013 but still it is showing an increasing trend. This shows that
trend of Virtual Currency as a consumer’s choice of payment is also encouraging
National and International level of investment in new payment system. Virtual
currency is also exposed to many kinds of threats to financial integrity, investor’s
protection and financial regulation whereas limited acceptance of these
currencies also put restriction on their use as a medium of exchange. Moreover,
it involves high price volatility that limits their capacity to serve as a
reliable kind of investment. These currencies are also difficult to monitor as
they are not even regulated by public authority. Investors investing in these
platforms are subject to various kinds of risks like credit, financial, legal