Bitcoin: Dominating the Investment World
“Bitcoin” was launched in 2009 and it is the first Crypto currency.
Nowadays, we are witnessing the series of pronouncements by Elon Musk on Cryptocurrencies and it is Fluctuating prices For Example On March 24 ELON MUSK Tweeted that one could purchase a Tesla with Bitcoin and this statement gave assurance to investors that Tesla is backing Crypto. It led to a tremendous rise in Bitcoins prices But on 13th May He reversed the previous tweet that Tesla was selling vehicles in exchange for Bitcoins. As we know that a month is a long time in the world of Cryptocurrencies, their prices skyrocketed or grounded in a single day. Due to its unique specifications, applications, industrial use, and affordability it is one of the most preferred cryptocurrencies of the modern world.
What is Bitcoin?
“Bitcoin” was launched in 2009 and it is the first Cryptocurrency. It eliminates intermediaries like Banks, Governments due to its decentralization of digital cash. It has no Government backing and is driven by the peer to peer technology.
Working of Bitcoin
To understand how cryptocurrencies work we have to look for these things:
1. Blockchain: Bitcoin is operated by Blockchain which is an open-source code and it creates a shared public ledger. Every transaction is “Block” and it is chained to the “Code”. It assists in recording the transactions. Blockchain Technology is the most important part of Cryptocurrencies.
2. Private & Public Keys: Bitcoins wallet contains both public keys & private keys. It helps in allowing the owner to initiate & digitally sign the transactions. It also provides proof of authorization.
3. Bitcoin Miners: Miners confirm the transactions using high-speed computers. They are highly paid.
How Bitcoins Make Money?
Bitcoins follow the principle of demand & Supply. As we know there are ups & downs in these forces of economics. Hence, the prices of cryptocurrencies are volatile. Mining Bitcoins requires a huge investment in high-speed computing & it also requires technical expertise. Some people buy Cryptocurrencies for currency speculation.
How to Store Bitcoins?
There are some methods of storing Bitcoins:
1. Hot Wallet: Digital currency normally stored in the cloud and can be accessed through a browser, desktop, etc.
2. Cold Wallet: It is an encrypted portable device and helps in downloading & Carrying Bitcoins
Where can I Buy Bitcoin?
There are several platforms some are given below:
1. Cryptocurrency Exchanges: There are many cryptocurrency exchanges in the world. Coin base is a famous cryptocurrency exchange that contains almost 30 types of cryptocurrencies.
2. Bitcoin ATM: There are approximately 7000-Bitcoin ATM in the US where people can easily buy Bitcoins
3. Bitcoin Mining: Bitcoin mining is also a way to earn Bitcoins but it needs technical expertise.
4. Peer to Peer: We can also buy Bitcoins directly from the Bitcoins owners. This is a common way most people used by many people.
Future of Bitcoins
Nandan Nilekani, Non-Executive Chairman of Infosys said that Cryptocurrencies can be accepted in India as a store of value. According to his statement, Cryptocurrencies are not good for financial transactions in a country like India because UPI (Universal Payment Interface) is better for these purposes. Recently, Central Government ordered the companies to disclose the investment made in crypto in their balance sheet. Sumit Gupta, CEO of Coindcx said it will be beneficial for those companies which are investing in Cryptocurrencies.
According to the Founder of Dreamscashtrue.com “At this stage Bitcoin is neither a regulated form of currency nor an investment. The volatility of Bitcoin makes it speculation at best and Gambling at worst. Until it gaining widespread acceptance as Mode of payment and regulated by some legitimate authority the future remains uncertain.
Impact of Bitcoin on Regular Currency
How Cryptocurrencies like Bitcoins affect the regular currency of a country in developing economies? According to Financial Stability Boards on Crypto-Assets, it can lead to the risks associated with financial stability. It also stated that Crypto markets & Crypto-assets lack the qualities which are needed to become sovereign currencies and do not serve as a mode of payment, store of value & unit of account.
Elon Musk on Cryptocurrency & Fiat Currency
Recently, we observed that the prices of Bitcoin rise after Elon Musk supported Cryptocurrencies in a battle with Fiat Currencies Elon Musk Tweeted that the Real battle is between Fiat Currencies & Crypto and he said that he supports the latter. He said that Fiat Currency has negative real interest. At some point Elon Musk supported crypto but at other, he also criticized it for its energy usage.
Misconceptions Related to Cryptocurrencies. Some of these are given below:
1. Cryptocurrencies are expensive: Generally, people think that the prices of Cryptocurrencies are very high and some potential investors do not invest due to their misunderstandings. CoinSwitchKuber is the premier platform for the exchange of Cryptocurrencies with a minimum investment of Rs 100.
2. Investing in Crypto is illegal: In 2018 RBI made a ban on banks for facilitating transactions in Cryptocurrencies and it surrounded the misconception that it is not legal. But in 2020 The Apex court ruled out the ban stating that there were no clear grounds for that. Many start-ups, renowned investors are investing in crypto.
3. Investing in Crypto is complex: People think that the investment process in Cryptocurrency is not easy but it is a very simple & less time taken activity as it does not require documentation like other investments.
4. Cryptocurrencies are not taxed: As we know those Cryptocurrencies are decentralized but in simple words, any capital; gains tax will be taxed in India. So the profits earned through investing in crypto are also taxed. It depends on the period of holding as it will come in Short term capital gains or Long term capital gains.
Bitcoins are full of volatility. They can give huge profits but there are losses also. Stock trading gives the same thrilling experience as Bitcoins. Easy availability, fewer intermediaries, huge profits (If done strategically), Efficient market, various types are its chief characteristics. In the investment & Financial world, Cryptocurrencies are making their place and we can say that they are dominating the minds of investors.
Edited By Team CLIQTAX
Want to get your business journey featured on CLIQTAX ? Send an email to us at firstname.lastname@example.org