Bitcoins encounter a technicality in India

Have you heard of Bitcoins? This virtual currency is currently the rage in online circles. Wikipedia explains Bitcoins as ‘a peer-to-peer payment network and digital currency based on an open source protocol, which makes use of a public transaction log’. Sounds complicated? In simple terms, Bitcoins are the electronic equivalent of actual money- and are used primarily for use online, and are appreciated for the ease and simple terms of its usage.

While Bitcoins are gaining a staunch fan following across the globe, the inherent risks involved in dealing with such alternative money cannot be ignored. Thus, it comes as no surprise that India’s largest Bitcoin exchange service, BuySellBitCo.in, has suspended its services indefinitely after the Reserve Bank of India laid out a stern caution against the use of virtual currency. This couldn’t come at a worse time- arguably the worlds’ most valuable currency had just started to gather a loyal following in India, and this statement from India’s premier bank could stifle the interest a bit.

It’s the exact wording of this statement that is the concern- cautioning the general users of Bitcoin about the ‘financial, legal, customer protection and security related risks’ that could crop up due to the use of a virtual currency. The bank also pointed that such currencies weren’t authorized by any bank or monetary authority and thus aren’t dependable. Bitcoin was officially launched in India on November 9, 2008 and since has a 50,000 strong member base. In India, the value of Bitcoin in relation to the US Dollar has peaked at 800% over the past 2 months, signalling the interest in Bitcoins amongst the Indian masses. Bitcoinity.org estimates that the number of members will skyrocket soon. However, this awkward situation must be dealt with first- a virtual show of disdain with regards to this upcoming virtual currency by the premier financial institution in India. Call it a lack of foresight, or a move to save itself from future eventualities; the Reserve Bank has hit the matter right when Bitcoins could have gathered some serious consideration in terms of the Indian financial scenario, seeing that any show of faith at this critical time could support this vulnerable market.

Bitcoins were invented in 2009 by a computer genius named Satoshi Nakamotoby. This electronic currency is minted in cyberspace and stored in customer specific digital wallets. Bitcoins can be traded on numerous online platforms or spent on goods where the seller accepts Bitcoins. Currently, the USA is the biggest user of Bitcoins, and though no bank (including the Reserve Bank of India) calls Bitcoins illegal but still stay away from matters concerning them, other countries in the world are catching up too. Hope, good sense will prevail and the services are resumed soon in India.