What are Bitcoins?
Bitcoin is the world’s first decentralized digital currency invented in 2009. They are a cryptocurrency and a digital payment system. Its much like the normal currency but without any physical form.
How does bitcoin works?
Bitcoin operates on a decentralized public ledger technology called the blockchain. When consumers make purchases and effect the payment through their Bank account or credit card, the vendor companies verify the authenticity of those transactions. Bitcoin performs the same function but at a lower cost without involving these institutions using a system called hashing. When one person pays another using bitcoin computers on the Bitcoin blockchain rush to check that the transaction and if found accurate, it permanently stores the transaction as a block on the blockchain.
Why are Bitcoins scarce?
Let’s us understand this with the example of gold. The reserves of gold are limited on earth.
As it is mined, the reserves keep on depleting and it becomes harder and more expensive to find and mine. The same stands true with Bitcoin.
There are only 21million Bitcoins created out of which 80% is already mined.
What makes Bitcoins a good investment?
The high liquidity associated makes Bitcoin a good investment instrument. Bitcoin is global and therefore it is least affected by any single country’s financial situation or stability. Bitcoins can be traded from anywhere in the world to anywhere else in the world. Bitcoin is censorship resistant money i.e. No bank can block payments or close your account
Bitcoin makes cross border payments possible, and serves as an easy escape to failed government monetary policy.
How to buy bitcoins in India?
Investing in Bitcoin can seem complicated, but it is much easier when you break it down into steps.
In India, you can buy bitcoins from some trusted Bitcoin apps. There are quite a lot of such apps. Viz. Zebpay, UnoCoin, CoinSecure etc.
The steps involved in purchasing are as under :
Step 1: Get a Bitcoin Wallet
The first thing that you’ll need to get started is a wallet to hold your bitcoin It enables storing and selling bitcoins. These wallets are set up when you sign in and create your account. One of the most trusted bitcoin wallet is Coinbase.
Step 2: Link a Bank Account
In order to purchase bitcoin, you need to link your wallet to your bank account, debit card, or credit card.
Step 3: Join a Bitcoin Exchange
Bitcoin exchanges are online marketplaces where you can trade bitcoin for traditional currencies. The most popular exchanges in India are Coinbase.com and Coindesk.com
Step 4: Place Your Order
You’re now set to buy bitcoin for the first time. It is crucial to keep in mind that although one bitcoin costs several lakhs, bitcoin can be divided up to eight decimal points. The smallest unit of bitcoin is called as a satoshi. Even if the price of bitcoin is skyhigh, you’ll still be able to buy a satoshi for a fraction of amount. In India, the minimum amount required to begin investing in Bitcoins is Rs.500
Points to remember