PRESENTATION ON,

Presented by: Vidyaranya.D 2nd year MBA

Introduction A currency is anything that has

value and can be exchanged for goods and services

Fiat currency versus virtual currency Fiat currency is any legal tender designated and

issued by a central authority Virtual currency: Unregulated digital money E-money: Regulated digital money

Bitcoin

Developed by “Satoshi Nakamoto.” Started in 2009. Bitcoin is an electronic peer-to-peer (i.e.

with no third party being involved) payment network and a digital currency.

Decentralisation – not being backed by or tied to any government or central bank.

Exchanged for fiat money. The price of bitcoins is set purely by

market demand and supply.

Bitcoin versus fiat currency

It is decentralized Peer to peer network No central clearing houses

Not inflationary Only 21 million bitcoin ever created The last bitcoin mined in 2140

It is anonymous One can hold multiple public addresses It is transparent.

How do you get Bitcoins?

Buy Barter Mine

Bitcoin exchanges Bitcoin listed in stock exchanges:

BTC China, Mt.Gox in Japan, BitBox in US, Bitstamp in Slovenia, and Bitcurex in Poland.

India does not have any centralized stock exchange

Users can buy or sell through various websites.

23000 Indians users currently have bitcoin wallet.

How can you profit with Bitcoin?

Mine, then sell Invest or trade Offer discount

Is it really money….???!!!!

Case law: Trendon Shavers of Bitcoin Savings & Trust (BTCST) Accused for scamming $4.5 million bitcoin. Argued bitcoin wasn’t money

District court of US (2013) Bitcoin can be used as money. It can be used to

purchase goods or services, and as Shavers stated, used to pay for individual living expenses.

The only limitation of Bitcoin is that it is limited to those places that accept it as currency.

It can also be exchanged for conventional currencies, such as the US dollar, Euro, Yen and Yuan.

Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money.”

Bitcoins: legal or illegal in India?

FEMA act 1999: currency defined, ”all currency notes, postal notes, postal orders, money orders, cheques, drafts, travelers cheques, letters of credit, bills of exchange and promisory notes, credit cards or such other similar instruments, as may be notified by the reserve bank.

the Payment and Settlement systems Act 2007, A payment system cannot be exist without the authorization

issued by the Reserve Bank of India.

It cannot be a security: Securities contract act 1955 It cannot be a derivative It cannot be a negotiable instrument The Indian Copyright Act defines the term “computer

programme” as “a set of instructions expressed in words, codes, schemes or in any other form, including a machine readable medium, capable of causing a computer to perform a particular task or achieve a particular result”

Reserve Bank of India (press release: 24 Dec 2013) Creation, trading or usage of VCs as a medium for

payment are not authorized including Bitcoin, litecoin, bbqcoin, dogecoins

No regulatory approvals, registration or authorization stated to have been obtained by the entities concerned for carrying on such activities

Risks: Hacking, loss of password, malware attack No established framework for recourse of customers

problems No underlying or back of any asset for VCs Huge volatility in price Legal status of exchange bodies of bitcoin also unclear Media reports on illegal usage of VCs

Pros of bitcoin Anonymous:- take precautions Never devalue due to inflation :-don’t hold

longer period No transaction fee:-cheer up You can buy things: You can speculate on bitcoin

Cons of bitcoin No inherent value:- like US Dollar Not good for over-the-counter or face to face payments. Like cash, if you lose your Bitcoin wallet, you lose your

money They can be stolen Using for illegal activity volatility

India Today( March 3, 2014)

Indians lose crores of rupees in bitcoin exchange collapse

What happened? Japan based Mt.Gox collapsed. Loss over 3,000 crore. (7.5 lakh bitcoins) It has 1.27 lakh creditors(1000 Japanese) Indians 35000 bitcoins( 100 crores)

sources

Bit Coin: The Indian banker What and why Bitcoins: journal of Accounting and

Finance www.rbi.org.in › Press Releases www.indiatoday.intoday.in › India › West › Maharashtra https://bitcoin.org/bitcoin.pdf www.mondaq.com/india/x/310426/.../Bitcoins+

Legal+Or+Illegal+In+Ind... An exploration of Bitcoin ecosystem.pdf

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