What is a bitcoin?
A bitcoin is a virtual currency first introduced in the year 2008 by an untraceable group called Satoshi Nakamoto. It’s an open source peer-to-peer crypto-graphical system (direct connections without an intermediary) where transactions happen through a public ledger called blockchain, handling users’ data anonymously. The term is a combination of bit and coin where bit is the basic unit of computing and coin represents currency, combining to mean virtual currency.
Eight years since its introduction, bitcoin has gone through a lot. From receiving little support in the beginning in our country to now being the most widely used and accepted digital currency, we analyze its legal nature, its implications, and possible future scenarios.
Bitcoin is a refreshing concept in the traditional world of economy, bringing in a lot of debates, discussions and differences of opinions. For any issue to be handled legally, it becomes a prerequisite to first define it, see where it fits and then start working on it.
Defining bitcoin is tricky, especially in India where the legal and regulatory set up is rather a lot complex. Further, given no clarity as to its regulation yet, it becomes a more composite task.
Given its meaning and all the attributes it holds, bitcoin could be considered to be goods, currency, an instrument, consideration, money, value for money, property, etc.
It has been a while that there has been a buzz around the emerging concept of financial technology (fintech), which seems to be evolving at an unimaginable speed. The technological development taking place globally, have compelled the traditionally cash-driven Indian economy to respond promptly to the fintech opportunities. The modern payment systems have overcome the shortcoming of the traditional mode of cash based payments where handing of cash was the most cumbersome part of all transaction. It is a known fact that the overall economic efficiency and stability of any country is dependent on the payment and settlement system in that country. As a result, the regulators in our country, including the central bank, have also been revisiting their operating model and policies regularly, to ensure and carry out the development of national payment systems. The regulators have to closely safeguard the sanctity of payment systems, primarily from the viewpoint of systemic risk, risk of fraud, etc. Specifically, it is the responsibility of the central bank of any country, that is to say the Reserve Bank of India (RBI) for our country, to ensure and carry out the development of national payment systems.
This article is intended to provide a panoramic view of the schematics of regulation over Indian payment and settlement systems.
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