If you are among those who still fail to understand the mania regarding the cryptocurrency and confused about its future prospects, let us take you to the basics.
As the craze for cryptocurrency shoots up worldwide, Bitcoin shows no signs of slowing down. The new favourite form of currency, Bitcoin already blew past $9,000 in less than a week's time and now eyeing to enter the five digit club.
But if you are among those who still fail to understand the mania regarding the cryptocurrency and confused about its future prospects, let us take you to the basics.
First of all, let's start with what is cryptocurrency?
Cryptocurrencies, including Bitcoin, are virtual money, which don’t have any physical backing like other currencies. If you want to buy something through Bitcoin, you have to just transfer a code to the seller’s wallet account online. Each coin can be further split to ease transactions.
Bitcoin has a payment network which is managed through a closed group of computer network. Those backing it claim it is transparent and all Bitcoin transactions can be monitored any time by anyone. The only hitch: You can’t find the owner’s identity. It’s decentralised and is not tied to a bank or government and allows users to spend money anonymously.
The records of the Bitcoin transactions are stored on thousands of computers across the globe. The price of Bitcoin depends on demand and supply of users.
Why cryptocurrency is new the new favourite?
The financial industry worldwide is reeling under the pressure of the cryptocurrencies and blockchain technologies. The crypto asset class is led by bitcoin, which first went online in 2009.
These cryptocurrencies are popular due to their inherent nature of decentralisation and transparency. Cryptocurrencies can be held, traded, transferred without the need of a central authority and the entire transactions are stored in decentralised public ledger.
Easy transfer:
The fact that transaction details are recorded by any third- party authorisers and that these records are stored in multiple nodes, makes transaction immutable and easily accessible.
Cryptocurrencies made international asset transfer possible in near real time, which the much backed and well researched FIAT currency system still struggle to do.
A transfer of cryptocurrency can happen in near real time depending upon the network congestion and the fee paid for the network confirmation.
The fact that these cryptocurrencies are traded and accepted globally gives crypto currencies the characteristics of gold and they could even replace gold as the preferred hedging instruments in the years to come.
Will banks authorised it as a legal tender?
The way Bitcoin is gaining popularity, the Central Banks worldwide will soon join the chorus as banks are already feeling the pinch as the fintech industry is inroading the money remittance and lending markets with innovative blockchain based solutions. IMF MD Christine Lagarde has warned banks and financial institutions should adjust to the impact of cryptocurrencies.
Cryptocurrency in India:
However, the Reserve Bank of India is uncomfortable with "non-fiat" cryptocurrencies like Bitcoin. The fiat cryptocurrency is a digital currency which will be issued by the Reserve Bank of India (RBI) in place of the physical one at present, he said, adding that the central bank is studying this aspect at present.
The RBI has been repeatedly cautioning everyone about the usage of cryptocurrencies, flagging a slew of concerns.
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 "Bitcoin aims to enter $10,000 club: Should you invest now and other queries answered")
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