What is bitcoin? Have you heard about cryptocurrencies?

What is bitcoin? Have you heard about cryptocurrencies?

 Bitcoin is a cryptocurrency -- an online type of money -- which is created using computer code.

 He called bitcoin -- the most celebrated of all cryptocurrencies -- a 'scam' in no uncertain terms. In an opinion piece in 'Recode', former CEO of PayPal and Intuit, Bill Harris wrote: 'Bitcoin is a scam. In my opinion, it’s a colossal pump-and-dump scheme, the likes of which the world has never seen."

"In a pump-and-dump game, promoters 'pump' up the price of a security creating a speculative frenzy, then 'dump' some of their holdings at artificially high prices. And some cryptocurrencies are pure frauds."

''The losers are ill-informed buyers caught up in the spiral of greed. The result is a massive transfer of wealth from ordinary families to internet promoters.''

 A warning more or less of this nature made by Bill Harris was also made some time back by Bank of England governor Mark Carney. He had said Bitcoin showed the 'classic hallmarks of a bubble' and that only 'fools' are investing in it.

What is a bitcoin?

 Bitcoin is a cryptocurrency -- an online type of money -- which is created using computer code. The world’s first cryptocurrency, it was invented by Satoshi Nakamoto in 2009. Bitcoins are stored in virtual wallets known as blockchains that keep track of one's money. It functions without a central bank or single administrator. One can buy merchandise with it anonymously.

Bitcoin mining

Bitcoins are created as a reward for a process known as mining. People compete to 'mine' bitcoins using computers to solve complex math puzzles. 

Want to buy cryptocurrency 'bitcoin' through bank? You can't.

Criticism, however, is not new to virtual currencies. In India, one can't buy cryptocurrency through banks, e-wallets etc as the Reserve Bank of India has banned it. It said, "dealing with or providing services to any individuals or business entities dealing with or settling virtual currencies". It has been warning users, holders and traders of virtual currencies, including bitcoins, on the risks that come with with virtual currencies. Earlier this year, cryptocurrencies took a beating when Facebook banned ads on cryptocurrencies raising the worries of investors. 

What experts say

 "Cryptocurrencies are here to stay," says V Balakrishnan, founder and chairman, Exfinity Ventures. "Like any new financial instrument, this too will face resistance, doubt, volatility and naysayers. With more adoption and legislative backing, I think it will become more and more mainstream," he adds.

 Vivek Belagavi, Partner, Fintech leader, points out, "There are regulatory challenges on considering bitcoin as a cryptocurrency. However, businesses and regulators are strongly considering its relevance as a crypto asset powering blockchain related use cases."






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