An Introduction to Bitcoin
Bitcoin is a cryptocurrency that was invented in the year 2009. Over the years since its inception, it became popular among the masses, and now it is considered one of the influencing economic innovations of the century. After the invention of Bitcoin, many other digital coins also come into existence, thereby helping the cryptocurrency industry grow in its scope and scale.
Despite the invention of several other digital coins, Bitcoin continues to remain the major cryptocurrency worldwide. It is the leading coin in terms of overall market capitalization and has provided lucrative returns to investors. Like other cryptocurrencies, Bitcoin is based on blockchain technology that uses the open ledger and cryptographic mechanism to carry out transactions. One of the reasons behind the growing popularity of Bitcoin and other cryptocurrencies is their robust safety mechanism and anonymous character. Along with this, the transaction’s high speed and the low-cost nature of Bitcoin have further expanded its appeal among the masses. Bitcoin is the most popular digital currency; on the other hand, it is highly volatile too. As this year started, the price of Bitcoin reached its all-time high & which continues its upward trek till now. Experts predicted that the price of Bitcoin will rise more and may go up to $100,000 in the near future. However, Bitcoin’s roller-coaster ride continues, but if you are planning to invest in Bitcoin. The Bitcoin Aussie System is an innovative way to invest in Bitcoin, which uses an algorithm that auto trades for its users. To know more about it, you can check Bitcoin Aussie System Reviews.
Where does Bitcoin come from, or how is it generated?
Bitcoin is generated through the process of mining. The process involved using sophisticated technology and hardware by miners to process transactions and secure the network in the process. In exchange for their services, these miners are rewarded with Bitcoin. It’s important to recognize that mining of Bitcoin happens at a predetermined rate, and with each passing year, the business of mining Bitcoin is becoming competitive.
Even the rewards associated with the mining of Bitcoin get halved, and the phenomenon is known as Bitcoin Halving. There is no central authority that controls the mining of Bitcoin, which lends credibility to generating new Bitcoins. In total, the supply of Bitcoin is limited to 21 million units.
Is Bitcoin legal in India?
Cryptocurrencies are not legal in India, and hence, Bitcoin doesn’t enjoy the status of a legal tender in India. The Supreme Court of India (India’s apex court) last year struck down the Reserve Bank of India’s ban on cryptocurrency. However, the regulations related to digital money in the country are still prohibited in nature. There is a lack of clarity related to the overall government stand and regulations related to cryptocurrencies. While digital coins are banned, there is no such prohibitory order related to the cryptocurrency exchanges operating in the Indian territory. So, it is quite confusing and ambiguous regarding the overall framework of regulations related to cryptocurrency in India.
How are Bitcoins taxed in India?
Like the status of cryptocurrencies, the government and tax authorities’ position on Income Tax related to Bitcoin and other cryptocurrencies is not very clear. However, there is a directive from the government agencies that anybody making money out of their investment in Bitcoin must declare their income and pay taxes to avoid any legal action against them.
The tax on the Bitcoin you hold depends upon the duration of the time you own the Bitcoin or any other cryptocurrency. For example, if you hold Bitcoin for less than a time frame of three years, the gains you will be making on your investment will be clubbed with your regular income, and accordingly, you need to pay the tax. In the second scenario, if you continue to hold Bitcoin for three years or more, you will be taxed at a 20% rate, although you will benefit from the indexation.
Another possible scenario of making money from Bitcoin is a trading activity. The income generated from the activity will be considered a business income, and according to the applicable rates, one needs to pay the taxes to the income tax department. Similarly, if a person receives the Bitcoin on the exchange of services, this will be considered income generated from the business. This, in turn, will be taxed according to the provisions of the capital gains.
Bitcoin and other cryptocurrencies are gaining popularity all across the globe. Digital coins are convenient, offer low-cost transactions, and their anonymous nature makes them very convenient to use. However, this anonymity of cryptocurrency is also harming its adoption potential in many countries, including India. The issues related to terror financing, money laundering, and other illegal activities could arise from the use of digital coins. This explains the reservation of the Government of India and its authorities against Bitcoin and other cryptocurrencies.
We hope in the future, clarity will ultimately prevail regarding the legal status of Bitcoin and other digital currencies in India. If the Government of India allows Bitcoin and other cryptocurrencies to operate in the country, it could open up a new revenue stream for the government. There are many examples of countries worldwide that have sensibly laid out their cryptocurrency regulatory framework and reaping tremendous benefits from the process. This will also lend a helping hand to the economy by encouraging a new crop of businesses to come on the horizon and contribute to the country’s economic well-being.