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Tags Current Affairs

Bitcoin

Date: 19 December 2020 Tags: IT, Mobile & Computers

Issue

Bitcoin has passed the $20,000 mark against the US dollar after increase in its demand surged the prices to all time high in international markets.

 

Details

  • Bitcoin from a user’s perspective is nothing more than a mobile app or computer program that provides a personal Bitcoin wallet and allows a user to send and receive Bitcoins with them.

  • A person or a group of people, known by the identity of Satoshi Nakamoto are said to have conceptualised an accounting system in the aftermath of the 2008 financial crisis.

  • Bitcoins are generally identified with a Bitcoin address, which comprises 26-35 alphanumeric characters starting with either “1” or “3”. This address, which remains anonymous, represents the destination of a Bitcoin.

  • Originally, the Bitcoin was intended to provide an alternative to fiat money and become a universally accepted medium of exchange directly between two involved parties.

 

Acquiring bitcoin

  • One can either mine a new Bitcoin if they have the computing capacity, purchase them via exchanges, or acquire them in over-the-counter, person-to-person transactions.

  • Miners are the people who validate a Bitcoin transaction and secure the network with their hardware. The Bitcoin protocol is designed in such a way that new bitcoins are created at a fixed rate.

Reasons for rise in prices

The prices have been driven by various factors, including increased acceptance during the pandemic. Globally, large players like payments firm PayPal, and Indian lenders like State Bank of India, ICICI Bank, HDFC Bank and Yes Bank, have given legitimacy to cryptocurrency through some of their decisions.

Regulating bitcoin

  • If the cryptocurrency is regulated, it could result in the reduction in volatality, and its acceptability and monetisation needs easing up.

  • However, given that Bitcoin was intended to come across as a global decentralised currency, any central authority regulating it would effectively defeat that purpose.

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