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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.

Bitcoin

Date: 07 November 2020 Tags: Miscellaneous

Issue

The U.S. Justice Department has seized over $1 billion worth of bitcoin associated with the underground online marketplace Silk Road.

 

Background

The government will now try to prove in court the items are subject to forfeiture. It is the largest cryptocurrency seizure ever made by the U.S. government.

 

Details

  • Bitcoin is a digital or virtual currency created in 2009 that uses peer-to-peer technology to facilitate instant payments.

  • Bitcoin offers the promise of lower transaction fees than traditional online payment mechanisms and is operated by a decentralized authority, unlike government-issued currencies.

  • There are no physical bitcoins, only balances kept on a public ledger that everyone has transparent access to, that – along with all Bitcoin transactions – is verified by a massive amount of computing power.

  • Unlike fiat currency, Bitcoin is created, distributed, traded, and stored with the use of a decentralized ledger system known as a blockchain.

  • Bitcoin is one of the first digital currencies to use peer-to-peer technology to facilitate instant payments.

  • The independent individuals and companies who own the governing computing power and participate in the Bitcoin network are comprised of nodes or miners. 

  • Bitcoin mining is the process by which bitcoins are released into circulation. Generally, mining requires the solving of computationally difficult puzzles in order to discover a new block, which is added to the blockchain.

 

Fiat currency

  • Fiat money is a government-issued currency that isn't backed by a commodity such as gold. Fiat money gives central banks greater control over the economy because they can control how much money is printed. Most modern paper currencies, such as the U.S. dollar, are fiat currencies.

  • Fiat money only has value because the government maintains that value, or because two parties in a transaction agree on its value.