© 2019 JETIR February 2019, Volume 6, Issue 2 www.jetir.

org (ISSN-2349-5162)

“A STUDY ON CRYPTOCURRENCY IN
INDIA – BOON OR BANE”
- With special reference to Bitcoin
Mr.J.P.Jaideep, , Mr. K.Rao Prashanth Jyoty,
Head Dept. of BBA*
Assistant Professor, Dept of B.B.A, D.G.Vaishnav College**

1. ABSTRACT: The present study is focused on assessing the role and impact of Bitcoin. As
India is in the technical era, techno-Indians speak, invest, and possess Bitcoin. This paper is an
outcome of an exploratory research on the role of Bitcoin and its future in the Indian economy.
The study answers the question “Is Bitcoin boon or bane in India”.
Key Words: Bitcoin
2.1. INTRODUCTION:

“My father was thought by his teacher - India is a developing country,

I was thought by my teacher - Indian is a developing country,
My son is studying - Indian is a developing country
India will be a developed country if the
Dollar value and the Rupee value
Meet at the same point i.e.
1 Rupee = 1 Dollar”
The present study is an attempt to explore
 Will India have any positive financial leverage by the usage of Bitcoin?
 Should India say yes to Bitcoin?
The crafting of this article is to make the young India to have better understanding towards
Bitcoin, Lakshmi Coin and Cryptocurrency.
2.2. CRYPTOCURRENCY
One of the most popular terms used by the world is “Cryptocurrency”. As E-Commerce
becoming the most integral part, internet sales is booming with more Techno-Indian customers.
Bitcoin came into existence in later 2009 as a medium of online transactions. The gap between
buyer and the seller was bridged by the financial institutions. They served as a trusted third
party to process E-Payments. Even though the gap was bridged effectively, there was always a
dependency factor for both the buyer’s and seller’s trading activities. This dependency turns to
be a factor responsible for the invention of Cryptocurrency.
A Cryptocurrency is defined as “a digital asset designed to work as a medium of exchange using
cryptography to secure the transaction and to control the creation of additional units of the

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currency”. Cryptocurrency was first ever used in the year 2010 22 nd May by Laszlo Hanycez,
Florida. In 2017, the popularity of the use of Cryptocurrency increased rapidly, People started to
invest a large sum of money that had no history of producing revenue. Crores of money was
invested into more than 1000 new digital coins. These coins were in various form such as
Bitcoin, Litecoin (LTC), Ethereum (ETH), Zcash (ZEC), Dash (DASH), Cash (BCH), Source: -
MPRA – “Factors Influencing Cryptocurrency Prices: Evidence from Bitcoin, Ethereum,
Dash, Litcoin,and Monero “ – Yhlas Sovbetov {London School of Commerce. In India the
use of Cryptocurrency is still in the development phases as reported by RBI. The name of
Cryptocurrency in India is expected to be Lakshmi Coin, and Reliance digital may also launch a
coin named JioCoin which will be channelized by the reserve bank authorities. This would be a
positive and a progressive attempt by the authorities towards economic development.
Source: - www.investopedia.com
Bitcoin is a digital currency which does not involve government intervention or authorization
by any legal entity. Bitcoin is a combination of cryptography and digital encryption which can be
utilized for online transaction. Bitcoin relies on cryptographic protocols and a distributed
network of users to store, mine and effective transferring. Bitcoin supports investor to perform
their transactions by themselves without any help from the financial sectors because Bitcoin is
considered to be digital currency which serves as an alternative for money market, Source:-
Economics Bulletin, “What Drives Price” Vol.36, Issue 2, Jamal Bouoiyour, University of Pau
– France, Refk Selmi, Tunis Business School, Olaolu Richard Olayeni, Pub: May 18
2016.The process of transacting a Bitcoin involves Mining. Bitcoin provides a reward for
exchange of mining services provided by the miners all over the world, if the miners don’t exists
transaction of crypto currencies will an impossible task or it might be subjected to fallacies.
These miners use specialized high performance equipments, sound technology, and henceforth
this process of mining protecting the data at a very high level, therefore this can be coined as
Block chain process. The network generates a maximum of 50 Bitcoin per block and this number
decreases over the time with the repeated usage of the technology. Total number of Bitcoin
mined till date is 21 million. The usage of Bitcoin in India can be advantageous as it can be free
from GST and Service charge levied by the Government because Bitcoin is digital coins not
subjected to any government or legal authority.

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3. BRIEF LITERATURE REVIEW

Projected Bitcoin Short Term

Year BTC/block Year (est.) BTC in Circu. BTC Increase BTC % of Limit

2009 50.00 2009 0 ~ 0%

2010 50.00 2010 2,625,000 Infinite 12.500%
2011 50.00 2011 5,250,000 100.00% 25.000%
2011 50.00 2012 7,875,000 50.00% 37.500%
2012 25.00 2013 10,500,000 33.33% 50.000%
2013 25.00 2014 11,812,500 12.50% 56.250%
2014 25.00 2015 13,125,000 11.11% 62.500%
2015 25.00 2016 14,437,500 10.00% 68.750%
2016 12.50 2016 15,750,000 9.09% 75.000%
12.50 2018 16,406,250 4.17% 78.125%
12.50 2019 17,062,500 4.00% 81.250%
12.50 2020 17,718,750 3.85% 84.375%
6.25 2021 18,375,000 3.70% 87.500%
6.25 2022 18,703,125 1.79% 89.063%
6.25 2023 19,031,250 1.75% 90.625%
6.25 2024 19,359,375 1.72% 92.188%

(Table Data Source: en.bitcoin.it)

As of June 20, 2017, Bitcoin has reached a total circulation amount of 16.4 million coins,
which is about 78% of the total amount of Bitcoin.
Bitcoin has controlled supplies, which suggest that there is finite circulation of the mined
currency. The amount of Bitcoin actually in circulation is lower than the amount of Bitcoin
mined. This is due to accidental loss or willful destruction. Approximately 16.5 Million Bitcoin
that have been mined so far. Out of this it is estimated that up to 25% of the mined currency has
been lost for good. The Bitcoin protocol is designed in such a way that new Bitcoin can be
created at a predictable and decreasing rate. The number of new Bitcoins created each year is
automatically halved over time until Bitcoin issuance halts completely with a total of 21 million
in existence.

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4. NEED FOR THE STUDY

The most trending word used by media, young Generation, Investors, and IT Employees
is Bitcoin. Has the time has arrived for India to go cashless? - If yes! Is the usage of Bitcoin a
positive step to enable India attain this big dream?

5. OBJECTIVE OF THE STUDY

This paper analyses the following
1. Is Bitcoin approved in India?
2. Do Indians Posses Bitcoin?
3. Is Bitcoin a safe locker for Black Money?
4. Is investing in Bitcoin is similar to investing in shares?
5. If an innocent is exploited in the name of Bitcoin will his queries be addressed?
6. Is Bitcoin is a Boon or Bane to the Indian economy?
The study is focused to analyse the results for the above queries.

6. ANALYSIS OF DATA

The following analysis has been done through secondary data to answer the above
quarries.

7. FINDINGS
I. Is Bitcoin approved in India?
According to RBI (Regulatory Authority) Circular, directed to the banks and other
financial institutions, trading Cryptocurrency including Bitcoin is prohibited. This has resulted in
zero dealing between the buyer and seller through any kind of dealing with cryptocurrency or
crypto assets. Further, the authorities have also highlighted with the risk associated with virtual
currencies.
II. Do Indians Posses Bitcoin?
Though the legal status of Bitcoin varies substantially from one country to another
country, in India there are some legal restrictions on the usage of virtual currencies. In India
there are 11 exchange platforms available to trade Bitcoin though it is not regulated by RBI.
III. Is Bitcoin a safe locker for Black Money?
RBI’s and Yes Bank in an e-mail to its customers said that, "We prohibit the use of YES
BANK - Debit Card, Credit Card, Net Banking, Mobile Banking, Digital Wallet, Prepaid Cards
and Travel Cards towards purchase of or trading in virtual currencies". The central bank (RBI)
issued a press release that said, “Technological innovations, including those underlying virtual
currencies, have the potential to improve the efficiency and inclusiveness of the financial system.

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However, Virtual Currencies (VCs), also variously referred to as Cryptocurrencies and crypto
assets, raise concerns towards consumer protection, market integrity, and money laundering.

IV. Is Investing in Bitcoin is similar to investing in shares?

After increase of 300 per cent in the value of Bitcoin in just a span of one year, different
types of investors and traders including budding investors have started showing their interest
towards Cryptocurrency and their trading methods.

V. If an innocent is exploited in the name of Bitcoin will his queries be addressed?

During the year 2016 Mr. Kailash Bishnoi, Manager, RBI discussed the characteristics of
Cryptocurrency such as “Not a legal tender, Most of the investments is subjected speculation,
Opaqueness, Illegal use, No security and Customer protection”. As a result RBI is not approving
Cryptocurrency. Over a period of time the traditional money system will be ruled out by the
digital currency once it overcomes the negative characteristics.

VI. Bitcoin is a Boon or Bane to Indian economy?

The stakeholders in India have suggested the usage of Bitcoin will predominantly have
negative impact to the country but it may have a positive impact for the citizens of India who are
rational and have individualistic consumer pattern behavior. It can be in articulated as, even
though Cryptocurrency has its drawbacks like every new technology does.The paper suggest the
following suggestion
8. SUGESSTION:
 Cryptocurrency can serve as a great tool from the financial point of view.
 As the study reveals that, there are some firms accepting Bitcoin, the investigation has
begun about the transparency, business module of those firms and the people who deal
with Bitcoin.
 Legalisation of cryptocurrency can take the Indians and India as a nation at a platform
which promises progressive growth.
9.CONCLUSION:
Cryptocurrency has potential to replace the traditional monetary system. In order to adopt
this phase of Cryptocurrency it must first evolve and accept a secure network of currency
exchange. According to the findings of the present study, if crypto currencies are in the form of
Lakshmi Coin then the society can be motivated to make investors adapt gradually which will in
turn pave a way towards rapid progress in usage of Cryptocurrency. This will help India to reach
to the next platform of E-commerce. Indians are to be benefited by Bitcoin, but it may not be the
same for the nation as the whole.

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Therefore Bitcoin is a boon to Indians and bane to India

BIBLIOGRAPHY

MPRA – “Factors Influencing Cryptocurrency Prices: Evidence from Bitcoin, Ethereum, Dash, Litcoin,
1. and Monero “ – Yhlas Sovbetov {London School of Commerce}

2. Economics Bulletin, “What Drives Price” Vol.36, Issue 2, Jamal Bouoiyour, University of Pau – France,
Refk Selmi, Tunis Business School, Olaolu Richard Olayeni, Pub: May 18 2016

“Role of Bitcoin on Economy” by Anu Singhal, Aqila Rafiuddin – World Congress on Engineering and
3. Computer Science. San Francisco, Vol. II Oct 2014.

4.
www.investopedia.com , www.wikipedia.com, www.googlescholar.com, en.bitcoin.it,
5.
Bitcoin a peer – to – peer Electronic Cash System by Satoshi Nakamoto
6.
 Bitter to Better — How to Make Bitcoin a Better Currency by Simon Barber, Xavier Boye, Elaine Shi,
Ersin Uzun - Financial Cryptography and Data Security pp 399-414
7. Handbook of Digital Currency, Bitcoin, Innovation, Financial Instruments, and Big Data2015, Pages 31-43

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