ABSTRACT

Nowadays, there is a vast and fast development in cryptocurrencies. Bitcoin is

one of them which is most popular and known as first decentralized currency.

The legal status of Bitcoin varies substantially from country to country and is still
undefined or changing in many of them. This paper mainly covers working with
Bitcoin in India. Bitcoin transactions are anonymous and most secure but on the
other hand they fail to protect consumers because of lack of regulations. Also the
use of cryptocurrencies is very less because of lack of its awareness and vendors.
This paper also coveres the legality and regulatory framework with respect to
Bitcoins in India.

As a virtual currency and peer-to-peer payment system, Bitcoin may signal future
challenges to state oversight and financial powers.

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 CHAPTER- 1

INTRODUCTION

INTRODUCTION:

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That is the time that numerous Indians started capitalizing their cash in Bitcoin
and proceed to owe them now. This spike drove some tech-savvy citizens of the
India to purchase Bitcoins as well as accomplish something with the blockchain
protocol itself in India. One can argue that while Satoshi Nakamoto invented
Bitcoin, it is India that may well be the first country to entrench its credibility as
an alternate monetary system. Every year, we have seen the crypto network
growing at a rapid pace. Apart from that, there is no one who understands Indian
consumers better than native companies. In a country like India, where we value
everything by its monetary worth, the sure-shot way to beat cash is to make
currency that is more valuable than cash. A crypto exchange and a wallet that
would allow hundreds of millions of citizens of the India to become part of the
crypto economy will be a great leap for the entire blockchain community.
Currently, the crypto-currency is neither illegal nor legal in India. The
government is considering the introduction of a regulatory regime for virtual or
crypto-currencies, such as Bitcoin, that would enable the levy of the Goods and
Services Tax on their sale. The new regime may possibly bring their trading under
the oversight of the stock market regulator, Securities and Exchange Board of
India (SEBI). The idea is to treat such currency in a manner similar to gold sold
digitally, so that it can be traded on registered exchanges in a bid to “promote” a
formal tax base, while keeping a tab on their use for illegal activities such as
money laundering, terror funding and drug trafficking. Crypto-currency is a
digital currency that allows transacting parties to remain anonymous while
confirming the transaction is valid. It is not owned or controlled by any institution
– governments or private. There are multiple such currencies — Bitcoin,
Ethereum and Ripple are some of the popular ones. Currently, they are neither
illegal nor legal in India. “One bitcoin today is worth as much as 60 grams of
gold. The market cap for all crypto-currencies has just crossed $100 billion, with
most of the increase coming in the past few months. On April 1, 2017, the total
market cap was just over $25 billion, representing a 300% rise in just over 60
days,” said a senior government official.

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DEFINING THE CRYPTOCURRENCY

A bitcoin is a virtual currency first introduced in the year 2008 by an anonymous

group called Satoshi Nakamoto. It’s an open source peer-to-peer cryptographical
system (direct connections without an intermediary) where transactions happen
through a public ledger called blockchain, handling users’ data anonymously.
Eight years since its introduction, bitcoin is today the most widely used and
accepted digital currency.

Bitcoins are the most sought after cryptocurrency in the market. However there
are several other currencies which have gained momentum ever since the concept
has been introduced. Below are some other of crypto currencies that exist:

1. Ethereum – Ethereum is the second most famous name in the virtual currency
market. It somewhat similar to the concept of bitcoins however it possesses some
additional attributes. It is purely a block chain based platform. What makes it
special is the Ethereum Virtual Machine. The blockcain in ethereum is used not

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to store the data of the transaction but to make sure smooth run of a decentralized
application.

2. Ripple – Ripple is more in the nature of a payment protocol created and

developed by a company named Ripple, which is based on the concept of Real
time Gross Settlement. It was initially released in the year 2012.

3. NEM – Similar to bitcoin, NEM is also a peer-to-peer blockchain platform

launched in the year 2015. It uses the unique Proof-of-Importance algorithm , a
way to validate transactions and achieve the distributed concensus.

4. Litecoin – Initially introduced in the year 2011, litecoin is mostly identical to

bitcoin. What makes it stand out is the use of Segregated Witness and the
Lightning Network. Some other cryptocurrencies are bbqcoins and dogecoins
which have not gained much significance due to their technical shortcomings and
inability to stand out.

In 2009, a white paper was published online under the name Satoshi Nakamoto
(probably a pseudonym), proposing a new solution for something that some
Internet enthusiasts had been looking forward to since the beginning of the
Internet: A form of digital cash that functions based on principles dear to
libertarian strands of the Internet community – non-state administered,
decentralized (“peer to peer”) and open source based. In this strand of thought,
cryptography and anonymous transaction systems are seen as important
instruments to defend privacy and freedom in the digital age. With trust in the
monetary and financial system shattered by the crisis, Nakamoto’s proposal was
taken up in 2009 and implemented by a significant number of supporters.

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TYPES OF CRYPTOCURRENCY
1) Litecoin (LTC)

Litecoin, launched in the year 2011, was among the initial cryptocurrencies
following bitcoin and was often referred to as ‘silver to Bitcoin’s gold.’ It was
created by Charlie Lee, a MIT graduate and former Google engineer. Litecoin is
based on an open source global payment network that is not controlled by any
central authority and uses "scrypt" as a proof of work, which can be decoded with
the help of CPUs of consumer grade. Although Litecoin is like Bitcoin in many
ways, it has a faster block generation rate and hence offers a faster transaction
confirmation. Other than developers, there are a growing number of merchants
who accept Litecoin.

2) Ethereum (ETH)

Launched in 2015, Ethereum is a decentralized software platform that

enables Smart Contracts and Distributed Applications (ĐApps) to be built and
run without any downtime, fraud, control or interference from a third party.
During 2014, Ethereum had launched a pre-sale for ether which had received an
overwhelming response. The applications on Ethereum are run on its platform-
specific cryptographic token, ether. Ether is like a vehicle for moving around on
the Ethereum platform, and is sought by mostly developers looking to develop
and run applications inside Ethereum. According to Ethereum, it can be used to
“codify, decentralize, secure and trade just about anything.” Following the attack
on the DAO in 2016, Ethereum was split into Ethereum (ETH) and Ethereum
Classic (ETC). Ethereum (ETH) has a market capitalization of $41.4 billion,
second after Bitcoin among all cryptocurrencies. (Related reading: The First-
Ever Ethereum IRA is a Game-Changer)

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3) Zcash (ZEC)

Zcash, a decentralized and open-source cryptocurrency launched in the latter part

of 2016, looks promising. “If Bitcoin is like http for money, Zcash is https," is
how Zcash defines itself. Zcash offers privacy and selective transparency of
transactions. Thus, like https, Zcash claims to provide extra security or privacy
where all transactions are recorded and published on a blockchain, but details
such as the sender, recipient, and amount remain private. Zcash offers its users
the choice of ‘shielded’ transactions, which allow for content to be encrypted
using advanced cryptographic technique or zero-knowledge proof construction
called a zk-SNARK developed by its team. (Related reading, see: What Is
Zcash?)

4) Dash

Dash (originally known as Darkcoin) is a more secretive version of Bitcoin. Dash

offers more anonymity as it works on a decentralized mastercode network that
makes transactions almost untraceably. Launched in January 2014, Dash
experienced an increasing fan following in a short span of time. This
cryptocurrency was created and developed by Evan Duffield and can be mined
using a CPU or GPU. In March 2015, ‘Darkcoin’ was rebranded to Dash, which
stands for Digital Cash and operates under the ticker – DASH. The rebranding
didn't change any of its technological features such as Darksend,
InstantX. (Related reading, see: Top Alternative Investments for Retirement)

5) Ripple (XRP)

Ripple is a real-time global settlement network that offers instant, certain and
low-cost international payments. Ripple “enables banks to settle cross-border
payments in real time, with end-to-end transparency, and at lower costs.”
Released in 2012, Ripple currency has a market capitalization of $1.26

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billion. Ripple’s consensus ledger -- its method of conformation -- doesn’t need
mining, a feature that deviates from bitcoin and altcoins. Since Ripple’s structure
doesn't require mining, it reduces the usage of computing power, and minimizes
network latency. Ripple believes that ‘distributing value is a powerful way to
incentivize certain behaviors’ and thus currently plans to distribute XRP
primarily “through business development deals, incentives to liquidity providers
who offer tighter spreads for payments, and selling XRP to institutional buyers
interested in investing in XRP.”

6 Monero (XMR)

Monero is a secure, private and untraceable currency. This open source

cryptocurrency was launched in April 2014 and soon spiked great interest among
the cryptography community and enthusiasts. The development of this
cryptocurrency is completely donation-based and community-driven. Monero has
been launched with a strong focus on decentralization and scalability, and enables
complete privacy by using a special technique called ‘ring signatures.’ With this
technique, there appears a group of cryptographic signatures including at least
one real participant – but since they all appear valid, the real one cannot be
isolated.

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BITCOIN AS A MONETARY SYSTEM

In economic theory, money is defined by three functions: unit of account, means

of payment and store of value. In modern economies, there is a single unit of
account in every currency area. This is considered to be an efficient solution:
Having all prices in a currency area denominated in the same unit makes them
comparable and enables the operation of markets. Usually, means of payment are
issued as official currency by a central bank that is in charge of ensuring the
quality and quantity of that money according to a public mandate. In most
countries, such a mandate entails ensuring the functioning of these means of
payment as stable and most liquid store of value over the short to medium term.
The acceptance of official currency among the public is supported by the
currency’s exclusive acceptance by the state for the discharge of tax liabilities
and its use by the state as (one of) the biggest single transaction parties in the
economy.
Apart from the central bank, private issuers can also offer means of payment as
long as they are accepted by the public. Such private means of payment,
denominated in the official unit of account, represent a claim on the issuer for
official currency. Banks are the biggest providers of private means of payment,
as the bulk of daily transactions among economic subjects is conducted by
transferring bank deposits (which represent a claim on official currency). In their
role as the biggest providers of private means of payment, banks are subject to
regulation, supervision and monetary policy. The resulting monetary system is a
hierarchical construction, where the state-provided unit of account and means of
payment issued in that unit form the apex of the system, and private means of
payment represent claims on the official means of payment denominated in the
official unit of account. The need to maintain the ability to keep the promise
underlying these claims serves as a major disciplining device for the issuers.

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While Bitcoin represents one of many private means of payment, it entails three
peculiarities: It introduces a separate unit of account, it has no single and
identified issuer and its quantity is ultimately fixed once and for all. Built around
the model of gold, the bitcoin is a pure asset not related to credit creation
processes. It has no central issuer and does not represent anybody’s liability. This
implies that its quantity cannot be adjusted to variations in demand, and it does
not come with anybody’s promise to convert it into official currency at a certain
rate. Given its operation based on cryptographic mechanisms described above,
the term “cryptocurrency” has been introduced to characterize Bitcoin type
systems.

OPINION OF GOVERNMENT OF INDIA, REGULATORY

AUTHORITIES & MARKET PLAYERS ON BITCOIN
The Bitcoin craze is catching on in India. While tech geeks and young
investors eye the digital cryptocurrency as its value soars, the government, too, is
contemplating a course of action surrounding its regulation. In a move expected
to boost financial inclusion, the Department of Economic Affairs in the Ministry
of Finance in India has formed an inter-disciplinary committee to examine the
framework on virtual currencies. In addition, the government initiated a
discussion on its forum My Government to seek public opinion on virtual
currencies.
Clearly, despite some initial reservations, the Indian government is keen on
understanding how Bitcoin works and is willing to deploy resources to build
frameworks. So, if Bitcoins are legalized in India, the following would happen:
(i) Bitcoins would fall under the purview of RBI’s 1934 Act.
(ii) Bitcoin investors would be taxed.
(iii) RBI would issue guidelines regarding investment and purchase of Bitcoins.
(iv) If any foreign payment is made through Bitcoins, it would fall under the
purview of FEMA Act.

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(v) Returns from investment in Bitcoins would be taxed.
Interestingly, the news comes around the same time when the Bitcoin trade
analyst, Chris Burniske, highlighted that trades from India accounted for 10% of
global cryptocurrency trade, in May. He tweeted a chart tracking cryptocurrency
trades that show India accounted for 16,754.76 coins by trade volume. It has also
been ranked fourth on the Bitcoin cryptocurrency trading market.
Over the past few years, despite the lack of regulations in the Indian digital
currency industry, a few Bitcoin exchanges have sprung up and started operating
with self-regulated trading platforms with strict Know Your Customer (KYC) and
anti-money laundering systems in place. These include startups like Zebpay,
Coinsecure and Unocoin. These startups have also raised funding from investors
and have slowly been building faith in the Bitcoin and digital currency sector
despite skepticism from the government. Blockchains which have the potential to
transform how bank back-end operations function as well as increasing the speed
of payments. The bank said that with its potential to fight counterfeiting, the
blockchain is likely to bring about a major transformation in the functioning of
financial markets, collateral identification, and payments systems.
In December 2015, former RBI Governor Raghuram Rajan had stated that digital
currency was ‘fascinating’ and that India’s central bank could use digital
currencies. He had said, “I have no doubt, that down the line, we will be moving
towards primarily a cashless society and we’ll have some kind of currencies like
this which will be at work.” But in February this year, the RBI issued a cautionary
press release, on the back of an earlier one issued in December 2013. The release
warned users of the risk they are likely to already be aware of. Namely, that the
RBI does not regulate and has not licensed any virtual currencies in India. Hence,
anyone using them does so at their own risk. A month later, on March 1, 2017,
RBI Deputy Governor R. Gandhi also raised concerns over virtual currencies. He
said that cryptocurrency poses potential financial, legal, customer protection and
security related risks. Blockchain technology Most cryptocurrencies are based on

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blockchain technology. In simple terms, it is a system to transfer and store data
or information that is generated while transacting in a cryptocurrency. A recent
Whitepaper on Blockchain has broken down the concept of blockchain
technology in detail.
As per the paper, “a Blockchain may be described as a tamper-evident ledger
shared within a network of entities, where the ledger holds a record of transactions
between the entities. To achieve tamper-evidence in the ledger, Blockchain
exploits cryptographic hash functions.”
Blockchain technology is at the heart of how cryptocurrencies work. It helps to
evade any possibility of fraud and makes any kind of tampering infeasible for the
users. It is a support system for the encrypted currency, whereby the transactions
are recorded and stored on the ledger. So even if the users are anonymous, it still
becomes difficult for anyone to possibly change the data without involving other
members on the network.
Bitcoin Pricing

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Importance of crypto currency

Cryptocurrency has created quite a buzz ever since the prices of certain types of
cryptocurrencies suddenly rose. As we see, this has become a new trend in the
world of investment for real fair reasons. People who invested in them have
been benefitted in unimaginable ways.
1. Cryptocurrency is one of the safest and trusted kinds of digital currency that
people prefer nowadays. In a world where there is an abundance of conmen and
looters, we all need to trade in the safest possible ways. Cryptocurrencies give
us that assurance which makes them an important source of investment right
now and in the future as well.
2. Another reason why cryptocurrencies have become extremely in demand is
because of their policies. You don’t really need to deal with a third party when
it comes to cryptocurrency. This gives people a reassurance and a feeling of
safety. The fact that cryptocurrencies are digital currencies alleviates the need
for a third party. You can transact no matter where you are situated at.

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3. Cryptocurrency is a low-cost means of transaction. You don’t need to shell
out money in order to exchange digital currencies. All you need in order to be
able to transact is your cell phone and a basic knowledge of cryptocurrencies.
4. Most of the digital currencies have to pay for transactions. In the case of
cryptocurrencies, you don’t really need to pay for the transactions. The reason is
that the people who mine the cryptocurrencies; called as miners get their
compensation from the network itself.
5. You can store your cryptocurrencies in a safe wallet. Cryptocurrencies give
you the option of storing your money in two kinds of wallets which can easily
be transferred to your account. And the wallets don’t have any charges in order
to be able to store your digital currencies.
6. For most people, privacy is the top-most priority. When dealing in
cryptocurrencies, you can expect your transactions to be highly confidential.
You can carry out your transactions and be anonymous.
7. The amount of money that you want to invest is totally up to
Cryptocurrencies give you the liberty of buying them in fractions as well. If you
feel like one bitcoin is too much, you can split it and buy half or one-third of it.
This reduces the cost for you and does not require you to spend out of bounds.
Using a crypto converter, you can find out the price of any cryptocurrency in
your country’s currency and invest accordingly.
8. Since the senders and recipients of cryptocurrencies don’t directly transfer
any money to the credit cards, you don’t have to share your credentials with
anyone. This helps you in avoiding identity theft. You decide what information
you want to share with the merchant if anything at all makes you doubtful.
9. You get complete autonomy that you look for. When it comes to
cryptocurrencies, there is no third party involved to demand for any fee or
money. You are the only person who is managing your account.

Receipts and Payments in Bitcoins:

Considering the fact that bitcoins are not legal tender in India, receipts and
payments in this virtual currency in a domestic transaction as well as in
imports/exports is a separate issue.

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As far as receipts and payments in bitcoins are concerned, following are the
possible questions that need to be answered:
Is it possible to buy goods or services in India and make payment in bitcoins?
Certain companies in India are accepting bitcoins as payment against purchase of
goods or services. Even if as per the Reserve Bank of India Act, 1934 (“the Act”),
payment made in legal tender is a valid discharge of an obligation or debt one has
towards a payee, the Act however does not specifically exclude any other form
of consideration. Meaning thereby that any form of payment other than legal
tender in India is allowed since it is not prohibited specifically, subject to the
condition that there is consensus between the parties involved.
Is it possible to export and receive payment in bitcoins? Any international
transaction which involves payment or receipt shall attract the provisions of
FEMA and rules made there under. If one was to export outside the Indian
territory and receive payment in bitcoin, one shall first examine what bitcoins
shall be treated as, for that matter. Foreign Exchange Management (Manner of
Receipt and Payment) Regulations, 2016 clearly specify the modes of payment
in different cases.
Regulation 3(2) of these Regulations state the following:
“(a) In respect of an export from India, receipt shall be made in a currency
appropriate to the place of final destination as mentioned in the declaration form
irrespective of the country of residence of the buyer.
(b) Any other mode of receipt of export proceeds for an export from India in
accordance with the directions issued by the Reserve Bank of India to authorized
dealers from time to time.”
Bitcoins are not legal tender in India, by virtue of which, they are not recognised
as real currency. Also, RBI hasn’t directed anything pertaining to receipt of
bitcoins for such transactions.
Clearly, this leads one to the conclusion that anyone cannot receive bitcoins as a
manner of receipt for any exports made outside India.

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Is it possible to import and remit payment in bitcoins? Regulation 6(1) states that:
“(1) Notwithstanding anything contained in Regulation 5, a person resident in
India may make payment for import of goods in foreign exchange through an
international card held by him/ in rupees from international credit card/ debit card
through the credit/ debit card servicing bank in India against the charge slip
signed by the importer/ as prescribed by Reserve Bank from time to time.”
What is “foreign exchange”? Section 2(n) of FEMA defines foreign exchange as,
“foreign exchange” means foreign currency and includes,— (i) deposits, credits
and balances payable in any foreign currency, (ii) drafts, travelers, cheques,
letters of credit or bills of exchange, expressed or drawn in Indian currency but
payable in any foreign currency, (iii) drafts, travellers cheques, letters of credit or
bills of exchange drawn by banks, institutions or persons outside India, but
payable in Indian currency; ”

GST on bitcoins
Currency under FEMA vis-à-vis ‘money’ under GST
Currency has been defined under FEMA:
Section 2(h) “currency” includes all currency notes, postal notes, postal orders,
money orders, cheques, drafts, travellers cheques, letters of credit, bills of
exchange and promissory notes, credit cards or such other similar instruments, as
may be notified by the Reserve Bank;
On perusal of the above definition, it is explicit that bitcoins does not fit in any
of the mentioned types. It is in fact not been notified by the Reserve Bank as a
currency. So apparently, bitcoin is not currency.

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On lines similar to the definition above, lawmakers have framed the definition of
‘money’ under GST which as same as the one under Section 65B (33) of Schedule
V of the Finance Act, 1994 pertaining to Service Tax. Section 2(75) of CGST Act
defines: “money” means the Indian legal tender or any foreign currency, cheque,
promissory note, bill of exchange, letter of credit, draft, pay order,
traveller,cheque, money order, postal or electronic remittance or any other
instrument recognized by the Reserve Bank of India when used as a consideration
to settle an obligation or exchange with Indian legal tender … of another
denomination but shall not include any currency that is held for its numismatic
value;…
Money
‘Money’, as defined, has been kept out of the purview of GST.

Goods
‘Goods’ has been defined under GST. Section 2(52) “goods” means every kind
of movable property other than money and securities but includes actionable
claim, growing crops, grass and things attached to or forming part of the land
which are agreed to be severed before supply or under a contract of supply;
Bitcoin doesn’t have any intrinsic value in itself; hence it would be technically
incorrect to refer it as goods.
Where bitcoin is not being used as anything except as a ‘means of payment’, it
needs to come under the arena of currency. Otherwise, GST implications with
respect to supply of goods/services will arise.
Until specifically declared by RBI, bitcoin shall not be ‘money’. Several countries
have declared bitcoin as ‘money’ thereby making it exempt from GST. For
example, a European Court of Justice Ruling has exempted bitcoin from VAT.
Australian Federal Government has also proposed to exempt bitcoins from tax in
its budget 2017.

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 Status of bitcoins under Indirect
Taxation in different jurisdictions Status
Country/Region
Singapore Profit on trading in bitcoins in ordinary
course is taxable20
Australia Propose to exempt bitcoins from taxation
by treating it as money
European Union Any exchange of bitcoins for another
currency does not attract VAT or GST, as
the case may be
USA Treated as property as per Internal
Revenue Service, USA21
Norway As proposed in 2017, no VAT shall be
levied on trading in bitcoins22
Japan In 2017, officially recognised bitcoins as
a means of payment
Risks Aassociated with Bitcoins
RBI through its press release dated 24th December, 2013 has warned the public
about the negative attributes of bitcoins and its usage. It specifically pointed out,
that since they are stored digitally, they are exposed to risks such as hacking,
attacks, compromises etc.

Bitcoins are not backed and/or regulated by a centralized agency till date, making
them less reliable.

There is no forum, where a user can possibly reach out for any help or grievance,
as a result of which Indian consumers are being exposed to transactional and
informative risks.

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Another issue pertains to awareness. Lot of consumers has little or no
information regarding risks associated with bitcoins lending them into unwanted
trouble under regulations such as anti-money laundering.

One of the very important attributes of bitcoins is its volatility. Steep changes
every second are expected, making investors prone to zero-worth risks

ENTRANCE OF RBI:
Will the Reserve Bank of India try to regulate bitcoins and other crypto-
currencies? Almost certainly. No government that imposes capital account
currency controls can afford to ignore non-fiat currencies. Will the Indian
government mess up attempts at regulation? Almost certainly. The RBI doesn’t
have a shining track record in terms of its recent actions and it could fumble this
task, for sure. In fact, the RBI is supposedly considering setting up its own crypto-
currency, which is a step in the wrong direction. Crypto-currencies work for
people who want anonymity and who are seeking alternative stores of value. No
fiat currency, crypto or not, can reasonably offer this combination. What’s more,
crypto-currencies have features (and bugs) that fiat currencies don’t and that’s
precisely why users love them. The blockchain system of generating an exact
increase in money supply gives comfort to speculators. This eliminates worries
about inflation caused by a sudden expansion of money supply by the central
bank since there is no central bank and the money supply is governed by pure
maths. This also makes fractional reserve banking cumbersome since currency
swaps or exchanges are always required for such actions.

Also, while bitcoin, ethereum, and other crypto-currencies can be banned by

government decree, these cannot be withdrawn from circulation except by peer-
to-peer consent. A fiat crypto-currency – well, that could be deleted in a minute
at the whim of an oligarch. Indians started trading in bitcoins and other crypto-
currencies enthusiastically after Nov 08, 2016, precisely because they became
wary about such possibilities. It’s hard to see a fiat crypto-currency catching on.

Indian companies using Bitcoin

According to CEO and the co-founder Sathvik Vishwanath many merchants in
the Bangalore area accept bitcoin through the Banglore-based Unocoin which is
one of the largest bitcoin exchanges in the country and also provides merchant
services. Five of India’s largest companies including Dell accepted the
cryptocurrency as payment. The number grows day by day. In India Bitcoin is far

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from popular and most Indians prefer fiat money but a recent Forbes article
reports Bitcoin's craze is catching on and that, to date, there are more than 600,000
users in the country. Recently two Indian companies jumped into Bitcoins
business, they came up with Wallet-Exchange concept and they accept Indian
Rupee.
 Zebpay
 Unocoin

COMPARISION OF BITCOIN VERSUS OTHER INVESTMENTS

Bitcoin vs gold
Since ancient times, gold is usually the most popular choice of people for
investing. Many people invest in gold as most of the time it gives profit to the
investor.
Though gold is the first choice of investors, bitcoin is much better than gold. As
bitcoin can easily carry no matter in how much quantity it is, on the other hand,
to carry gold from one place to other place is difficult and not at all safe.
User can easily access their bitcoin wallet from anywhere by using a computer,
laptop or a Smartphone this is not possible with gold.
Chances of forgery are possible in gold, whereas it cannot be possible with
bitcoins.
The government can confiscate gold but can never confiscate bitcoins.
When you think about Bitcoin Vs Gold as Investment then its better to consider
Bitcoin.

Bitcoins vs bonds
A bond is where the investor lends some money to a corporation for a certain time
period at a fixed interest rate. This option for investing is not safe as it depends
upon a third party, whereas bitcoin is independent where a user doesn’t depend
on a third party. Bitcoin allows the user to be powerful on their own.
Bitcoin seems to give you better when you talk about Bitcoin Vs Bonds.

Bitcoin vs shares and stock

If one chooses shares and stock for investment it means they are buying shares of
a company at a price that is fixed by a company. Buying more stocks means your
power and ownership in company increases which will result in more profit.
The profit of the investor completely depends on the profit of the company and it
also takes time to make the profit such as two or three years, whereas bitcoins
make the profit instantly it will only take few weeks or months.
There is one more advantage of investing in bitcoin which is not available in other
investments, that is if you invest in bitcoin you doesn’t have to pay tax but if you
invest somewhere else you have to pay tax.

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Bitcoin vs Mutual Funds
Well, it depends, whether you are a seasoned investor or recently started buying
and how much you know about the crypto market.
Approach for investing in financial instruments is much different than investing
in the cryptocurrencies. Everything that happens in the coin market is in one way
related to the demand and supply, and also other factors such as legalization, the
technology behind a coin, popularity and what future it holds.
Whereas in the mutual funds, the performance is calculated based on the type of
resources it is investing into, the top holdings, age and how the overall
performance has been for the past three to five years.
At Groww, if you open any of the portfolio or mutual funds you can see all the
factors that are affecting returns on your investment, whereas with the crypto
coins factors change within minutes and prices fluctuate every second.
Second, it also depends on risk appetite of the person, if the person is in his old
age and wants to invest his savings in regular income schemes then
cryptocurrency investment is not an option for him.
On the other hand if the person doesn’t want to take too much of risk and invest
in schemes which give really good returns he may consider the option of investing
in equity mutual funds, in which if remain invested for a longer period give good
amount of returns.

FUTURE OF CRYPTOCURRENCY
Cryptocurrencies like bitcoins are rapidly mutating into real money that will give
a healthy competition to the different currencies issued by the centralised
governing bodies. Bitcoin’s current price hike could reflect a bright future
therefore, it can be clearly seen that Bitcoins has a very bright future ahead.
Cryptocurrency is also called as digital money in any payment system such as the
points we get in some random stores can be called as digital money or
cryptocurrency because it can be used instead of physical money for payment.
The genuine cryptocurrency is the decentralised. Cryptocurrency will be grown
in future and will have a huge scope ahead, however this new form of currency
does not benefits all systems of power and control that are currently in place. It’s
hard to tell what fight will be put up in order to control cryptocurrency and the
obstacles that will need to be overcome to solidify its presence in everyday life.

Types of Cryptocurrencies Traded

SR. NAME SYMBOL PRICE in (USD)
No.

1. Bitcoin BTC 130.0

2. Ethereum ETH 725.11

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 3. Ripple XRP 0.71223

4. Litecoin LTC 129.29

5. Cardano ADA 0.32525

6. Stellar XLM 0.333700

7. Bitcoin Cash BCH 896.69

It has the potential to be the world’s currency in future there will be no need to
keep a specific currency for every individual country all the time. With a type of
currency which is difficult to regulate , which is decentralise, that anybody can
use and that eliminates the exchange rates across the world makes the future of
the world by being a centralised currency across the world. This suggests the
concept one world one currency. Central banks are slowly arriving to the
conclusion that cryptocurrency are here to stay. And according to various
research papers and economist the value of digital currencies such as bitcoin are
market determined still there is a lot of analysis to be done regarding the effect of
cryptocurrency in future. Example of cryptocurrency:- Ether(ETH), Litecoin
(LTC), Bitcoin . And in these “Ether” is the second largest cryptocurrency in
terms of market cap. Litecoin enables faster block time around 2.5 minutes
whereas, bitcoin needs 10 minutes so Litecoin enables faster exchange between
users.
Needs of the study

 To study the concept of cryptocurrency, also understanding the bitcoins

and its scope
 To study the legalization of bitcoins in India, its comparison with other
cryptocurrencies and the government’s stand towards it
 To study the future of cryptocurrency in India, and the views of experts for
investing in the same

Statement of problem

The problem with this regularly occurring scenario is investing in the

market. Small traders have boosted the the price of crypto currency this leds to
price spike it also have the transaction delays across transactions

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 CHAPTER – 2

RESEARCH METHODOLOGY

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RESEARCH DESIGN

Crypto- is short for “cryptography”, and cryptography is computer

technology used for security, hiding information, identities and
more. Currency simply means “money currently in use”. Cryptocurrencies are a
digital cash designed to be quicker, cheaper and more reliable than our regular
government issued money. Instead of trusting a government to create your money
and banks to store, send and receive it, users transact directly with each other and
store their money themselves. Because people can send money directly without a
middleman, transactions are usually very affordable and fast.
A research design is a frame work or blue print for conducting research procedure
is necessary for obtaining information to solve the problem. Research designed
to assist the decision maker in determining, evaluating and selecting the best
course of action to take in a given situation. Descriptive studies are usually the
best methods for collecting information that will demonstrate relationships and
describe the world as it exists. Descriptive studies are designed primarily to
describe what is going or what exist.
The research design that will be use is Descriptive Research.
 Involves gathering data that describe events and then organizes, tabulates,
depicts, and describes the data.
 Uses description as a tool to organize data into patterns that emerge during
analysis.
 Often uses visual aids such as graphs and charts to aid the reader.

OBJECTIVES OF THE STUDY

1. To study the view of government and general public perspective towards
cryptocurrency.
2. Can we replace the indian financial system through cryptocurrency.
3. To check how much cryptocurrency is affecting the indian financial system.

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SOURCE OF DATA

PRIMARY DATA
The data which is collected directly from the respondent to the base of knowledge
and belief of such research are called primary data.
SECONDARY DATA
When data are collected and compelled from the published nature or any other's
primary data is called secondary data. We have not collected any information
from any sources. So, we have not used secondary data for our research.

Research Instruments
I have collected the data through QUESTIONNAIRE by personal meeting and
table–calling with people.

Sampling area:-The sampling area to collect the data is common people near
about Bathinda and Kotkapura.

Sample size:-100 respondents

Sample technique:-Convenient technique

Limitations of the Study

 The responses given by respondents may not be true

 Area of study is limited
 Time of study is also limited

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 CHAPTER 3

SWOT ANALYSIS

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SWOT Analysis

When we use SWOT analysis, Its often for strategic planning. It prepares for
decisions and gives an overall look at the strengths, weaknesses, opportunities,
and threats of business. But SWOT analysis can also be used to increase and build
upon customer satisfaction.
To give a well-rounded overview of how to use SWOT analysis for a boost in
customer satisfaction, we’ll start with the Strengths and Weaknesses first.

SWOT analysis, for any who may be unfamiliar, is a planning method

typically used in business strategy to identify
the Strengths, Weaknesses, Opportunities and Threats that may face a business
or project.

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A number of us have likely had the opportunity to either observe or participate
in this exercise for the broader business in which we work. A quick overview
of the core concepts:

Strengths and weaknesses

Strengths and weaknesses internal to the organization. Strengths represent
positive attributes or characteristics, factors that provide an
advantage. Weaknesses are attributes or characteristics that place the business
at a disadvantage relative to others.

Opportunities and threats

Opportunities and threats are external to the organization. Opportunities
represent external trends and chances to improve performance - something
happening in the outside environment that presents positive potential. Threats
are elements or trends in the outside environment that could cause trouble for
the business, place it at risk.

STRENTHS

 Solving the double spending problem

 Possible to digitize assets
 Digital scarcity can be created
 It enables the new markets

WEAKNESS

 Scalability
 Governance
 It is still experimental
 No clear standards
 Uncertainty regulatory

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Opportunities

 Inefficient in banking and payments

 Make government budgets and fiscal policy more transparent
 New market more financial activity
 Might this technology be like the steam

THREATS

 Short term illict actors using cryptocurrencies

 Long term geopolitical repositioning
 Drive a potentially alternative financial system

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 CHAPTER – 4

DATA ANALYSIS

&

INTERPRETATION

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Cryptocurrency facts takes a simplified look at digital currencies like Bitcoin to
help explain what cryptocurrency is, how it works, and its implications.
Cryptocurrency is a digital currency that uses encryption (cryptography) to
generate money and to verify transactions. Transactions are added to a public
ledger – also called a Transaction Block Chain – and new coins are created
through a process known as mining.

1. Being a citizen of india, do you support cryptocurrency?

Options No. of Respondents Percentage

Yes 15 15%
No 85 85%

Interpretation:

From the survey we comes to know that 85% of the citizen of india do not
supports cryptocurrency and 15% of citizen of india support cryptocurrency.

2 Have you ever heard of Bitcoin, Litecoin or other cryptocurrencies?

Options No. of Respondents Percentage
Yes 40 40%
No 60 60%

Interpretation:

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From the study we comes to know that,40% people heard about Bitcoin and
60% people never heard about bitcoin, Litecoin and cryptocurrencies.

3. Have you ever bought a cryptocurrency?

Options No. of Respondents Percentage
Yes 20 20%
No 80 80%

Interpretation:

From the study, we comes to know that 20% People has invested in
cryptocurrency and 80% People has not invested in cryptocurrency.

4. Do you expect Bitcoin to become the leading virtual currency over the next 5
years?
Options No. of Respondents Percentage
Yes 10 10%
No 70 70%
Don’t Know 20 20%

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Interpretation:
From the survey, we comes to know that 10% Respondents expect that Bitcoin to
become the leading virtual currency over the next 5 years,70% Respondents
expect that Bitcoin has not becoming the leading virtual currency over the next
5 years and 20% Respondents do not expect that Bitcoin to become the leading
virtual currency over the next 5 years.

5. Is Your current Cryptocurrency portfolio worth more than your initial

investment?
Options No. of Respondents Percentage
Yes 9 8.80%
No 91 91.20%

Interpretation:

From the survey we comes to know that,8.80% people having their current
Cryptocurrency portfolio worth more than your initial investment,91.20% people
having their current Cryptocurrency portfolio worth less than your initial
investment.

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6. According to you, which financial system is more trustable?
Options No. of Respondents Percentage
Cryptocurrency 10 10%
Indain financial system 90 90%

Interpretation:
From the study we comes to know that,10% people having trust on
cryptocurrency & 90% people having trust on Indian financial system.

7. As the Indian government is not backing up the cryptocurrency, will you

still be interested in purchasing it?
Options No. of Respondents Percentage
Yes 17 17%
No 83 83%

Interpretation :

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From the survey, we comes to know that as the government is not backing up
the cryptocurrency, as much as 83% people is not interested in purchasing it &
17% people is interested in purchase it.

8. Cryptocurrency is non-government regulated which offers users more

freedom. Would this increase your interest in using cryptocurrency?

Options No. of Respondents Percentage

Yes 45 45%
No 55 55%

Interpretation:

From the study we comes to know that,45 % people thought that their interest is
increasing in using cryptocurrency & 55% people thought that their interest is
decreased in using cryptocurrency.

9. Do you expect Governments will take a practical view on Bitcoin and minimise
user registration with identity checks to be limited to original purchase of Bitcoin
with fiat currency?

Options No. of Respondents Percentage

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 Yes 15 15%
No 70 70%
Don’t Know 15 15%

Interpretation:

From the survey, we comes to know that 15% expect Governments will take a
practical view on Bitcoin and minimise user registration with identity checks to
be limited to original purchase of Bitcoin with fiat currency & 15% do not expect
Governments will take a practical view on Bitcoin and minimise user registration
with identity checks to be limited to original purchase of Bitcoin with fiat
currency

10. Why Indian government do not support cryptocurrency, main reason

behind that:

Options No. of Percentage

Respondents
Untrackable 70 70%
Reducing the power of ministry of 20 20%
finance
Increasing the illegal activities 10 10%

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Interpretation:

From the survey, we comes to know that main reason behind that the government
is not supporting the cryptocurrency, as much as 70% of the people thought it is
untrackable,20% of the people thought that it reduces the power of ministry of
finance & 10% of people thought that it increases the illegal activities.

11.If cryptocurrency is government regulated but remained intangible,

would this
increase your interest in cryptocurrency?
Options No. of Respondents Percentage
Yes 80 80%
No 20 20%

Interpretation:
From the survey, we come to know that cryptocurrency is government regulated
but remained intangible this factor increasing interest of 80% people in
cryptocurrency is government regulated but remained intangible this factor
decreasing the interest of 20% people in cryptocurrency.

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 12.Keeping the bird eye view on the world. What approach should
indian government takes towards crypto currency.
Options No. of Respondents Percentage
Positive 20 20%
Negative 80 80%

Interpretation:

From the survey, we comes to know that 20% of the people thought that govt
approach is positive towards cryptocurrency& 80% of the people thought that
govt approach is negative towards cryptocurrency.

13.If cryptocurrency providers created tangible coins (or notes) for

cryptocurrency users with banks and ATMs readily available but
remained non-government regulated, would this increase your interest in
cryptocurrency?

Options No. of Respondents Percentage

Yes 72 73%
No 27 27%

Interpretation:

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From the survey we comes to know that, 73% people increase their interest in
using cryptocurrency and 27% people decrease their interest in using
cryptocurrency.

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 CHAPTER – 5

FINDINGS,

CONCLUSION

&

SUGGESTIONS

FINDINGS:

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 From the survey we comes to know that 85% of the citizen of india do not
supports cryptocurrency and 15% of citizen of india support
cryptocurrency.

 From the survey we comes to know that, 73% people increase their interest
in using cryptocurrency and 27% people decrease their interest in using
cryptocurrency.
 From the survey,we comes to know that main reason behind that the
government is not supporting the cryptocurrency,70% of the people
thought it is untrackable,20% of the people thought that it reduces the
power of ministry of finance & 10% of people thought that it increases the
illegal activities.
 From the survey, we comes to know that 20% of the people thought that
govt approach is positive towards cryptocurrency& 80% of the people
thought that govt approach is negative towards cryptocurrency
 From the survey, we comes to know that 50% people interest has been
increased in using cryptocurrency by considering the less fees to operate &
50% people interest has been decreased in using cryptocurrency by
considering the less fees to operate.
 From the study we comes to know that,45 % people thought that their
interest is increasing in using cryptocurrency & 55% people thought that
their interest is decreased in using cryptocurrency.
 From the survey,we comes to know that 35% people thought that
cryptocurrency diminish the value that you perceive about the currency &
65% people thought that cryptocurrency not diminish the value that you
perceive about the currency.
 From the study we comes to know that,30% people is interested in using
cryptocurrency & 70% people is not interested in using cryptocurrency.

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  From the study,we comes to know that 60% People has invested in
cryptocurrency and 40% People has not invested in cryptocurrency.

CONCLUSION

The cryptocurrency market, which trades various digital-based coins, can look
exciting, scary, and mysterious all at once to the casual observer. Its pioneer,
Bitcoin, dramatically surged in value and steeply dropped (before picking
back up) in recent months. ICOs (initial coin offerings for new
cryptocurrencies), meanwhile, are emerging at a head-spinning rate.While
some financial advisers remain skeptical, it’s hard to ignore the massive
amount of money invested in the field. We talked to two leading futurists, who
study and predict technology trends, about where they see cryptocurrency
headed—and why you should pay attention.The problem that we can foresee is
the pace of change in regulations; change in regulation usually takes a route of
develop, propose and adopt which generally takes a period. Regulations or
regulatory changes typically evolve at a pace than innovation thereby killing it by
declaring it illegitimate. Also as its not been governed by a central authority
Bitcoin tends to fluctuate widely and to be used globally its volatility needs to
settle down.

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SUGGESTIONS

The price of Bitcoin and the price of Ethereum has exploded in 2017. The
question is whether there is sufficient upside potential to consider investing in
crypto currencies. Stated differently, is it (still) worth looking into crypto
currencies as an investment or is it too late?
The key consideration is that Bitcoin is not the only crypto currency to invest in.
On the other hand, Bitcoin has made crypto currencies popular and even more
secure. Yes, there were definitely security issues a couple of years ago, but it
seems those issues have been resolved. So Bitcoin has helped mature the crypto
currencies space.

Investing Haven believes that a combination of price analysis and fundamental

analysis is the most appropriate way to make a rational investment choice, and to
engage in forecasting the price of crypto currencies. With that in mind, we also
look into the altcoins space in this article in order to find investment
opportunities.

Investing Haven’s research team has collected 10 investment tips for investing
in crypto currencies which are useful to investors not very familiar in this space.

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BIBLOGRAPHY

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science-institute/_files/ifree-papers-and-photos/koeppel-april2017.pdf
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%20Cryptocurrency%20-
%20Sindri%20Le%C3%B3%20%C3%81rnason%20Final.pdf
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short-introduction-to-the-world-of-cryptocurrencies.pdf
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cryptocurrency-research-conference-2018.pdf
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suisse.com/docView?language=ENG&format=PDF&sourceid=csplusrese
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LNi1z%2Fk8mInqoBSQ5KDZG4%3D
https://www.ubs.com/content/dam/WealthManagementAmericas/cio-
impact/cryptocurrencies.pdf
 https://lopp.net/pdf/princeton_bitcoin_book.pdf
 https://www.chapman.edu/research/institutes-and-centers/economic-
science-institute/_files/ifree-papers-and-photos/koeppel-april2017.pdf
 https://www.msm.nl/resources/uploads/2017/10/Working-Paper-No.-
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 file:///C:/Users/Care/Downloads/sustainability-09-02214.pdf
 https://bitcoin.org/bitcoin.pdf

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