Advantages And Disadvantages Of Bitcoins

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Untraceable- This is one of the biggest drawbacks of Bitcoins, that the transaction is untraceable. This can lead to the money being used for a variety of illicit purposes like terrorism, money laundering etc. Current status of bitcoins in India: The Reserve Bank of India’s advisory on Dec. 24 directed certain Indian bitcoin traders to suspend their operations, even though regulators seeked clarity on digital currencies and ways to regulate them. The RBI is worried about taxation, money laundering etc. While regulators have not deemed virtual currencies illegal, India’s law enforcement agency, the Enforcement Directorate, raided the offices of a few companies that operate bitcoin trading websites. While this might slow the adoption of bitcoins…show more content…
Bitcoins can be usd for such goods where the price is sub rupee i.e in paise. It will also reduce the commission to be given to third party actors for the transaction. 3. Virtual World and Game-Related Commerce In today’s world, consumers engage in transactions in online virtual world games such as buying gems in Clash Of Clans or buying crops in Farmville. Bitcoins could be offered as the transaction currency in these virtual worlds. It has the unique advantage of not being governed by a central entity-who could issue any number of currency notes, thus depreciating the value of bitcoins in terms of real money. Is Bitcoin a sustainable…show more content…
Yet, it is unregulated, and no authority can issue any number of bitcoins at will. Hence, this has lead to a confidence in the bitcoin by investors as they feel the value of the bitcoin in terms of real money cannot be affected except by the market. However, certain changes in the Bitcoin sytem may portent a drastic downfall of the system. (a) Software developers or a new competitive system might exercise discretionary authority to change the inflation rate-which would cause users to lose confidence in Bitcoin and sell their holdings thus causing panic. (b) A superior ccurrency that competes with Bitcoin – one with a better inflationary algorithm and more security - could cause the value of Bitcoin to drop drastically. (c) The Government of India may blacklist the currency which would cause fall of confidence in a currency that is associated with criminal charges in the country. (d) Certain industries using bitcoin as currency may stop using it altogether leading to a deflationary spiral. (e) On the technical front, Bitcoin is susceptible to the failure of its anonymity feature, cybertheft of the wallets on personal compuiters and denial of service attacks. These would cause a drastic loss of confidence in the

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