Cryptocurrencies are “a stateless digital currency” in which encryption techniques are used for trading and these ‘currencies’ operate independently of a Central bank like the RBI, “rendering it immune from government interference”.
RBI, through its circular, had directed banks and financial institutions to freeze the bank accounts of those individuals and companies dealing in the illegal trade of virtual currencies. News emerged that the government was seriously considering classifying cryptocurrencies as commodities.
Cryptocurrencies work through Blockchain. Blockchain can be described as a shared record of every transaction ever made on a digital accounting book. When person A sends Bitcoin to person B, this transaction is added to an immutable public ledger – the blockchain. This ledger is stored in multiplicity throughout the network, and to update one is to update them all. That’s a big part of what makes blockchain so powerful as a tool and idea – once a record is created on the blockchain, it can’t be reversed or altered, it is forever, and it is verifiable. Processing and validating these transactions and then recording them is called mining. Bitcoin is coded to have a fixed supply of 21 million coins. there shall not be more than the said fixed amount
A BitCoin can be divided up to eight decimal points or 0.00000001[Satoshi or SAT]. Presently, there can only be 4 bitcoin transactions per second.
Bitcoin: A Peer-to-Peer Electronic Cash System.
Abstract. A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending.
We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they’ll generate the longest chain and outpace attackers. The network itself requires minimal structure. Messages are broadcast on a best effort basis, and nodes can leave and rejoin the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone. [Satoshi Nakamoto -firstname.lastname@example.org> http://www.bitcoin.org]
Bitcoin Core Free Software: Bitcoin Core powers the Bitcoin peer-to-peer network, so people who want to disrupt the network may attack Bitcoin Core users in ways that will affect other things you do with a computer