Reserve Bank of India is not comfortable with NON FIAT crypto currencies like BITCOIN, according to a report received today.
What is CRYPTOCURRENCY?
CRYPTOCURRENCY is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.
“Decentralized cryptocurrencies such as bitcoin now provide an outlet for personal wealth that is beyond restriction and confiscation”
A cryptocurrency like Bitcoin consists of a network of peers. Every entity would have a record of the complete history of all transactions and thus of the balance of every account. The transaction runs like this:
- Bob gives X Bitcoin to Alice“ and is signed by Bob‘s private key.
- It‘s basic public key cryptography, nothing special at all.
- After signed, a transaction is broadcasted in the network, sent from one peer to every other peer.
- This is basic p2p-technology.
- A confirmation received duly completes the transaction cycle.
Bitcoin was the first decentralized cryptocurrency introduced in 2009. Subsequently, several cryptocurrencies have been created. These are often termed as ALTCOINS which is a a blend of bitcoin alternative. Bitcoin and its derivatives use decentralized control as opposed to centralized electronic money/ centralized banking systems. The decentralized control is related to the use of bitcoin’s block chain transaction database in the role of a distributed ledger
A Non fiat currency is a private cryptocurrency which is issued by RBI in place of physical one at present. The Central Bank is said to be studying this at present which could form an alternate to the Indian Rupee.