Last month, Finance Minister Nirmala Sitharaman had also informed Parliament that the government doesn’t collect information about the number of cryptocurrency exchanges operational in the country and the number of investors linked to the same.
The ‘Cryptocurrency and Regulation of Official Digital Currency’ bill will create a facilitative framework for an official digital currency to be issued by the Reserve Bank of India, and ban all private cryptocurrencies.
Such a pre-verification approach would create obstacles for thousands of peer-to-peer currencies that thrive on being outside the ambit of regulatory scrutiny.
What is Bitcoin
Bitcoin is a decentralized digital currency created in January 2009. It follows the ideas set out in a white paper by the mysterious and pseudonymous Satoshi Nakamoto.12 The identity of the person or persons who created the technology is still a mystery. Bitcoin offers the promise of lower transaction fees than traditional online payment mechanisms do, and unlike government-issued currencies, it is operated by a decentralized authority.
What is cryptocurrency mining
Most people think of crypto mining simply as a way of creating new coins. Crypto mining, however, also involves validating cryptocurrency transactions on a blockchain network and adding them to a distributed ledger. Most importantly, crypto mining prevents the double-spending of digital currency on a distributed network.
Like physical currencies, when one member spends cryptocurrency, the digital ledger must be updatedby debiting one account and crediting the other. However, the challenge of a digital currency is that digital platforms are easily manipulated. Bitcoin’s distributed ledger, therefore, only allows verified miners to update transactions on the digital ledger. This gives miners the extra responsibility of securing the network from double-spending.
MINING BANNED IN INDIA?
According the summary of the Bill, the government is planning a ‘general prohibition on all activities by any individual on mining, generating, holding, selling, (or) dealing’ in digital currencies as a ‘medium of exchange, store of value and a unit of account’.