Buzzwords Crypto-Currencies and Bitcoin Simplified

Saurabh Jain, Vice President - South, Havas Media

Surabh holds expertise in bridging the gap between the Client and the Media (Television, Dailies, Magazines, Radio, Cinema, and OOH, Digital).

I am in love with these buzz words for the pure reason that I got lucky with a few bucks. Being from  a Media Agency background, studying trends and dissecting data is in my DNA. At heart I am a finance advisor too, hence sharing some of my study for the benefit of people who want to know more about this slightly complicated world.

What is Crypto-Currency?
Crypto-currency is a form of digital money that is designed to be secure, and in some cases, anonymous. It is a currency associated with the internet that uses cryptography, the process of converting legible information into an almost uncrackable code, to track purchases and transfers.

Bitcoin was the first crypto-currency, which was created in 2009 and is still the best known. There has been a proliferation of crypto-currencies in the past decade.

The top crypto-currencies in the world today- as on date there are around 920 crypto currencies in the market : Bitcoin has a market capitalization of over 60 percent followed by Ethereum (ether) - 12 percent, Ripple - 6 percent, Bitcoin Cash - 5.5 percent, Litecoin - 2.8 percent, IOTA - 2.2 percent, and etc.

At USD 300 bn valuation, Bitcoin has now become the 15th most valuable liquid currency in the world, above Indian INR circulation of UNR 294 bn (measured by M1 money supply).

What are Bitcoins?
Bitcoins are decentralized, purely digital virtual coins exchanged directly between two parties online with no middle man. Unlike modern fiat money, Bitcoin, which has often been called "cash for the Internet," is not controlled or backed by any bank or central government authority. So now you know why there is a strong resistance by most governments.

Bitcoins are pieces of computer code, mathematical algorithms that represent monetary units. There are currently 16.74 million Bitcoins in existence. In all, only about 21 million Bitcoins will ever be generated through the year 2140.
To put things into perspective - supply of Bitcoins are limited (21 Mn). Demand is ever increasing, thanks to the growing popularity. Prices were bound to increase. Increasing price continues to create inquisitiveness to the wider audience, which are now the main reason behind the increase in popularity making it a circle. Economics of demand and supply is a logical reason behind the continued price gains.

Are Bitcoins Anonymous and Untraceable?
No, contrary to popular belief, they aren't. While Bitcoin users don’t have to divulge certain pieces of identifying information, like their bank account, identity, and physical addresses, a traceable trail of each transaction is left behind in a public log known as the Blockchain.

Bitcoin exchanges that operate in the U.S/ India etc collect personal identifying information from their users.

Explaining why #bitcoinwen-tcrazy in Q4 2017- Two of the world's biggest exchanges CBOE and CME are beginning bitcoin futures trading in Dec 17. It's a big dose of legitimacy, something that could be helping to boost its price. In India, Bitcoin jumped from Rs 11.2 lac buying price to a crazy Rs 14 lac the moment CBOE launched Bitcoin futures on 12th Dec. Investors are now looking forward to the launch at the bigger exchange, CME.

• Banks and financial companies see tremendous promise in the blockchain technology underlying bitcoin, which could revolutionize payments and securities settlement.
• Price volatility is only one of bitcoin's risks.

A word of caution - While I myself am a Bitcoin enthusiast, Iam a finance advisor at heart. There is no logical explanation to the sky rocket prices of Bitcoin - they have increased by an insane 11 times in 2017 itself.
I would urge all those who are considering to invest in bitcoin or Altcoin (Alternate coins to Bitcoin) to invest only the amount which they don’t mind loosing. Looking at the past trends, being optimistic is good but let’s be pragmatic with your hard earned money.

Why is There a Difference in Indian Price and International Price?
At times, the Indian prices, both buy and sell prices, are 5-10 percent higher than international market. This happens when there is high demand for bitcoins in India and sellers are not ready to sell cheap. India holds few top Bitcoin exchanges namely, Zebpay, Unocoin and Coinsecure. The best prices are best decided when rates are compared prevailing in India across exchanges and decide.