A cryptocurrency is a new form of digital money that uses cryptography to secure the digital transaction as well as the creation of new units. Simply, it is a medium of transaction. They are self-contained systems which use many timestamping methods to avoid the need for the third-party verifier. This means the transaction does not require any other vendor and the transaction between two people is encrypted from end to end. This also means that cryptocurrency has no server or central authority.
One of the famous cryptocurrency is Bitcoin. Bitcoin is the first cryptocurrency that was introduced in the year 2009. Although there are many other cryptocurrencies, Bitcoin is most popular one. So I will keep my further explanation in regard to Bitcoin only.
Bitcoin is a digital currency. No bills to print or coins to mint. It's decentralized (as it is cryptocurrency) - there's no government, institution (like a bank) or other authority that controls it. The transactions are anonymous; instead of using names, tax IDs, bitcoin connects buyers and sellers through encryption keys. Bitcoin is "mined" by powerful computers over the internet. This requires a lot of hardware and power supply.
Bitcoin is mined by complex algorithms and requires a lot of record keeping. This mining is done by an open-source software and the process is called 'mining'. When a person sends bitcoin to another, the transaction is recorded over the network called as 'block'. The 'mining' software will inscribe this transaction into a digital ledger. The entire 'blocks' recorded over the network is called as 'blockchain'. The miners will convert these blockchains into 'hash' which is a sequence of a code. This process of forming hash is the competitive part as many miners will be doing the same. When a new hash is generated, it's placed at the end of the blockchain, which is then publicly updated and propagated. The person who finishes first will get the bitcoins (12.5 bitcoins generally). This mining can be done in a pool or individually. The bitcoin generated in the pool is distributed to the miners in that pool. 21 million bitcoins is the maximum limit all over the world which can be mined and until the end of the year 2017, 17 million bitcoins have been mined.
Bitcoin or any cryptocurrency is not officially recognized by the Indian government. It is not illegal but it isn't recognized legally. Although the recent 2018 union budget has showered some rays of hope on the blockchain system. There are officially no merchants that accept cryptocurrency in India but you can still mine any cryptocurrency of your choice. There are certain scam sites that offer bitcoin or any form of cryptocurrency coupons. Proceed with caution. It is generally safe to mine rather than buying new bitcoin. There are some genuine sites which sell bitcoin online. Example: Coinmama, CEX, Kraken, and Coinbase.
The present value of one Bitcoin in INR is nearly 5 Lakhs. This value is not determined by any authority or any top authority finance controller. The value of cryptocurrency depends on people themselves. It depends on how much people are willing to pay. Before union budget was announced, the bitcoin value was nearly 11 lakhs.
Don't start mining without proper preparation. It doesn't mean that if you have a super fast computer or if you buy high-end hardware you can mine the cryptocurrency quickly. Many have fallen to this misconception. Mining is super heavy competition and you must understand every concept of it. Also don't blindly assume that bitcoin is the best currency. Over the period of time, another cryptocurrency will become more popular. Also, remember that mining will make your hardware run to its maximum capacity which means there will be a lot of load on the computer and it can cause malfunctioning of your PC.
Dr. V. Shashikanth