Even if you are not into technology, you would have surely come across the word Bitcoin. (Unless you’ve been living under a rock !) Thanks to the recent trends of this cryptocurrency, Bitcoins are all over the place. This virtual currency that traded for few hundred rupees 7 years back, is currently trading at almost 10 Lakh Rupees ! This is the latest head turner in the town, no other investment has seen such meteoric rise ever. At one side we have the RBI releasing a caution notice for anyone dealing in Bitcoin while on the other we are seeing a huge rush to buy bitcoins. This post isn’t going to give a detailed insight into what Bitcoin is, but this is for anyone who just wants to know what is bitcoin and how do you earn bitcoins in India. Let’s get started…
The First Question – What is Bitcoin ?
Prior to getting to answering what is Bitcoin, it is important for you to understand the technology behind it. Blockchain (another buzzword that you would have surely come across) is the technology fuelling Bitcoin. To put it in simple words, Blockchain is an open, distributed and highly secured ledger. The basic unit is a ‘block’ and each block is linked to other block thus forming a ‘chain’. Every computer has a copy of this chain (Distributed and Transparent), but only the person with the required key has access to all the information in the block. (Highly Secured)
Whenever a new transaction takes place, this blockchain needs to be updated. Since there are multiple copies of the ledger, only one of them can append the transaction. To cement a transaction, a computer needs to solve puzzles in time and the process of doing so is called mining. For solving the puzzle, miners are issued bitcoins in exchange. And that’s how Bitcoins are generated. You can use this virtual currency just like regular currency. Just like 100 paise make a Rupee, units called Satoshi make up a bitcoin. In fact 100,000,000 Satoshi make 1 Bitcoin. That’s it on What is Bitcoin, I hope this has helped you understand it a little.
How do you Earn Bitcoin in India ?
With Bitcoin breaking new records almost every week, there are many people who are now getting more interested in earning bitcoins. Some financial gurus have termed that the Bitcoin Bubble will soon burst while there are others who feel that the Bitcoin will break the $40,000 mark in 2018 (Latest news coming in that bitcoin has already crossed $15,000). Whatever be the case there are many people who are eager to earn bitcoin. So how do you earn bitcoins in India ? Well, I’ll mention 100% legitimate ways to earn bitcoins in India. As mentioned earlier, earning / investing in Bitcoins calls for high risk due to the high volatility. So please ensure you consider all your current financials before proceeding to invest in bitcoin.
Before you actually start to earn bitcoin in India or invest in Bitcoin, you need to have a secured place to store your bitcoins. (Just like your bank account) These secured accounts are called Wallet. Before you start any activity related to Bitcoin, you need to have a Bitcoin Wallet with you. These wallets are just like any other digital wallet you use PayTM, Freecharge etc. Every wallet will have a unique Bitcoin address (alpha numeric 26-35 characters) All the bitcoins you earn will be stored in these wallets which you can then use to buy product/services or convert them to cash.
1. Bitcoin Mining
As mentioned earlier, there are people who are working day in and out to solve complex puzzles to earn bitcoin. (Don’t worry you don’t have to solve them using a pen and paper !) You use your computer’s computing power to solve these puzzles. But these puzzles are so complex, that it will probably take years for you alone. Therefore mining is usually done in group called pools. You usually join a pool of miners and solve puzzles together. If you successfully solve it, your pool is awarded some bitcoins and you get a share of it.
Now the trade-off here is the resources you put in versus the amount you earn. You need to have a very power computer (high power CPU and GPU) connected 24×7 to the internet. You can imagine what your electricity bill would look like ! In short the more powerful the device is, the less time it will take to mine a bitcoin. You can even use your mobile to mine bitcoin or hire resources to mine bitcoin. There are various companies that are providing infrastructure needed to mine bitcoin. You rent those and earn bitcoins.
2. Trading Bitcoin – easiest way to Earn Bitcoin in India
Trading or Investing in bitcoins is just like trading any other currency. There is a central coin exchange where the bitcoins are traded. You can buy bitcoin from these exchanges or from other people who are willing to sell it. You can also sell the bitcoins in similar way – can sell to an exchange or a person. Since bitcoin is almost 10 lakh Indian Rupees, you might wonder How to Earn Bitcoins in India then ? Well you don’t need to actually buy 1 Bitcoin, you can buy how much ever you want. You can buy bitcoins worth 500 Rs, 1000 Rs 100000 Rs and so on. Based on the amount you wish to invest, you will be allotted some bitcoins.
Keep the bitcoins in the wallet and watch the trends in the value of bitcoin. If you feel, you can sell the bitcoin to get cash in your account or you can leave it and hope for it to reach a level when you could buy an Audi ! Choice is yours. In India there are various Bitcoin Wallets available, some of the well-known ones are Unocoin, Zebpay, Coin secure to name a few.
Final Words – Invest with caution
This was all about what Bitcoin is and How You Can Earn Bitcoins in India. You can either utilise your smartphone’s or computer’s computing power to mine bitcoin or you can take an easier but risky route to earn bitcoins in India. Whatever your choose to do, do it with caution. Since the value of Bitcoin fluctuates way faster than you can imagine. The Sensex is probably slower than Bitcoin’s value.
I hope this post gave you an insight into Bitcoin and how you can earn Bitcoins in India. Make sure you invest in Bitcoin with caution, neither the RBI nor I shall be responsible for any monetary loss(or gain) you may incur in the process. And as for the taxation part, I guess this will be taxed like any other capital gain (need to confirm with a CA). If you found these tips to be helpful or feel that I’ve missed out on anything, please mention in the comments below or tweet to me at @Atulmaharaj