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International Research Journal of Modernization in Engineering Technology and Science

( Peer-Reviewed, Open Access, Fully Refereed International Journal )
Volume:04/Issue:06/June-2022 Impact Factor- 6.752 www.irjmets.com
RESEARCH ON BITCOIN IN INDIA
Ms. Janhavi Haresh Varpe*1
*1MCA Student, MET-Institute of Computer Science, Mumbai, India.
ABSTRACT
Bitcoin, which was founded in 2009, has become a global currency. Bitcoin is a decentralised digital currency
that is not backed by any government or central bank. It may be used to purchase goods and services from
retailers who accept bitcoins. These bitcoins serve as encrypted data chunks. This data is sent from one person
to another, and the transaction is confirmed, i.e., money is spent, necessitating a significant amount of
computing power to accurately authenticate the individual transactions. The peer-to-peer network monitors
and certifies bitcoin transfers between users. It may be used to book hotels, shop, do financial transactions, and
even buy video games. The evolution of bitcoin cryptocurrency, the emergence of blockchain, and its use in
real-world entities are explained. This research paper will cover the rise of Bitcoin in India.
I. INTRODUCTION
Bitcoin is a collection of concepts and technologies that form the basis of a digital money ecosystem. Units of
currency called bitcoins are used to store and transmit value among participants in the bitcoin network. Bitcoin
users communicate with each other using the bitcoin protocol primarily via the internet, although other
transport networks can also be used. The bitcoin protocol stack, available as open source software, can be run
on a wide range of computing devices.
Bitcoin was invented in 2008 with the publication of a paper titled “bitcoin: A peer-to-peer electronic cash
system,” written under the alias of satoshi nakamoto. The bitcoin network started in 2009, based on a reference
implementation published by nakamoto and since revised by many other programmers.
Bitcoin is known as a type of cryptocurrency because it uses cryptography to keep it secure. There are no
physical bitcoins, only balances kept on a public ledger that everyone has transparent access to (although each
record is encrypted).
A cryptocurrency is a virtual currency which is based on block chain technology. This type of currency works on
cryptography. It is decentralised meaning that no authority is there behind it to regulate and control it. The
number of types of cryptocurrency is increasing on a regular basis. There are over 4000 cryptocurrencies as of
early 2021 but it is believed that top 20 cryptocurrencies hold the Market share upto 90% earlier people used
to invest in gold as an asset to protect their money against inflation. Over the past couple of years, more people
found bitcoin to be a better alternative asset. Even institutional investors are converting their cash into bitcoin
to protect their finances against inflation.
OBJECTIVES OF THE STUDY
o To understand the concept of Bitcoin, how it works.
o To study how to buy and sell the Bitcoin.
o To understand the pros and cons of Bitcoin in India.
II. WHAT IS BITCOIN?
Bitcoin is a type of digital money. "It is a collection of binary data that is intended to be anonymous and safe."
Bitcoin operates on the Cryptography concept, in which data is turned into codes,' explains Gaurav Dahake, CEO
& Founder of Bitbns, a renowned Bitcoin exchange in India.
The virtual currency is intended to function as a means of exchange, with encryption used to safeguard
transactions and manage the generation of extra units of money. These are decentralised in nature, which
implies that no single entity owns or controls them. Furthermore, it does not rely on central banks and is a
collection of data that is intended to function as a medium of exchange by utilising its underlying technology,
the blockchain.
It is a peer-to-peer system that lets anybody from anywhere to send and receive money. Bitcoin payments exist
purely as digital entries to an online database that identify individual transactions, rather than as physical
money that can be carried about and exchanged in the real world. Transactions involving Bitcoin money are
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recorded in a public ledger. Bitcoin is stored in digital wallets "Kshitij Purohit, Lead Currency & Commodities
Analyst at CapitalVia Global Research, agreed.
What is the size of the Bitcoin market?
The worldwide bitcoin industry is predicted to be worth $2.73 billion by 2025. According to an HDFC analysis,
there are already more than 8,500 cryptocurrencies in the globe, with a market value of more than $2 trillion.
"This equates to 18% of total world gold holdings."
"The reason for cryptocurrency's rise is that it has a very low barrier to entry — when something is free and
decentralised, it's easy to imitate and copy," says Vinay K Mayer, Marketing Research & Consulting @ Asia
Research Partners LLP.
In 2010, the first commercial bitcoin transaction was to purchase two pizzas for 10,000 bitcoin. The same
amount today is worth $400 million!
III. HOW TO PURCHASE BITCOIN
1. Select a Crypto Exchange
To purchase Bitcoin or any other cryptocurrency, you'll need to use a crypto exchange, which connects buyers
and sellers to swap cash for coins.
There are hundreds of exchanges available, but as a newbie, you should choose one that combines ease of use
with minimal costs and great security. If you don't already have an exchange in mind, make sure to check out
our top selections for best crypto exchanges, such as Unocoin, WazirX, ZebPay, and CoinDCX.
You may move bitcoins from one exchange to another. For example, if you need to transfer bitcoin from your
WazirX wallet to another crypto exchange, you must first withdraw your bitcoins from your WazirX account.
Obtain the deposit address from the cryptocurrency exchange to which you wish to transfer your coin. You are
now ready to transfer your monies once you have the deposit address.
2. Select a Payment Method
You must fund your account after selecting an exchange before you can begin investing in Bitcoin. You may fund
your account with bank transfers, net banking, Mobikwik, a cryptocurrency wallet, or UPI, depending on the
exchange. However, platforms may charge higher transaction fees for specific funding alternatives. CoinDCX, for
example, does not charge a fee if you utilise UPI or bank transfers. However, it charges 0.5 percent for online
banking and 1% for transactions above INR 2,000 using Mobikwik wallet. WazirX, on the other hand, costs INR
23.6 (including all taxes) through net banking or forces you to top up your Mobikwik wallet via UPI or bank
transfer before transferring cash. Credit cards are not accepted for wallet transfers, and fees vary depending on
the trip.
Because fees lower the amount of money you can invest (and hence the amount of money you have to grow and
multiply), electronic transfers from a bank account make more sense than alternative options.
3. Make a Purchase
You can make your first order to acquire Bitcoin after your account has been financed. Depending on the
platform, you may be able to buy it by just hitting a button, or you may need to input Bitcoin's ticker symbol
(BTC). You must then enter the amount you wish to invest.
You will possess a fraction of a Bitcoin after the transaction is completed. This is due to the high initial cost
required to purchase a single Bitcoin today. If the current price of Bitcoin was $38,000, for example, you would
need to invest that much to get one. If you invested less, say $1,000, you would receive a proportion of a Bitcoin,
in this example 0.026 percent.
4. Choose a Secure Storage Option
Your cryptocurrency exchange most likely includes an inbuilt Bitcoin wallet or a chosen partner where you may
safely store your Bitcoin. Some users, however, are concerned about leaving their cryptocurrency connected to
the internet, where it may be easily taken by hackers.
The majority of customer assets are stored offline, in what is known as cold storage, by cryptocurrency
exchanges. If you desire the highest level of protection, you may keep your Bitcoin in an online or offline Bitcoin
wallet of your choice. However, bear in mind that if you withdraw cryptocurrency from an exchange, you may

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be charged a modest withdrawal fee. Furthermore, if you use a third-party crypto wallet custodian, you may be
unable to access your coins indefinitely if you lose the private key that serves as your wallet password. This has
prevented several Bitcoin billionaires from accessing their money.
IV. HOW TO CONVERT BITCOIN INTO CASH?
1. Through an exchange or a broker
The first way to convert bitcoin into cash is through an exchange or broker, which works similarly to the
currency exchange system at airports. After depositing digital currency to exchange and requesting withdrawal,
the broker will send your funds to the same bank account from where you purchased the coins. Deposits in the
same bank account are prohibited by the country's anti-money-laundering rules.
This approach is thought to be safe and secure, but it takes a long time to convert. The typical time for money to
reach your account is 4-6 days. The exchange also charges a fee for the transaction, which varies from broker to
broker and country to country.
Furthermore, Bitcoin ATMs and Bitcoin Debit Cards function similarly to third-party brokers. In both cases, you
open an account that allows you to sell bitcoins and withdraw cash. The most significant negative is the hefty
transaction costs. However, this service is not accessible in India.
Select the third-party broker exchange you wish to utilise. Sign up and go through the brokerage's verification
process before depositing (or purchasing) bitcoin into your account. Finally, withdraw your bitcoin by
transferring it to your bank account.
2. Platforms for peer-to-peer communication
If you need to sell bitcoin for cash quickly, you can use peer-to-peer marketplaces. You may also choose the
payment method you wish purchasers to utilise when selling bitcoins using this approach.
Furthermore, this generally results in speedier transactions with lower fees. You may also often receive better
exchange rates with an individual buyer than with a third-party firm.
However, while employing the peer-to-peer selling approach, it is critical to be careful of scammers. It may also
be advantageous to utilise a peer-to-peer network that allows you to keep your bitcoins locked until you
receive payment from the buyer.
Choose your preferred peer-to-peer trade platform. Sign up and select your ideal buyer's location. Then, search
the marketplace for buyers and submit a trade request. Most peer-to-peer networks include an escrow option,
in which your bitcoins are not transferred to the buyer until you confirm payment has been received.
Hence, peer-to-peer technologies allow you to remain anonymous. You may also use a VPN (virtual private
network) to encrypt your connection and select payment options such as online money or gift cards.
V. BITCOIN MINING
Bitcoin mining, as the name implies, is the process of extracting bitcoin by solving complicated mathematical
problems with high-powered machinery. Even the most powerful computers cannot complete the
computational and difficult process of bitcoin mining.
The goal of this effort is to make the bitcoin payment network more trustworthy for users. Another advantage
of this long and difficult game of mining is greater security, as all transaction information is validated by bitcoin
miners every time an equation is solved.
Banks, point-of-sale systems, or tangible receipts document transactions in a common currency. Similarly, a
bitcoin transaction is validated by solving equations, and bitcoin miners generate a "block," which is effectively
a list of transactions awaiting confirmation. A block is then compiled in a public chain of previously generated
blocks in the past as if it were the next link in the chain, which is referred to as the "blockchain." A programme
called bitcoin miner or bitcoin mining calculator is used to conduct the mining process online. Bitcoin mining
machines are computers that have been customised to handle the intricacy of mathematics.
VI. IS BITCOIN LEGAL IN INDIA?
Bitcoin is not regarded legal cash in India, although it is not illegal to invest in Cryptos. As a result, many
financial irregularities occur.

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According to financial analysts, the current crypto investing boom is causing a slew of anomalies, including
money laundering. "A lot of Indian monies are travelling outside through Crypto currency, which is leading to
money laundering," says Mangat.Rai.Garg, a chartered accountant by profession.
The current environment in which Crypto trading occurs is not covered by the SEBI preview. There are several
P2P (Peer to peer) wallets in the nation that trade in Crypto currencies. Binance, Wazirx, Zengo, Ledger, and
CoinDCX are just a few examples.
"If the government instructs the banks through which these currencies are invested to use 26 AS mapping and
deducts 30% tax, the matter might be readily remedied." If this is done, the country's tax receipts will almost
certainly increase," Mr. Garg predicts.
Crypto money has been championed by renowned business tycoons such as Eon Musk, the inventor of Tesla
and Space X, and Jack Dorsey, the founder of Twitter, who have said that "Crypto is the currency of the future."
VII. PROS AND CONS OF BITCOIN
Pros:-
Sending money online through a bank gateway is both time-consuming and costly. Bitcoin, on the other hand,
have minimal to no transaction costs because the fee charged is tiny.
Money is available 24 hours a day, seven days a week whether it is invested in the stock market or credited to a
bank account. With cryptocurrencies, a person gets 24/7 access to money with no time limit for transacting or
utilising the money invested. With Bitcoin, you may pay or send money to anybody, anywhere, and at any time,
regardless of the other user's location. They must, however, be prepared to take payment in the specified
cryptocurrency. You can conduct as many transactions as you like because there is no central authority to
control or oppose them. The time it takes to conduct a transaction using bitcoins is quite short. When you send
money online to another nation, blockchain technology completes the transaction in seconds and in the most
secure method possible.
Cons:-
Cryptocurrencies are one of the most volatile asset types in the whole financial world. Although volatility and
the associated price fluctuations allow investors to benefit, they can also compel them to pay enormous losses if
the price fluctuations are negative.
There is no literature on bitcoin trends, unlike equities, where you can undertake technical and fundamental
analysis to understand the present trend and anticipate the future trend. Due to a lack of literature, investors
are unable to correctly analyse and assess cryptocurrencies, resulting in extremely speculative investing.
There are currently no regulations, norms, or a regulatory agency in place to control the operation of
cryptocurrencies. As a result, investors have frequently lost money to fraudsters or cryptocurrencies designed
to raise revenue for illegal operations. Because you never know who you are selling or paying to, there is a lot of
worry about how the money is spent on the other side.
Everything digital is constantly subject to cyber assaults. However, cryptocurrencies like Bitcoin, which are in
great demand and value, attract a lot of attention from cybercriminals. In the event of a cyber-attack with no
regulating agency, it is nearly hard to recover the lost funds, which may compel you to forfeit your personal
data as well as the invested capital.

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VIII. BITCOIN SHARE MARKET
In terms of price and value, Bitcoin has been trapped in a holding pattern throughout the first few months of
2022, fluctuating between pricing levels of around $27,000 and $34,000. With that in mind, Bitcoin price
predictions estimate that by the end of 2022, BTC will have surpassed $74,000.
IX. CHALLENGES FACING BY BITCOIN TODAY
Since its inception, Bitcoin has been extremely volatile. Experts believe that the price of Bitcoin coins might
reach a million dollars in a few years, and that it could even drop to zero. In this context, bitcoin has become
increasingly popular among investors who believe the price will continue to increase, but may also plummet
considerably.
While certain recommendations exist to make BTC nearly hard to steal, taking advantage of this system
necessitates in-depth understanding of bitcoin's operating structure as well as substantially more effort on the
user's part. In reality, several reports claim that buyers lose money on exchanges and through mining losses.
Furthermore, even if a smart wallet is present, exchanges can be hacked.
Because bitcoin lacks accountability, it is impossible to govern its market behaviour merely based on financial
incentives. This produces various issues, such as smart contracts and other hacks affecting the market, crooks
creating phoney investment crowdfunding and then running off with the money, and other related effects.
Buyers will quickly lose faith in bitcoin if it cannot be regulated internally.
BTC are now classified as intangible property under the law, which means they are liable to capital gains taxes.
If the investors acquire bitcoin and then sell it at a higher price, they will have to demonstrate the difference in
their taxes. Every time an investor purchases something using Bitcoin, it is a taxable event.
The core technology of Bitcoin is blockchain, which restricts the amount of information that may be included in
each block to 1 megabyte of data. This constraint allows the network to handle three transactions per second.
As more transactions are completed, the network will struggle to keep up with the records, resulting in
significant processing delays.
The bitcoin market is devoid of any permanent or substantial rules. Because governments still do not have a
clear opinion on the role of cryptocurrencies in the economic landscape, the whole crypto market operates
without any permanent laws.
Although it has become easier to buy, sell, and use bitcoin over the years, there are still not many user-friendly
investors to encourage mainstream adoption. To purchase BTC, the normal consumer would need to establish
an account with a bitcoin exchange like Coinbase, link their bank account, and then wait several days for the
transaction to clear.
Cryptocurrency is still a relatively new technology, having emerged around ten years ago. These technologies
are evolving on a daily basis, impacting the market. The future of Bitcoin is still unknown. Buyers evaluate the
upcoming circumstances of bitcoin and hesitant to invest.
Bitcoin was formerly widely used on the Dark Web for money laundering and purchasing illicit things. As the
only form of anonymous payment, bitcoin became an obvious alternative for those dealing with narcotics, illicit
firearms, and other connected commodities.

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In addition to hacking, there is a substantial amount of fraud in the bitcoin market. With the surge in popularity
of bitcoin, criminals have set up bogus exchanges to steal money. Several law-abiding organisations have issued
warnings against these fraudulent practises in which naïve investors are tricked into participating in bogus
exchanges. Since bitcoin is a novel form of payment, only a few organisations and countries accept it as an
approved mode of trade and a real currency.
X. FUTURE OF BITCOIN IN INDIA
Bicoin is gradually but steadily gaining traction in India. Millennials from tier 2 and tier 3 cities are flocking to
cryptocurrency. Despite the fact that men have dominated this field, women's participation in crypto trading
has increased by over 1000 percent in recent years. 66 percent of all users are still under the age of 35,
indicating that crypto has a greater acceptance rate among the country's youth.
Because of their distrust of banks and financial institutions, the thrill of volatility, and the availability of digital
technologies and digital sources of information, Generation Z and millennials are huge investors in this field
and will continue to be. P2P networks have aided in the widespread acceptance of cryptocurrencies by the tech-
savvy generation.
The growing acceptability of cryptocurrencies in the mainstream will also stimulate future penetration into
more esoteric areas of the society.
Although laws remain murky, the government has showed evidence of understanding the potential of
cryptocurrencies. Crypto appears to be the way of the future.
XI. BITCOIN REGULATION POLICY IN INDIA
Bitcoin has always been a 'grey area' in India, with no regulation or law in place. Despite investments made at
the speed of light, there appears to be no authoritative clarification on the subject. The Government of India had
solicited views on whether to regulate, prohibit, or self-regulate crypto currencies from May 22nd to July 30th,
2017.
XII. BITCOIN REGULATION OF OFFICAL DIGITAL CURRENCY BILL 2021
The New Bill'2021 was proposed with the intention of creating a facilitative framework for the formation of the
official digital currency to be issued by the Reserve Bank of India. The Bill also intends to outlaw any private
bitcoin in India; however, it provides for specific exclusions to encourage the core technology of bitcoin and its
purposes.
The goal of developing a digital currency is to give major benefits such as reduced reliance on cash, increased
seigniorage owing to lower transaction costs, and reduced settlement risk. The new digital currency might also
lead to a more robust, efficient, reliable, regulated, and legal tender-based payment alternative. The
government's objective previously evolved from outright prohibition to regulation. It may be safely assumed
that the crypto business is anticipating favourable legislation that will allow for limited crypto investment and
trade. However, the Indian government scheduled this new measure to be introduced during the winter session
of Parliament, but no action has been made as of yet.
In the next Union Budget next month (Feb'22), the Indian government may examine modifications in domestic
tax legislation to bring earnings from bitcoin transactions into the tax net, as well as the prospect of imposing
goods and services tax (GST) on the trading in virtual currencies.
XIII. IS BITCOIN TAXABLE UNDER GST?
We understand that cryptocurrency is a digital asset stored in a computer-based ledger that protects
transactions, controls the production of new coins, and verifies the transfer of coin ownership. It is important to
note that such money is not maintained by the Central Government or any other authorized entity.
Furthermore, bitcoin has been in the market for more than two decades. However, most individuals do not
understand what cryptocurrency is. In such a case, the question is whether the currency is subject to Goods and
Services Tax (hence referred to as GST) under Indian regulations.
Except for the delivery of alcoholic liquor for human use, petroleum products, aviation turbine fuel, natural gas,
and electricity, the GST is levied on all supplies of commodities or services or both. While the terms
commodities and services are defined as follows:

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Goods include actionable claims, growing crops, grass, and anything attached to or constituting part of the land
that are agreed to be detached before delivery or under a contract of sale. Services encompass actions
connected to the usage of money or its conversion by cash or any other manner from one form, currency, or
denomination to another form, currency, or denomination.
XIV. IMPLICATIONS OF INDIAN DOMESTIC TAX LAW IN INDIA
Income flowing from the transfer of a bitcoin, whether capital or revenue, is not taxable in India in the event of
transactions between non-resident people, even though the operating Server is situated in India. However, if a
non-resident person engages into a transaction with a person residing in India, the transaction is taxable, and
the Indian counterpart must comply with the criteria of "Deduction of tax at source" under Section 195 of the
Act.
Business income:
If a person often trades bitcoin like a stock-in-trade, the earnings and gains are taxed as business profits and
gains. If he imports and/or exports goods, the changes in bitcoin prices would be included in the consideration
paid and/or received for the import or export of the commodities.
Capital income are taxable:
It is unknown whether obligations for asset purchase are incurred in bitcoin and/or any borrowings are paid
due in bitcoin. If this is the case, the transactions would be subject to the requirements of Section 43A of the
Income-tax Act of 1961 (hereafter "the Act"). Section 2(14) of the Act defines "capital asset" broadly enough to
cover "property" of any type possessed by an assessed, whether or not related to his company or profession.
Although the term "property" is not defined, it refers to any interest that a person can acquire, keep, or enjoy.
As a result, because bitcoin is an intangible asset, it can be classified as a 'capital asset' and taxed as such,
depending on whether the individual intends to hold it as an investment or otherwise. The gain would be
classified as short-term or long-term depending on the holding duration. If a bitcoin is kept for more than 36
months from the date of purchase, it is considered a long-term capital gain and is taxed at 20% with the benefit
of indexation. If it is kept for less than 36 months from the date of acquisition, it is deemed a short-term capital
gain and is taxed at the taxpayer's appropriate slab rate.
Mining is one means of gaining Bitcoins and/or bitcoin. A bitcoin obtained by this method is a "self-generated
asset" with no purchase cost. While trading in such a self-generated asset would be taxed as business income,
no capital gains tax may be assessed on its transfer in light of the Hon'ble Supreme Court's decision in the
matter of B.C. Srinivasa Shetty [1981] 5 Taxman 1 (SC)]. Whereby it was decided that if the cost of purchase of
an asset could not be determined, the machinery provision for computing capital gains would fail, and hence no
capital gains could be charged on the transfer of such assets. As a result, bitcoin created through the ‘mining'
process may be tax-free.
XV. BITCOIN PRICE PER DAY TILL JUNE 2022

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XVI. CONCLUSION
Banning bitcoin would lock us out of this fast burgeoning business while other countries continue to advance.
On the contrary, controlling and utilising this new technology will aid India in furthering its interests while
establishing the new international order.
Efficient regulation would also aid in the prevention of frauds and the unauthorized usage of bitcoin. Better
understanding of what the Bill can provide will be gained only once it is delivered and its content is made
public.
Bitcoin is neither the money of the future, nor is it a potential 'global currency.' If it survives, which it very well
may, it will most likely be as a high-risk asset class. As a result, it might see a significant gain in value in the
future, but it could also go the other way and become worthless. Buyer Be Careful.
XVII. REFERENCES
[1] https://www.researchgate.net/publication/353887034
[2] http://ijrar.com/upload_issue/ijrar_issue_20543250.pdf
[3] https://www.researchgate.net/publication/324770908_The_Growth_of_Cryptocurrency_in_India_Its_C
hallenges_Potential_Impacts_on_Legislation
[4] https://timesofindia.indiatimes.com/blogs/voices/the-evolution-of-cryptocurrencies-in-india-and-
what-the-future-looks-like/
[5] https://gadgets360.com/finance/bitcoin-price-in-india-today-inr

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