A study on customer perception towards investment in

bitcoin

Semester VI

Academic Year 2021-22

A Project Submitted to

University of Mumbai for Partial Completion of the Degree of

Bachelor of B.com (Financial Management)

Under the Faculty of Commerce

By

Shreyas bharat rane

Roll no. 217130

Under the Guidance of

Asst. Prof. Namita Bagwe

Saket College of Arts, Science and Commerce, Kalyan East

UNIVERSITY OF MUMBAI
i
 A study on customer perception towards investment in
bitcoin

Semester VI

Academic Year 2021-22

A Project Submitted to

University of Mumbai for Partial Completion of the Degree of

Bachelor of B.com (Financial Management)

Under the Faculty of Commerce

By

Shreyas bharat rane

Roll no. 217130

Under the Guidance of

Asst. Prof. Namita Bagwe

Saket College of Arts, Science and Commerce, Kalyan East

UNIVERSITY OF MUMBAI
ii
 SAKET GYANPEETH’S

SAKET COLLEGE OF ARTS, SCIENCE & COMMERCE

(Affiliated to University of Mumbai)

NAAC Accredired B Grade

Department of Bachelor of BCom (financial

management)

CERTIFICATE
This is to Certify that
Mr. Shreyas bharat rane

Has Completed the Project Work Entitled

A study on customers perception towards investment in bitcoin

Submitted the same in the Partial Completion of BCom (FM)

Degree under our Supervision in Saket College of Arts, Science
and Commerce in the Academic Year 2021-22.

Head of the Department

Internal Examiner External Examiner principle

iii
 Saket college of arts, science & commerce
Certificate

This is to certify that Mr. Shreyas bharat rane has worked and duly
completed her/his Project Work for the degree of Bachelor of B. Com
(financial management) under the Faculty of Commerce and her/his project is
entitled, “bitcoin investment in India” under my supervision.

I further certify that the entire work has been done by the learner under my
guidance and that no part of it has been submitted previously for any Degree
or Diploma of any University.
It is her/ his own work and facts reported by her/his personal findings and
investigations.

Asst. Prof. Namita Bagwe

Name and Signature of
Guiding Teacher
Date of submission:

iv
 Declaration

I the undersigned Mr. Shreyas bharat rane here by, declare that
the work embodied in this project work titled “A study on customer
perception towards investment in bitcoin”, forms my own
contribution to the research work carried out under the guidance of
Asst. Prof. Namita bagwe Of The Guiding Teacher is a result of
my own research work and has not been previously submitted to any
other University for any other Degree/ Diploma to this or any other
University.

Wherever reference has been made to previous works of others, it

has been clearly indicated as such and included in the bibliography.

I, here by further declare that all information of this document has

been obtained and presented in accordance with academic rules and
ethical conduct.

Shreyas bharat rane

Name and Signature of the learner
Certified by
Asst. Prof. _______
Name and signature of the Guiding Teacher

v
 Acknowledgment

To list who all have helped me is difficult because they are so

numerous and the depth is so enormous.

I would like to acknowledge the following as being idealistic

channels and fresh dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving

me chance to do this project.

I would like to thank my Principal Dr. Vasant Barhate for providing

the necessary facilities required for completion of this project.

I take this opportunity to thank our Coordinator Asst. Prof. Namita

Parab, for her moral support and guidance.

I would also like to express my sincere gratitude towards my project

guide Name of the Guide whose guidance and care made the project
successful.

I would like to thank my College Library, for having provided

various reference books and magazines related to my project.
Lastly,
I would like to thank each and every person who directly or
indirectly helped me in the completion of the project especially my
Parents and Peers who supported me throughout my project.

vi
 INDEX

SR.NO PARTICULARS PAGE

NO.
Chapter no. 1: introduction

1.1 history 1-11

1.2 Background 11-22
1.3 Advantages 22-26
1.4 problems 26-30
1.5 Related concept 30-44
Chapter no. 2: introduction to research methodology
2.1 Introduction 45
2.2 Objective of the study 45-47
2.3 Statement of the problem 48-49
2.4 Scope of the study 49
2.5 Data collection method 49
2.6 Sample method 49
2.7 Technique used for analysis 49
2.8 Limitation of study 49
Chapter no. 3: literature review
20 review in my research paper 50-57
Chapter no. 4: data analysis interpretation & presentation
Q.1 to Q18 including in my research 58-75
Chapter no. 5: conclusion and suggestion 76-79
Bibliography 80-81
APPENDIX 1-4

vii
 CHAPTER 1
INTRODUCTION
1.1 HISTORY: -
Satoshi Nakamoto created the virtual currency called Bitcoin in
early 2009. Bitcoin is digital money that is not backed by the government, and is treated as
currency and used to purchase goods and services. It is a collection of computer code that
is stored either digitally or, in rare cases, in printed form. Many benefits of Bitcoin explain
its growing popularity. First, Bitcoin allows individuals to anonymously purchase goods
and services online. Further, Bitcoin technology results in faster, transactions that are less
costly than traditional monetary transactions that require third-party intermediaries.
Moreover, Bitcoin’s centralized public ledger that records all Bitcoin transactions reduces
redundancies and inefficiencies.

However, as Bitcoin has grown in popularity, so too has its use in nefarious
activities. The private nature of Bitcoin provides an avenue for criminals to perpetrate
white-collar crimes like tax evasion and money laundering.

In addressing Bitcoins’ benefits and concerns, the U.S. government

currently lags behind the evolving technology in its development of appropriate and
concise regulations. This note examines the various approaches regulators are employing,
which include treating Bitcoin as a security and as money under existing antimony
laundering statutes and state regulatory schemes. This note also describes a proposed
regime that balances the benefits of Bitcoin with its security concerns. This note argues
that Bitcoin should be regulated sparingly, with standard purchases in Bitcoin not subject
to regulation, and regulations imposed only on certain providers that can unilaterally
transfer or block transfers of Bitcoin on behalf of users.

Internet transactions typically require financial intermediaries, such as banks, to ensure

that buyers complete transactions. These systems usually suffer from high transaction
costs. Satoshi Nakamoto created the theoretical framework for Bitcoin and its underlying

1
technologies with the intention of fostering peer-to-peer transactions that did not require a
“trusted third party” to facilitate payment. Bitcoin exists solely on the internet and is not
backed by any tangible commodity or monetary system, although it can be exchanged for
currencies, including the U.S. dollar.

Bitcoin technology functions in the following manner. Bitcoin itself is “a

chain of digital signatures” that defines who holds the coin. Each individual in the network
has a unique wallet, similar to an account, which holds coins. Wallets may be stored locally
on an individual’s own computer or on third-party servers. Server storage makes the user’s
wallet accessible anywhere via the Internet. Users download software onto their computers
or smartphones to send Bitcoins. Each individual in the network has both a public and a
private key. The public key acts as a public address for assigning and holding coins while
the private key functions like a password, allowing users access and control only to coins
that he or she holds. In order to pass the Bitcoin to a new holder, the current holder adds
code to the coin, which memorializes the transaction and assigns the coin to the next
holder’s public key.

There are three ways in which individuals can acquire Bitcoins. First, users can exchange
physical currency for Bitcoins on Bitcoin exchanges. These exchanges function similarly
to traditional currency exchanges, and allow individuals to exchange traditional currency
for the equivalent value in Bitcoin. The exchange rate is determined solely by the market’s
value scale of Bitcoin on any given day because there is no commodity backing Bitcoin.
To acquire Bitcoins through an exchange, users must visit an exchange, create an account,
connect a bank account or credit card to the account, exchange currency for a
corresponding number of Bitcoins, and then store the Bitcoins in their wallets.

Second, individuals can acquire Bitcoins by trading a good or service for

compensation in Bitcoin. In this scenario, buyers merely append the seller’s public key to
a Bitcoin the buyer holds. Once the seller has the coin in his or her wallet, payment is
complete.

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 Third, users can acquire new Bitcoins by using their computer to verify
Bitcoin transactions. This method of acquiring Bitcoins is known as mining. Through this
process, a Bitcoin user is compensated with twenty-five Bitcoins when he or she uses a
computer, either with or without optimized computer hardware designed for mining, to
solve a complex mathematical problem that verifies a Bitcoin transaction. After a
transaction has been verified, it is recorded on the Bitcoin network. These computations
ensure that the entire chain of transactions is accurate and absent of any fraudulent activity.
Mining for new Bitcoins becomes progressively more resource and time intensive, because
the computations become increasingly difficult. One incentive to mine is an optional
transaction fee that applies to 97 percent of Bitcoin transactions, and is often priced at
bitcoin.

The Block chain is a public ledger that records all Bitcoin transactions.
Miners power the Block chain, and after they solve and verify the computations, the Block
chain reflects the transaction. This process helps ensure that only legitimate transactions
are recorded. The Block chain also mitigates the risk of user’s double spending their
Bitcoins. A double-spend fraud could only theoretically be perpetrated on the Block chain
if a fraudulent user possessed an incredible amount of computer processing power. More
precisely, the fraudulent user would need enough computing power not only to resolve the
math problems used in processing a particular coin, but also enough power to solve all
subsequent math problems in the sequence at a faster rate than all the other non-fraudulent
users. This is most likely impossible, but at a minimum extremely unlikely. Accordingly,
one of the many benefits of Bitcoin is that Bitcoin transactions are inherently safe.

Today’s economies are all money economies, because all economies have accepted
certain currencies (money) as medium of exchange. The money supply causes inflation as
well as deflation in economies by its excess supply and contraction in money supply, hence
currencies of different countries regulated by government in order to combat inflation or
deflation situations. Now a day’s many countries in the world have focusing towards digital
currency and transactions. Even some one doesn’t want to regulate their currencies and
transactions. this brought greater innovation in new currency that is crypto currency, One

3
of the most advanced, ambiguities, regulation free currency. In this article I made an
attempt to study regarding crypto currency and its development and transactions in India.

Bitcoin is a cryptocurrency. It is a decentralized digital currency without

a central bank or single administrator that can be sent from user to user on the peer-to-peer
Bitcoin network without the need for intermediaries.

Transactions are verified by network nodes through cryptography and

recorded in a public distributed ledger called a block chain. Bitcoin was invented in 2008
by an unknown person or group of people using the name Satoshi Nakamoto and started in
2009 when its source code was released as open-source software. Bitcoins are created as a
reward for a process known as mining. They can be exchanged for other currencies,
products, and services. Research produced by University of Cambridge estimates that in
2017, there were 2.9 to 5.8 million unique users using a cryptocurrency wallet, most of
them using bitcoin.

World has transforming in to cash less transactions through innovating and making
transactions by digital money. One of the tremendous innovation in money that is crypto
currency it is digital money, not regulated by any authority and central bank, universal
currency, at the same time there are some problems associated with this new currency
hence many countries step back from its implementation among those India is one of the
country prohibited using and mining Bitcoins. But as per the order of supreme court now
trading through Bitcoin is no more illegal in India from That’s why it is an important need
to understand about Bitcoin trading in India, how it operates, how it was evolved in India,
players who are involving in this transaction.

• How and when was Bitcoin created?

There was a lot of mystery around Bitcoin after it was first proposed in 2008, the
most prominent being its creator: Satoshi Nakamoto, a pseudonymous person
whose real identity is still unknown. Nakamoto posted a paper, entitled Bitcoin:
A Peer-to-Peer Electronic Cash System, on a mailing list on cryptography. This

4
 attracted a lot of attention and a huge discussion ensued about it. Bitcoin price in
India stood at Rs. 29.18 lakhs as of 7pm IST on August 2.

In 2009, the Bitcoin software was made available to the public. Its mining, the process
through which new Bitcoins are created and transacted on the blockchain, began.

The valuation of Bitcoin took place the next year. Until then, Bitcoin was only mined,
nobody had traded it so the real value of the coin was undetermined. On May 22, 2010,
programmer Laszlo Hanyecz traded 10,000 Bitcoins to buy two pizzas. Had he controlled
his pizza craving; those Bitcoins would have been worth $389 million (roughly Rs. 2,890
crores) today. A least the episode gave us the "Bitcoin Pizza Day".

In 2011, the dominance of whatever market Bitcoin had captured by then was first
challenged. Some alternatives to Bitcoin — such as Name coin and Litecoin — began
emerging. These rival coins offered improved services like better transaction speed, among
some other claims. Today, there are more than 11,000 cryptocurrencies in circulation,
according to Comarkets, a market research website.

• Bitcoin's middle years

These years were some of the most volatile periods in Bitcoin's history. In 2013,
three years after Bitcoin was first valued, its price crashed for the first time. Bitcoin
had breached the $1,000 (roughly Rs. 74,380) mark by then, but the price began to
quickly slide to around $300 (roughly Rs. 22,310). In January 2014, the world's
largest Bitcoin exchange, Mt.Gox, suddenly went offline. With it, 850,000 Bitcoins
too vanished and those who owned them never found out what happened to their
Bitcoins. On 20 March 2014, Mt. Gox reported that it found 199999.99 Bitcoins in
an old digital wallet, which brought the total number of bitcoins the firm lost down
to 650,000, from 850,000. Investigation into the matter is still on.

In 2015, Bitcoins regained the $1,000 (roughly Rs. 74,380) value again. The next
year, Ethereum posed a serious threat to Bitcoin's market leadership. However,
Bitcoin had gained so much popularity that by 2017 it was getting closer to the

5
 $10,000 (roughly Rs. 7.4 lakhs) mark. More people were joining the ecosystem and
putting money into it. This year, the market cap of all cryptocurrency coins rose
from $11 billion (roughly Rs. 81,820 crores) to over $300 billion (roughly Rs.
22,31,640 crores). Ethereum price in India stood at Rs. 1.9 lakhs as of 7pm IST on
August 2.

• Bitcoin now

At the start of 2018, Bitcoin price again crashed and it lost more than 80 percent of
its value as several countries took steps to tighten regulatory oversight around
cryptocurrency. Even in India, the RBI issued a note to regulate banks from trading
or facilitating cryptocurrency transactions. Also, this year, one of the biggest
cryptocurrency heists took place. The Bit Connect scam siphoned off $2 billion
(roughly Rs. 14,880 crores) by duping investors.

The year 2019 started off quiet. But Bitcoin neared $8,000 (roughly Rs. 5.9 lakhs)
by May. Then it lost nearly $1,000 (roughly Rs. 74,380) in June only to reach
$14,000 (roughly Rs. 10.4 lakhs) by July. This year was relatively good for Bitcoin.
The next year, the pandemic year, Bitcoin was still considered a fringe investment
by the likes of Warren Buffet, who said it has “no value.” By the end of the year,
however, Bitcoin nearly quadrupled, reaching an all-time high above $28,000
(roughly Rs. 20.8 lakhs). The Supreme Court of India set the RBI circular aside on
cryptocurrency in May 2020.

This year, Bitcoin has had a roller-coaster ride so far. During the initial months, it
had the backing of the tech tycoon Elon Musk, who later began
supporting Dogecoin after environmentalists raised concern about Bitcoin mining
driving up energy consumption. Dogecoin price in India stood at Rs. 15.11 as of 7pm
IST on August 2. After reaching its lifetime high of $65,000 (roughly Rs. 48.3 lakhs),
Bitcoin crashed massively in May. It has now recovered to some extent and was trading
around $40,000 (roughly Rs. 29.7 lakhs) on Monday, August 2.

6
• Regulatory issues

On 18 March 2013, the Financial Crimes Enforcement Network (or FinCEN), a

bureau of the United States Department of the Treasury, issued a report
regarding centralized and decentralized "virtual currencies" and their legal status
within "money services business" (MSB) and Bank Secrecy Act regulations. It
classified digital currencies and other digital payment systems such as bitcoin as
"virtual currencies" because they are not legal tender under any
sovereign jurisdiction. FinCEN cleared American users of bitcoin of legal
obligations] by saying, "A user of virtual currency is not an MSB under FinCEN's
regulations and therefore is not subject to MSB registration, reporting, and
recordkeeping regulations." However, it held that American entities who generate
"virtual currency" such as bitcoins are money transmitters or MSBs if they sell their
generated currency for national currency: "...a person that creates units of
convertible virtual currency and sells those units to another person for real currency
or its equivalent is engaged in transmission to another location and is a money
transmitter." This specifically extends to "miners" of the bitcoin currency who may
have to register as MSBs and abide by the legal requirements of being a money
transmitter if they sell their generated bitcoins for national currency and are within
the United States. Since FinCEN issued this guidance, dozens of virtual currency
exchangers and administrators have registered with FinCEN, and FinCEN is
receiving an increasing number of suspicious activity reports (SARs) from these
entities.

Additionally, FinCEN claimed regulation over American entities that manage

bitcoins in a payment processor setting or as an exchanger: "In addition, a person
is an exchanger and a money transmitter if the person accepts such de-centralized
convertible virtual currency from one person and transmits it to another person as
part of the acceptance and transfer of currency, funds, or other value that substitutes
for currency.

In summary, FinCEN's decision would require bitcoin exchanges where bitcoins

are traded for traditional currencies to disclose large transactions and suspicious

7
activity, comply with money laundering regulations, and collect information about
their customers as traditional financial institutions are required to do.

Jennifer Shaky Calvary, the director of FinCEN said, "Virtual currencies are subject
to the same rules as other currencies. ... Basic money-services business rules apply
here.

In its October 2012 study, Virtual currency schemes, the European Central
Bank concluded that the growth of virtual currencies will continue, and, given the
currencies' inherent price instability, lack of close regulation, and risk of illegal uses
by anonymous users, the Bank warned that periodic examination of developments
would be necessary to reassess risks.

In 2013, the U.S. Treasury extended its anti-money laundering regulations to

processors of bitcoin transactions.

In June 2013, Bitcoin Foundation board member Jon Martinis wrote in Forbes that
he received a warning letter from the California Department of Financial
Institutions accusing the foundation of unlicensed money transmission. Martinis
denied that the foundation is engaged in money transmission and said he viewed
the case as "an opportunity to educate state regulators.

In late July 2013, the industry group Committee for the Establishment of the Digital
Asset Transfer Authority began to form to set best practices and standards, to work
with regulators and policymakers to adapt existing currency requirements to digital
currency technology and business models and develop risk management standards.

In 2014, the U.S. Securities and Exchange Commission filed an administrative

action against Erik T. Voorhees, for violating Securities Act Section 5 for publicly
offering unregistered interests in two bitcoin websites in exchange for bitcoins.

By December 2017, bitcoin futures contracts began to be offered, and the

US Chicago Board Options Exchange (CBOE) was formally settling the futures
daily. By 2019, multiple trading companies were offering services around bitcoin
futures.

8
• Theft and exchange shutdown

Bitcoins can be stored in a bitcoin cryptocurrency wallet. Theft of bitcoin has been
documented on numerous occasions. At other times, bitcoin exchanges have shut down,
taking their clients' bitcoins with them. A Wired study published April 2013 showed
that 45 percent of bitcoin exchanges end up closing.

On 19 June 2011, a security breach of the Mt. Gox bitcoin exchange caused the
nominal price of a bitcoin to fraudulently drop to one cent on the Mt. Gox exchange,
after a hacker used credentials from a Mt. Gox auditor's compromised computer
illegally to transfer a large number of bitcoins to himself. They used the exchange's
software to sell them all nominally, creating a massive "ask" order at any price.
Within minutes, the price reverted to its correct user-traded value. Accounts with
the equivalent of more than US$8,750,000 were affected.

In July 2011, the operator of BitComet, the third-largest bitcoin exchange,

announced that he had lost access to his wallet.dat file with about 17,000 bitcoins
(roughly equivalent to US$220,000 at that time). He announced that he would sell
the service for the missing amount, aiming to use funds from the sale to refund his
customers.

In August 2011, My Bitcoin, a now defunct bitcoin transaction processor, declared

that it was hacked, which caused it to be shut down, paying 49% on customer
deposits, leaving more than 78,000 bitcoins (equivalent to roughly US$800,000 at
that time) unaccounted for.

In early August 2012, a lawsuit was filed in San Francisco court against Biconical –
a bitcoin trading venue – claiming about US$460,000 from the company. Biconical
was hacked twice in 2012, which led to allegations that the venue neglected the
safety of customers' money and cheated them out of withdrawal requests.

In late August 2012, an operation titled Bitcoin Savings and Trust was shut down
by the owner, leaving around US$5.6 million in bitcoin-based debts; this led to
allegations that the operation was a Ponzi scheme. In September 2012, the U.S.

9
Securities and Exchange Commission had reportedly started an investigation on the
case.

In September 2012, Bit floor, a bitcoin exchange, also reported being hacked, with
24,000 bitcoins (worth about US$250,000) stolen. As a result, Bit floor suspended
operations. The same month, Bit floor resumed operations; its founder said that he
reported the theft to FBI, and that he plans to repay the victims, though the time
frame for repayment is unclear.

On 3 April 2013, Insatiable, a web-based wallet provider, was hacked, resulting in

the theft of over 35,000 bitcoins] which were valued at US$129.90 per bitcoin at
the time, or nearly $4.6 million in total. As a result, Insatiable suspended operations.

On 11 August 2013, the Bitcoin Foundation announced that a bug in

a pseudorandom number generator within the Android operating system had been
exploited to steal from wallets generated by Android apps; fixes were provided 13
August 2013

In October 2013, Inputs.io, an Australian-based bitcoin wallet provider was hacked

with a loss of 4100 bitcoins, worth over A$1 million at time of theft. The service
was run by the operator Trade Fortress. Coin chat, the associated bitcoin chat room,
was taken over by a new admin.

On 26 October 2013, a Hong Kong–based bitcoin trading platform owned by

Global Bond Limited (GBL) vanished with 30 million yuan (US$5 million) from
500 investors.

Mt. Gox, the Japan-based exchange that in 2013 handled 70% of all worldwide
bitcoin traffic, declared bankruptcy in February 2014, with bitcoins worth about
$390 million missing, for unclear reasons. The CEO was eventually arrested and
charged with embezzlement.

On 3 March 2014, Flexcoin announced it was closing its doors because of a hack
attack that took place the day before. In a statement that once occupied their
homepage, they announced on 3 March 2014 that "As Flex coin does not have the

10
 resources, assets, or otherwise to come back from this loss [the hack], we are
closing our doors immediately. Users can no longer log into the site.

Chinese cryptocurrency exchange Biter lost $2.1 million in BTC in February 2015.

The Slovenian exchange Bit stamp lost bitcoin worth $5.1 million to a hack in
January 2015.

The US-based exchange Crypts declared bankruptcy in January 2016, ostensibly

because of a 2014 hacking incident; the court-appointed receiver later alleged that
Crypts’ CEO had stolen $3.3 million.

In August 2016, hackers stole some $72 million in customer bitcoin from the Hong
Kong–based exchange Biaffine.

In December 2017, hackers stole 4,700 bitcoins from Nice Hash a platform that
allowed users to sell hashing power. The value of the stolen bitcoins totaled about
$80M.

On 19 December 2017, Apian, a company that owns the You bit cryptocurrency
exchange in South Korea, filed for bankruptcy following a hack, the second in eight
months.

1.2BACKGROUN: -

1.2.1 What is bitcoin?

Bitcoin (BTC) is usually described as a virtual, decentralized and (at first

glance) anonymous currency that is not government-backed or backed by any
other legal entity, and that cannot be exchanged into gold or any other
commodity.

11
At the heart of the creation of Bitcoin stands the text "Bitcoin: A Peer-to-Peer
Electronic Cash System" of Satoshi Takemoto, published on the internet in
2008. It was on the basis of this text and the ideas conveyed in it that the
development of Bitcoin accelerated. Contributory to the mystic nature of
Bitcoin is that until now it remains unclear whether Satoshi Nakamoto is a real
person, a pseudonym, or perhaps even a group of hackers.

The virtual character of Bitcoin implies that Bitcoins normally do not take a
physical form. Therefore, a good representation of a Bitcoin probably is that of
a computer file saved on a personal computer or, via an online service, in a
digital wallet. The mere virtual character of Bitcoins should, however, be
qualified. Reputedly, it is possible to print out the combination of characters
that constitute the Bitcoin and, subsequently, to transfer such print as a bearer
instrument. However, this is supposed to be a marginal phenomenon and, hence,
will not further elaborated here.

Bitcoin is based on a Pow consensus mechanism. The issue of Bitcoins takes

place via a process called "mining" (see also above). To reiterate, such process
the entire elements of which are publicly available via open-source software –
entails that persons voluntarily make their own computers available to the
Bitcoin network to solve complex mathematical problems. Computers that are
able to solve such problems (and, as a consequence, are able to create so-called
transaction "blocks") are rewarded with Bitcoins.

The aggregate number of Bitcoins that can be created through mining is limited:
The Bitcoin system is programmed so that the development of blocks in time
will be rewarded with increasingly less Bitcoins and that at no point in time will
more than 21 million Bitcoins exist. The fact that the creation and the increase
of Bitcoins is automated and limited by the system itself implies that there is no
need for the intervention of a central entity / authority to issue Bitcoins.

12
 The limited number of Bitcoins, together with the fact that conversion rates for
Bitcoins are determined by supply and demand, without a government body
being able to intervene (e.g. by printing additional money), results in a high
volatility in Bitcoins prices.

1.2.2 Bitcoin runs on an open, permission less block chain

The Bitcoin block chain is a typical example of an open, permission less block
chain. Any person can join or leave the public Bitcoin network at will, without
having to be (pre-)approved by any (central) entity. All that is needed to join
the Bitcoin network and add transactions to the ledger is a computer on which
the relevant software has been installed.

1.2.3 Bitcoin is directly convertible into fiat currency

Bitcoin can be bought with and directly converted into fiat currency on a wide
array of cryptocurrency exchanges e.g. Coin base, Kraken, any coin Direct Out
of all cryptocurrencies currently in circulation, Bitcoin is one of the easiest
coins to convert into fiat currency.

1.2.4 Bitcoin is a medium of exchange

Bitcoin (BTC) is being accepted as a legitimate source of funds by a relatively

large number of (online) merchants, among which various large companies
(e.g. Microsoft, Expedia, Playboy, Virgin Galactic, LOT Polish Airline as a
result it can be qualified as a medium of exchange.

13
 1.2.5 Bitcoin is a pseudo-anonymous coin

Bitcoin is often characterized as an anonymous currency: although everyone

can verify the chain of transactions on the basis of the public ledger, at first
glance nothing in the system connects Bitcoins to individuals. However, this
anonymous character is far from absolute. It is technically feasible though very
complex and costly to identify the parties behind a Bitcoin transaction by
bringing together factors that accompany such transaction. In other words,
Bitcoin is not a fully anonymous currency, but rather a pseudo-anonymous
coin.

Which the growing popularity of the crypto market, the large number of
unregulated cryptocurrencies (several hundreds), greater attention is now being paid by
governments and other stakeholders around the world. Illustrative is that the total market
capitalization of the 100 largest cryptocurrencies is reported to exceed the equivalent of
EUR 330 billion globally by early 2018. The total market capitalization of all
cryptocurrencies together in that period peaked at an even higher USD 728 billion,
dropping just three weeks later to approximately USD 360 billion. Regulators are looking
at whether and how to regulate cryptocurrencies. Up till now there is no univocal view on
how to do that. In any event, there are compelling reasons why cryptocurrencies should be
under more

scrutiny by regulators and supervisors. The threat of price volatility, speculative

trading, hack attacks, money laundering and terrorist financing all call for stricter
regulation.

This research deep dives into the latter issue. According to many, aside from the
instability of cryptocurrency prices, these cryptocurrencies must have greater regulatory
oversight in order to prevent illegal activity and illegitimate use. Aside from the instability
of cryptocurrency prices, regulators are worrying about criminals who are increasingly
using cryptocurrencies for activities (trading away from official channels) like fraud and

14
manipulation, tax evasion, hacking, money laundering and funding for terrorist activities.
The problem is a significant one: even though the full scale of misuse of virtual currencies
is unknown, its market value has been reported to exceed EUR 7 billion worldwide.

1.2.6 SCOPE OF THE RESARCH

Cryptocurrencies and block chain are a

monstrous topic. There are several hundreds of cryptocurrencies and the
applications of block chain technology are also numerous. To make this
research a useful and focused one, we have to narrow it down. To do this, the
research attaches to multiple connecting factors, defining its scope.

Firstly, the research is limited to cryptocurrencies and block chain. This means
that other types of assets than cryptocurrencies, such as tokens or crypto
securities, are not within the scope of this research. We will explain how these
assets differ from cryptocurrencies further on. We will also not elaborate on
derivatives of cryptocurrencies, which are essentially investment instruments.
Block chain will be scrutinized to the extent cryptocurrencies run on this
technology. Therefore, block chain technology will not be looked at outside of
the context of cryptocurrencies, such as it being used as a technique to eliminate
intermediaries in the financial, public or other sector. This would lead to far and
exceeds the scope of this research. Secondly, the research relates to the legal
context of cryptocurrencies and block chain. The focus is, hence, a legal one.
This means that we will not elaborate on all the technical aspects – and there
are many – relating to cryptocurrencies and block chain. We will only touch
upon those to the extent necessary to understand the legal context. We will also
not take an economic, criminological or any other approach than a legal one.
We focus on the EU legal context. Therefore, we will not elaborate on the

15
international or national context, unless it is relevant to better understand the
European context.

Thirdly, the legal context is addressed in connection with

the implications for financial crime, money laundering and tax evasion.
Therefore, we will only scrutinize the legal context of cryptocurrencies and
block chain to the extent relevant in connection with financial crime, money
laundering and tax evasion. We will do this by assessing what exactly
cryptocurrencies and block chain are, which challenges they bring from the
perspective of combating financial crime, money laundering and tax evasion,
to which extent they are caught by legislation at European level and what could
be done to improve the legal framework. We will not deep dive into other legal
queries than those related to money laundering, terrorist financing and tax
evasion, such as the qualification of cryptocurrencies under tax laws or the
protection of investors in cryptocurrencies (whether or not consumers) under
financial services laws. Although very interesting, these queries exceed the
scope of this research.

Lastly, the research relates to financial crime, money

laundering and tax evasion. Financial crime is no term of art. Generally
speaking, it is used as an umbrella term to designate all sorts of crimes relating
to the use of finances, such as fraud, theft, tax evasion, bribery, money
laundering, terrorist financing, etc. In an EU context, financial crime includes
inter alia crimes against the integrity of the financial sector, such as money
laundering and insider dealing, and crimes against the financial interest of the
Union, such as fraud. In this research we will not elaborate on all imaginable
financial crimes. On the contrary, we will focus on money laundering, terrorist
financing and tax evasion as subtypes of financial crime. This focus can be
justified for a number of reasons. Firstly, money laundering, terrorist financing

16
and tax evasion are at the forefront of the EU’s efforts on combating financial
crime. Furthermore, the EU is clearly taking the approach to address
cryptocurrency issues via anti-money laundering and counter terrorism
financing legislation. This research acknowledges that approach and takes
the same one. Secondly, leaving theft aside, money laundering, terrorist
financing and tax evasion are probably the three types of financial crimes that
are likely to be most associated with cryptocurrencies and block chain, i.e. when
persons commit a crime relating to cryptocurrencies and block chain, the
likelihood of that crime being money laundering, terrorist financing and/or tax
evasion is high. Cryptocurrencies are thought to be very suitable for money
laundering, terrorist financing and tax evasion purposes because of their
anonymity, cross-borders nature and quick transferability. Thirdly, some crimes
simply cannot be committed at this stage via cryptocurrencies. Financial crimes
such as market abuse and insider dealing are for instance of no relevance for
cryptocurrencies. Market abuse rules relate to financial instruments traded on a
regulated market, a multilateral trading facility or an organized trading facility.
For the application to cryptocurrencies this poses two problems:
cryptocurrencies are not financial instruments and they are not traded on a
regulated market, MTF or OTF.

The research starts with a definition of cryptocurrencies and

block chain. After that, a taxonomy of cryptocurrencies will be given on the
basis of an analysis of the 10 cryptocurrencies with the highest market
capitalization. This taxonomy will serve as a benchmark throughout this
research and will allow to verify the adequacy of the existing and upcoming
legal framework.

Internet transactions typically require financial

intermediaries, such as banks, to ensure that buyers complete transactions.
These systems usually suffer from high transaction costs.14 Satoshi Nakamoto
created the theoretical framework for Bitcoin and its underlying technologies15

17
with the intention of fostering peer-to-peer transactions that did not require a
“trusted third party” to facilitate payment. Bitcoin exists solely

on the internet and is not backed by any tangible

commodity or monetary system, although it can be exchanged for currencies,
including the U.S. dollar. Bitcoin technology functions in the following manner.
Bitcoin itself is 1a chain of digital signatures that defines who holds the coin
Each individual in the network has a unique wallet, similar to an account, which
holds coins. Wallets may be stored locally on an individual’s own computer or
on third-party servers. Server storage makes the user’s wallet accessible
anywhere via the Internet. Users download software onto their computers or
smartphones to send Bitcoins. Each individual in the network has both a public
and a private key. The public key acts as a public address for assigning and
holding coins, while the private key functions like a password, allowing users
access and control only to coins that he or she holds. In order to pass the Bitcoin
to a new holder, the current holder adds code to the coin, which memorializes
the transaction and assigns the coin to the next holder’s public key.

There are three ways in which individuals can acquire

Bitcoins. First, users can exchange physical currency for Bitcoins on Bitcoin
exchanges. These exchanges function similarly to traditional currency
exchanges, and allow individuals to exchange traditional currency for the
equivalent value in Bitcoin. The exchange rate is determined solely by the
market’s value scale of Bitcoin on any given day because there is no commodity
backing Bitcoin. To acquire Bitcoins through an exchange, users must visit an
exchange, create an account, connect a bank account or creviced to the account,
exchange currency for a corresponding number of Bitcoins, and then store the
Bitcoins in their wallets.

Second, individuals can acquire Bitcoins by trading a good

or service for compensation in Bitcoin. In this scenario, buyers merely append

18
 the seller’s public key to a Bitcoin the buyer holds. Once the seller has the coin
in his or her wallet, payment is complete.

Third, users can acquire new Bitcoins by using their computer

to verify Bitcoin transactions. This method of acquiring Bitcoins is known as
mining. Through this process, a Bitcoin user is compensated with twenty-five
Bitcoins when he or she uses a computer, either with or without optimized computer
hardware designed for mining, to solve a complex mathematical problem that
verifies a Bitcoin transaction. After a transaction has been verified, it is recorded
on the Bitcoin network. These computations ensure that the entire chain of
transactions is accurate and absent of any fraudulent activity. Mining for new
Bitcoins becomes progressively more resource and time intensive, because the
computations become increasingly difficult.

1.2.7 Using Bitcoins

Bitcoins are money and can be used as such. You can send them to
friends to settle small debts. You can sell something or work for bitcoins. You can
also buy products and services online with them. Currently there are hundreds of
business that accept Bitcoin online and around the globe.

For business that only accept dollars, Euros, yen and other national
currencies you will need to exchange your bitcoins. This can be done on one of the
many online Bitcoin exchanges or by finding someone local who will to buy them
from you.

To sell bitcoins on an exchange you would create an account with

the exchange, send them your Bitcoins and place an order to sell. Then when a
corresponding buy order appears, your bitcoins will be traded for the currency you

19
 prefer. Then you'll need to get your money sent to you via a money transfer method
that is compatible with Bitcoin.

One very important feature of Bitcoin is irreversibility. Once

bitcoins are sent to an address, there is virtually no way to reverse the transaction.
I hesitate to even say virtually because doing so requires either extremely Fast
timing or government-sized mining power. No credit card company or bank can get
them back. The mathematics behind Bitcoin are very strong.

Bitcoin is therefore incompatible with financial services that

allow payments to be disputed or "charged back". Notable examples include
PayPal, credit card, check, and ACH. In the economy that grows around Bitcoin,
refunds will need to be performed by the receiver of the funds and buyers will be
wise to use escrow services with vendors they do not trust.

1.2.6 Managing Your Bitcoins

Whether you're mining solo or as part of a pool, with one

computer or with many, eventually you will have some bitcoins. Once you get them
it is important to handle them properly. Let's go over the wallet and how your
Bitcoins are stored in practice.

When you run a Bitcoin client for the first time, it creates a
Bitcoin wallet. The wallet contains your private keys, made of long blocks of
random letters and numbers, that are meant to be kept secret. These keys are what
allows your Bitcoin client to spend and, you to effectively own, your bitcoins.

From each private key, a public key and corresponding Bitcoin

address are created. When someone sends you some bitcoins, their Bitcoin client

20
uses their private key to sign the bitcoins over to one of your addresses. This
transaction is broadcast to the bitcoin network and later recorded in a block.

The important point to know here is that bitcoins aren't actually

sent anywhere. They are instead assigned to addresses. To send bitcoins to yet
another addresses the private key of the address that owns them will be required.
This means you need to secure and backup your wallet to protect it against theft,
virus attack, or loss due to hard drive failure or natural disaster.

The simplest way to back up your wallet is to use the backup

feature of your Bitcoin program. If no such facility exists or you would like an
additional backup, find your Bitcoin configuration folder and make a full backup
of it. Be sure to have turned off your Bitcoin program however before making this
copy.

Place this backup on one or more flash drives or CDs and put
those somewhere safe. Depending on the number of Bitcoins you have, you may
want to keep your backups in a safe or safe deposit box until they need to be used.

In regards to backup, it is a good idea to test the backup on another

secure system. It is said that you do backup but what you really want is restore. So,
test your backups. Just be sure to test it on another system because some people
have lost bitcoins by restoring a backup over a wallet that had private keys that
were not in the backup.

Next is protection from online threats. This means keeping the

wallet either offline or on a computer that is disconnected from the internet. If you'd
like to have reasonable yet secure access to your Bitcoin wallet you can use a live
CD with your computer to access and manipulate your bitcoins. The live CD would
include all the software needed to handle bitcoins.

21
 If you're going to be placing your backups where other people
may be able to access them, you can use encryption. Once encrypted, a potential
thief would need your password to be able to access the wallet file and steal your
bitcoins. As an example, and there are many, a program like True crypt provides a
simple way to encrypt one or more files on any drive or computer you wish. The
latest version of the Bitcoin program from bitcoin.org also includes wallet encrypt.

1.3 Advantage

1.3.1 Bitcoin as Crypto-currency

The process is a decentralized crypto-currency system and its

derivatives follow a novel approach by adopting the most famous emerging
technology network with the dynamic improvement in monetary transaction
sectors. To enable the transactions performance faster, a Bitcoin community has
been developed with a contractual solution in the form of payment channels.
Bitcoin is an emerging digital currency, has several exchange markets and targeted
across several businesses in order to bridge the gaps between cash and digital
currency. According to Churn Bitcoin is an open source code that exists through
a ‘cloud’ network called the ‘block chain’ and the transactions happen instantly
anywhere around the world for a very nominal cost. Moreover, transactions are very
secure only because of strong cryptography that makes it impossible to access
without an authenticated permission. Thus, the Bitcoin pricing advantage arises and
eliminates the market power of traditional banking industry.

Bitcoin is the first decentralized digital payment system which

is powered by its users with no middleman or central authority and maintained the
most prominent triple entry bookkeeping system. This virtual payment is the first

22
 implementation of a concept called ‘Cryptocurrency’ that uses cryptography to
control its transactions, rather than a central monitoring authority. Any developer
around the world can review the code or design their own modified version
of Bitcoin software, because the protocol and software are openly published.
Bitcoin users can hold a virtually unlimited amount of cryptographic identities
which called Address. An Address is actually the hash of an ECDSA (Elliptic Curve
Digital Signature Algorithm) public security key and a user in possession of the
corresponding private key is called the own ‘address’. Addresses serve as
frequently and pseudonyms using new ones which is the basis for anonymity in
Bitcoin technology.

1.3.2 Future Effects in Traditional Transaction

Block chain technology-based system is the currently default

perspective in the conventional banking and finance sector; as a model of this
technology a latest technology has been adopted differentially by some financial
institutions for the further round of technological competition to defeat
cryptocurrency for the purpose of keeping alive the traditional transaction system.
By developing block chain technologies, conventional monetary institutions can
shift the boundary of hierarchical organizations to self-organizing industry. As a
result, in future the traditional trading will be conducted in more efficient
dynamically and got empowerment in financial trading. As Bitcoin is completely
decentralized mechanism; hence the some financial have been following block
chain architectures and it will tend them towards a specific design for broad rooms
and automated structure of governance frameworks. Perhaps new approaches of
governance systems with the ability of decentralize method will develop more
democratic inclusive decision-making processes in traditional trading industry.

23
1.3.3 Developing New Platform

This cryptocurrency allows its internal researchers to develop an autonomous

decentralized financial framework where there will be no monitoring or
governing body. While the governments and banks spend billions of moneys
for the security purposes, but the Bitcoin holders only feel comfort on
cryptocurrency and the wisdom of the developers. The implications of the
decentralized nature, the authorities of cryptocurrency and their ability to
monitor and regulate the flow of currency are still unclear. Many users adopt
Bitcoin for philosophical and political reasons because anonymity is a primary
designed goal of the system for skipping law enforcement. Though Bitcoin is
visualized as a trustless decentralized platform where all transactions are
recorded in a decentralized ledger and cryptographically confirmed by users.
So far, the Bitcoin exploration has been very successful in certain aspects third
parties cannot manipulate currency creation users are the owners over their
wealth users can achieve a certain measure of anonymity and fees of
transactions are very low.

1.3.4 Exchangeability

The fundamental idea behind the digital currency is to create a digital

transaction as online payment system by using a mathematical algorithm that
is both rare and exchangeable on the currency market. The earners of Bitcoin
had proved that Bitcoin is changeable and can be used in conventional
financial transactions through online network without any paperwork. On the
other hand, the conventional banks may reduce the exchangeability by creating
regulations. Actually, exchangeable instruments are in limitation set by the
regulations, laws and practice which is modified by the governments or the
lawmakers.

24
1.3.5 Security

Bitcoin ensures high security to the ultimate users compared to centralized

monetary systems; even if there is a well-developed variety of software
available for operating bitcoins transactions. Nevertheless, the users get
experience with the technical fundamentals and recovery platform for human
errors or to recover their virtual monetary assets in case of a loss. In the case
of Bitcoin miners’ security Hour argued that Bitcoin security is directly
depending on the whole computational power of the miners. But by
misconception some people criticize about the security system of Bitcoin
activities.

1.3.6 Bitcoin as Crypto-currency

The process is a decentralized crypto-currency system and

its derivatives follow a novel approach by adopting the most famous emerging
technology network with the dynamic improvement in monetary transaction
sectors. To enable the transactions performance faster, a Bitcoin community has
been developed with a contractual solution in the form of payment channels.
Bitcoin is an emerging digital currency, has several exchange markets and targeted
across several businesses in order to bridge the gaps between cash and digital
currency. According to Churn Bitcoin is an open source code that exists through
a ‘cloud’ network called the ‘block chain’ and the transactions happen instantly
anywhere around the world for a very nominal cost. Moreover, transactions are very
secure only because of strong cryptography that makes it impossible to access
without an authenticated permission. Thus, the Bitcoin pricing advantage arises and
eliminates the market power of traditional banking industry.

25
 Bitcoin is the first decentralized digital payment system
which is powered by its users with no middleman or central authority and
maintained the most prominent triple entry bookkeeping system. This virtual
payment is the first implementation of a concept called ‘Cryptocurrency’ that uses
cryptography to control its transactions, rather than a central monitoring authority.
Any developer around the world can review the code or design their own modified
version of Bitcoin software, because the protocol and software are openly
published. Bitcoin users can hold a virtually unlimited amount of cryptographic
identities which called Address. An ‘Address’ is actually the hash of an ECDSA
(Elliptic Curve Digital Signature Algorithm) public security key and a user in
possession of the corresponding private key is called the own address. Addresses
serve as frequently and pseudonyms using new ones which is the basis for
anonymity in Bitcoin technology.

1.4 Problems

1.4.1 Young Technology

Cryptocurrency is still a very young technology. Bitcoin came about roughly

10 years ago, and it has yet to develop into something solid. With so many
changes occurring in the past few years, there’s no telling how the market will
evolve. Bitcoin as we know it may become useless in the future. The best way
to approach this new investment opportunity is with caution and due diligence.
Take the steps to secure your funds, and brace yourself for the future of the
market.

26
1.4.2 Currency or Investment Opportunity?

Cryptocurrency could be an effective online currency exchange; however,

buyers buy up bitcoins with the intent of investing much as they would with
stocks. Some even think that bitcoin is a solid investment opportunity for
retirement. With a constantly shifting market, no regulation and zero physical
collateral, investors can end up losing everything they invest. While bitcoin
could potentially pay off, the best way to approach this investment is with
caution. Small investments and small steps will cover more ground.

1.4.3 Financial Loss

Bitcoin has been referred to as a Ponzi scheme, with people at the top
benefiting off the ignorance of others. As more people buy into bitcoin, it
creates a bubble economy. When the bubble bursts, bitcoin will essentially
become useless; there will be many people holding onto cryptocurrency,
intending to sell but unable to unload. There is no return on the investment,
which can equal a very painful financial loss.

1.4.4 Limited Use

Bitcoin may be a step toward a new monetary exchange; however, there are
few companies that accept it as a viable form of currency. Currently, a few
online stores, including Overstock, Newegg and Monored, allow
cryptocurrency exchanges. Additionally, bitcoin owners can use their funds for
travel with companies like Air Baltic, Air Lithuania and CheapAir.com.
Unfortunately, many companies do not recognize bitcoin as a legitimate
exchange.

27
1.4.5 Block Withholding

New bitcoins are created by solving mathematical equations called “blocks,”

which are created every time there is a bitcoin exchange online. A mining pool
can use computational power to mine a block and hide it from honest minors
of reporting the new block to the network. Essentially, this is a way for a select
few to reap the benefits, while others are left with nothing.

1.4.6 Technology Reliance

Bitcoin is an online exchange that is reliant on technology. Coins are digitally

mined, exchanged via smart wallet and kept in check using various systems.
Without that technology, cryptocurrency is worth nothing. Unlike other forms
of currency or investment, there is no physical collateral to back it up. With
gold, real estate, bonds or mutual funds, you own something that can be
exchanged. With a currency that is 100% technology-based, bitcoin owners
are more vulnerable to cyber threats, online fraud and a system that can be shut
down.

1.4.7 Little or No Regulation

Currently, the bitcoin market is operating without any major regulations. The
government doesn’t have a clear stance on cryptocurrency; the market is just
too new. It is not taxed, which can make it enticing as an investment
opportunity. However, a lack of taxation could lead to problems should bitcoin
pose as competition for government currency. As of now, cryptocurrency is
not a widely accepted currency, but the future is ever-changing. There’s no
telling what the state of the bitcoin market could be in a few years’ time.

28
1.4.8 Fraud

In addition to hacking, there is a fair amount of fraud in the bitcoin market.

Buyers and sellers are looking to trade bitcoins online, but since their rise in
popularity, some of these exchanges can be fake. The Consumer Finance
Protection Bureau and the Securities and Exchange Commission have warned
against these transactions where unsuspecting investors are duped out of their
bitcoins in fraudulent exchanges. This lack of security creates a big risk for
investors. While systems have been created to deal with these problems,
security remains a big issue.

1.4.9 Cyber theft

Cryptocurrency is technology-based, which leaves this investment open to

cyberattacks. Hacking is a serious risk, since there is no way to retrieve your
lost or stolen bitcoins. Many reports suggest that many buyers lose their
investments on exchanges and mining losses. Exchanges are more likely to
hacked -- even if you have the protection of a smart wallet. Additionally, if
you do have a wallet and you forget or misplace your key, there is rarely a way
to retrieve your coins. Carefully research your cryptocurrency wallets to be
sure you have the most reliable option.

1.4.10 The Volatile and Fluctuating Market

The price of bitcoin is constantly changing. As of November 6, 2018, one

bitcoin was worth $6,461.01. If you happened to purchase a bitcoin on
December 17, 2017, the price topped $20,000. Days later, on the 24th, buyers

29
 could not sell their investment for more than $14,626. The bitcoin market is
constantly rippling back and forth. With such an unpredictable market, there’s
no telling if you will get a return on your investment. To avoid a massive loss,
keep a vigilant eye on the market. Make small investments; they’ll be more
beneficial long-term.

1.5 Related concept

1.5.1 How does Bitcoin work

From a user perspective, Bitcoin is nothing more than a
mobile app or computer program that provides a personal Bitcoin wallet and
allows a user to send and receive bitcoins with them. This is how Bitcoin works
for most users.
Behind the scenes, the Bitcoin network is sharing a public
ledger called the "block chain". This ledger contains every transaction ever
processed, allowing a user's computer to verify the validity of each transaction.
The authenticity of each transaction is protected by digital signatures
corresponding to the sending addresses, allowing all users to have full control
over sending bitcoins from their own Bitcoin addresses. In addition, anyone
can process transactions using the computing power of specialized hardware
and earn a reward in bitcoins for this service. This is often called "mining". To
learn more about Bitcoin, you can consult the dedicated page and the original
paper.

1.5.2 Is Bitcoin fully virtual and immaterial

Bitcoin is as virtual as the credit cards and online banking networks people
use every day. Bitcoin can be used to pay online and in physical stores just like

30
 any other form of money. Bitcoins can also be exchanged in physical form
such as the Denarius coins, but paying with a mobile phone usually remains
more convenient. Bitcoin balances are stored in a large distributed network,
and they cannot be fraudulently altered by anybody. In other words, Bitcoin
users have exclusive control over their funds and bitcoins cannot vanish just
because they are virtual.

1.5.3 Is Bitcoin secure?

The Bitcoin technology - the protocol and the cryptography - has a strong
security track record, and the Bitcoin network is probably the biggest
distributed computing project in the world. Bitcoin's most common
vulnerability is in user error. Bitcoin wallet files that store the necessary
private keys can be accidentally deleted, lost or stolen. This is pretty similar
to physical cash stored in a digital form. Fortunately, users can employ
sound security practices to protect their money or use service providers that
offer good levels of security and insurance against theft or loss.

1.5.4 Hasn't Bitcoin been hacked in the past?

The rules of the protocol and the cryptography used for Bitcoin are still
working years after its inception, which is a good indication that the concept
is well designed. However, security flaws have been found and fixed over time
in various software implementations. Like any other form of software, the
security of Bitcoin software depends on the speed with which problems are
found and fixed. The more such issues are discovered, the more Bitcoin is
gaining maturity.

There are often misconceptions about thefts and security breaches

that happened on diverse exchanges and businesses. Although these events are
unfortunate, none of them involve Bitcoin itself being hacked, nor imply

31
 inherent flaws in Bitcoin; just like a bank robbery doesn't mean that the dollar
is compromised. However, it is accurate to say that a complete set of good
practices and intuitive security solutions is needed to give users better
protection of their money, and to reduce the general risk of theft and loss. Over
the course of the last few years, such security features have quickly developed,
such as wallet encryption, offline wallets, hardware wallets, and multi-
signature transactions.

1.5.5 How does Bitcoin work?

Anybody can become a Bitcoin miner by running software with
specialized hardware. Mining software listens for transactions broadcast
through the peer-to-peer network and performs appropriate tasks to process
and confirm these transactions. Bitcoin miners perform this work because they
can earn transaction fees paid by users for faster transaction processing, and
newly created bitcoins issued into existence according to a fixed formula.

For new transactions to be confirmed, they need to be included in a block

along with a mathematical proof of work. Such proofs are very hard to generate
because there is no way to create them other than by trying billions of
calculations per second. This requires miners to perform these calculations
before their blocks are accepted by the network and before they are rewarded.
As more people start to mine, the difficulty of finding valid blocks is
automatically increased by the network to ensure that the average time to find
a block remains equal to 10 minutes. As a result, mining is a very competitive
business where no individual miner can control what is included in the block
chain.

The proof of work is also designed to depend on the previous block to force
a chronological order in the block chain. This makes it exponentially difficult
to reverse previous transactions because this requires the recalculation of the
proofs of work of all the subsequent blocks. When two

32
 blocks are found at the same time, miners work on the first block they receive
and switch to the longest chain of blocks as soon as the next block is found.
This allows mining to secure and maintain a global consensus based on
processing power.

Bitcoin miners are neither able to cheat by increasing their own

reward nor process fraudulent transactions that could corrupt the Bitcoin
network because all Bitcoin nodes would reject any block that contains invalid
data as per the rules of the Bitcoin protocol. Consequently, the network
remains secure even if not all Bitcoin miners can be trusted.

1.5.6 Isn't Bitcoin mining a waste of energy?

Spending energy to secure and operate a payment system is hardly a
waste. Like any other payment service, the use of Bitcoin entails processing costs.
Services necessary for the operation of currently widespread monetary systems,
such as banks, credit cards, and armored vehicles, also use a lot of energy. Although
unlike Bitcoin, their total energy consumption is not transparent and cannot be as
easily measured.

Bitcoin mining has been designed to become more optimized over

time with specialized hardware consuming less energy, and the operating costs of
mining should continue to be proportional to demand. When Bitcoin mining
becomes too competitive and less profitable, some miners choose to stop their
activities. Furthermore, all energy expended mining is eventually transformed into
heat, and the most profitable miners will be those who have put this heat to good
use. An optimally efficient mining network is one that isn't actually consuming any
extra energy. While this is an ideal, the economics of mining are such that miners
individually strive toward it.

33
1.5.7 Is Bitcoin a Ponzi scheme?
A Ponzi scheme is a fraudulent investment operation that pays returns to its investors
from their own money, or the money paid by subsequent investors, instead of from
profit earned by the individuals running the business. Ponzi schemes are designed
to collapse at the expense of the last investors when there are not enough new
participants.

Bitcoin is a free software project with no central authority. Consequently, no one is

in a position to make fraudulent representations about investment returns. Like other
major currencies such as gold, United States dollar, euro, yen, etc. there is no
guaranteed purchasing power and the exchange rate floats freely. This leads to
volatility where owners of bitcoins can unpredictably make or lose money. Beyond
speculation, Bitcoin is also a payment system with useful and competitive attributes
that are being used by thousands of users and businesses.

1.5.8 Is Bitcoin useful for illegal activities?

Bitcoin is money, and money has always been used both for legal and
illegal purposes. Cash, credit cards and current banking systems widely
surpass Bitcoin in terms of their use to finance crime. Bitcoin can bring
significant innovation in payment systems and the benefits of such innovation
are often considered to be far beyond their potential drawbacks.

Bitcoin is designed to be a huge step forward in making money more secure

and could also act as a significant protection against many forms of financial
crime. For instance, bitcoins are completely impossible to counterfeit. Users
are in full control of their payments and cannot receive unapproved charges
such as with credit card fraud. Bitcoin transactions are irreversible and immune
to fraudulent chargebacks. Bitcoin allows money to be secured against theft
and loss using very strong and useful mechanisms such as backups, encryption,
and multiple signatures.

34
 Some concerns have been raised that Bitcoin could be more attractive to
criminals because it can be used to make private and irreversible payments.
However, these features already exist with cash and wire transfer, which are
widely used and well-established. The use of Bitcoin will undoubtedly be
subjected to similar regulations that are already in place inside existing
financial systems, and Bitcoin is not likely to prevent criminal investigations
from being conducted. In general, it is common for important breakthroughs
to be perceived as being controversial before their benefits are well
understood. The Internet is a good example among many others to illustrate
this.

1.5.9 Can Bitcoin be regulated?

The Bitcoin protocol itself cannot be modified without the cooperation of
nearly all its users, who choose what software they use. Attempting to assign
special rights to a local authority in the rules of the global Bitcoin network is
not a practical possibility. Any rich organization could choose to invest in
mining hardware to control half of the computing power of the network and
become able to block or reverse recent transactions. However, there is no
guarantee that they could retain this power since this requires to invest as much
than all other miners in the world.

It is however possible to regulate the use of Bitcoin in a similar way to any

other instrument. Just like the dollar, Bitcoin can be used for a wide variety of
purposes, some of which can be considered legitimate or not as per each
jurisdiction's laws. In this regard, Bitcoin is no different than any other tool or
resource and can be subjected to different regulations in each country. Bitcoin
use could also be made difficult by restrictive regulations, in which case it is
hard to determine what percentage of users would keep using the technology.
A government that chooses to ban Bitcoin would prevent domestic businesses
and markets from developing, shifting innovation to other countries. The

35
 challenge for regulators, as always, is to develop efficient solutions while not
impairing the growth of new emerging markets and businesses.

1.5.10 What about Bitcoin and consumer protection?

Bitcoin is freeing people to transact on their own terms. Each user can
send and receive payments in a similar way to cash but they can also take part in more
complex contracts. Multiple signatures allow a transaction to be accepted by the
network only if a certain number of a defined group of persons agree to sign the
transaction. This allows innovative dispute mediation services to be developed in the
future. Such services could allow a third party to approve or reject a transaction in
case of disagreement between the other parties without having control on their money.
As opposed to cash and other payment methods, Bitcoin always leaves a public proof
that a transaction did take place, which can potentially be used in a recourse against
businesses with fraudulent practices.

It is also worth noting that while merchants usually depend on

their public reputation to remain in business and pay their employees, they
don't have access to the same level of information when dealing with new
consumers. The way Bitcoin works allows both individuals and businesses to
be protected against fraudulent chargebacks while giving the choice to the
consumer to ask for more protection when they are not willing to trust a
particular merchant.

1.5.11 What about Bitcoin and

Bitcoin is not a fiat currency with legal tender status in any jurisdiction,
but often tax liability accrues regardless of the medium used. There is a wide
variety of legislation in many different jurisdictions which could cause income,

36
 sales, payroll, capital gains, or some other form of tax liability to arise with
Bitcoin.

1.5.12 What about Bitcoin and consumer protect

Bitcoin is freeing people to transact on their own terms.
Each user can send and receive payments in a similar way to cash but they can
also take part in more complex contracts. Multiple signatures allow a
transaction to be accepted by the network only if a certain number of a defined
group of persons agree to sign the transaction. This allows innovative dispute
mediation services to be developed in the future. Such services could allow a
third party to approve or reject a transaction in case of disagreement between
the other parties without having control on their money. As opposed to cash
and other payment methods, Bitcoin always leaves a public proof that a
transaction did take place, which can potentially be used in a recourse against
businesses with fraudulent practices.

It is also worth noting that while merchants usually depend on their public
reputation to remain in business and pay their employees, they don't have
access to the same level of information when dealing with new consumers. The
way Bitcoin works allows both individuals and businesses to be protected
against fraudulent chargebacks while giving the choice to the consumer to ask
for more protection when they are not willing to trust a particular merchant.

• The man behind Indian first bitcoin exchange

In August this year, Bangalore-based startup Uno coin made news internationally when
Bitcoin investor Barry Silber infused $250,000 in the company. With this, Uno coin

37
became the first Bitcoin exchange and merchant processor in India to have raised
international funding.

For Uno coin founders, Vikram Nikkam, 38, and Sathvik Vishwanath, 31, this was also an
opportunity to convince their families about how real the virtual currency they were
dabbling in was. Bitcoin is a digital currency that is created and stored electronically. While
it is not the only virtual currency in the digital market (there are over a hundred), it is by
far the most popular one and accounts for more than two-thirds of the virtual currency
market.

The economic downturn of 2008, which hit money as we know it in the real world, was
what brought Nikkam and Vishwanath together in the world that deals in virtual currency.
Vishwanath had just completed his MBA in Australia. As a student, he was already
scripting for Second Life, an online virtual world, for users in the United States. The hobby
became a full-time venture as the number of clients increased and Vishwanath set up his
first venture called Venture Next which sold Fenix, a foxlike creature in Second Life. He
created about 1.2 million Fenix’s. In 2013, a business partner from the US in a Second Life
project introduced him to Bitcoin. It wasn’t difficult for Vishwanath to grasp the concept
of Bitcoin, given that he had already dealt in another kind of centralized virtual currency,
Linden Dollars, in Second Life. With the popularity of Second Life dipping, he gravitated
towards Bitcoin.

While Vishwanath was busy creating creatures for Second Life, Nikkam, who studied in
the UK, was working for hospitality company Hilton Worldwide. Here, business
development and food and beverage management were his areas of operation. The
downturn made him look at the concept and fundamentals of money afresh. Then in 2009,
he came across Bitcoin and it “got me interested,” he says.

After his stint at Hilton, Nikkam returned to India in 2013, intent on working in the Indian
Bitcoin business. “I started searching online for Bitcoin activity or community in Bangalore
and came across the India Bitcoin meet-up. That got me excited. I have been part of this
movement ever since,” he says.

38
He met Vishwanath at one such meet-up and the two decided to set up a business in the
crypto-currency. They launched Uno coin in December 2013 and, in less than a year, claim
to have a membership of 3,000 registered users. Though the number of operators in India
is small, the players say there have been 150,000 wallet downloads so far. (A ‘wallet’ in
the Bitcoin world is your own private online repository). Between the two, Nikkam
manages the business development aspect of Unicoi, while Vishwanath controls the
technology and handles the back-end and real-time updates.

“In the beginning, no one would understand what we were doing,” recalls Nikkam. “I tried
to explain it to my brother who said I was wasting my time. My father too started to
understand that I was doing something that the world understood only when some
neighbors asked him about my business.” To convince his brother, Nikkam would take him
to several of the meet-ups that he and Vishwanath participated in.

Bitcoin is being increasingly used in online transactions across the world for purchases and
other financial deals. But it is also used by shady operators for illegal deals because of the
anonymity involved. Currently, there are 21 million Bitcoins in circulation. Earlier this
week, each Bitcoin was valued at around $290.

In India, acceptance of Bitcoin has been a tad slow. Initially, the Reserve Bank of India
was also not supportive of Bitcoin and though it has allowed its operations, it has cautioned
investors about the risk of crypto-currency.

Nikkam and Vishwanath are, however, convinced that Bitcoin has a glowing future in
India. CoinDesk, which covers the news and prices on digital currencies, says India ranks
fourth in the list of the world’s top 10 markets that are most likely to see mass adoption of
Bitcoin, according to a recent Bloomberg report. CoinDesk’s ranking was based on
categories like technology penetration, inflation, history of financial crises and the size of
a nation’s black market.

39
intellectual property on it. Bitcoin is the most transparent system for financial transaction
globally.” Firms such as Dell, Overstock and Expedia have already started accepting
Bitcoin. Online e-commerce businesses like PayPal, which facilitate payments and money
transfers through the Internet, also plan to allow Bitcoin payments through integration with
a Bitcoin payment processing system.

Investor interest in India has been significant. “As promoters, we were planning to raise
capital ourselves, but were approached by Silber, the CEO of Bitcoin Opportunity Corp,
USA,” says Nikkam. The company now plans to use the funds to scale Uno coin and make
Bitcoin available to the masses. Part of the investment will be used for liquidity and
marketing efforts, while another part will be used towards regulatory compliance and
security expenditures.

Silber is not the only one eyeing the Indian Bitcoin market. In July this year, venture
capitalist Tim Draper, who was the sole winner of an auction of 30,000 Bitcoins by the US
Marshals Service, partnered with Silicon Valley-based startup Vaurum, founded by Avish
Bhama, to leverage this pool. Both Draper and Bhama have, in separate media reports,
been quoted as saying that these coins will be used in emerging economies where local
currencies are not very strong. And India is very much on the radar.

Like Silber and Draper, Nikkam believes that Bitcoin will prove to be a breakthrough in
India, especially for banking the unbanked, instant global reach for e-commerce,
freelancers serving the world at the click of a button, charity, fundraising, micro payments
and transactions as well as crowd-funding operations for ideas and startups. Currently, a
few freelancers and small businesses are accepting Bitcoin through Uno coin in India.

The biggest hurdle for the acceptance of Bitcoin in India is the lack of regulation and clarity
on how to tax it. “It took us over six months to completely roll out Uno coin. We took a lot
of time brainstorming to come up with a concrete plan to execute an operation where we
would fit into the legal system and be able to stay 100 per cent compliant with regards to
the know your customer and the anti-money-laundering policies,” says Nikkam. The

40
company has also applied for approvals under existing tax laws such as service tax to
continue to serve the Indian market.

Within India, Bangalore, the hub of technologists, entrepreneurs and businessmen who
have embraced technology in a big way through regular meet-ups, has been faster in
accepting Bitcoin. One of the reasons for the 150,000 wallet downloads in India is the
Bangalore Bitcoin Progressive Thinkers Meetup that has been a channel of expanding
Bitcoin technology education. “This meet-up group has built a team of cryptographically
intellectual minds who love Bitcoin and who supported the Global Bitcoin Conference
2013 that took place in Bangalore,” says Nikkam.

“The level of knowledge and understanding of the subject has greatly advanced,” says
Nikkam. “A lot of people now want to know how they can get jobs in the Bitcoin space.”
Uno coin employs 15-20 people, including engineers, and those looking into sales and
marketing, and verification of customers. With the virtual money tree showing healthy
growth, Nikkam and Vishwanath are clearly determined to reap its rewards.

1.5.13 Bitcoin Price History

The price changes for Bitcoin alternately reflect investor enthusiasm and
dissatisfaction with its promise. Satoshi Nakamoto, the anonymous Bitcoin
inventor(s), designed it for use as a medium for daily transactions and a way to
circumvent traditional banking infrastructure after the 2008 financial collapse.

Since then, the cryptocurrency has gained mainstream traction as a means of exchange
and attracted traders who bet against its price changes. It has also morphed into a different
investment type—a way to store value and hedge against inflation; additionally, Bitcoin
has investments linked to its price.

41
Though this new narrative may prove to hold more merit, the past price fluctuations
primarily stemmed from retail investors and traders betting on an ever-increasing price
without much grounding in reason or facts.

But Bitcoin's price story has changed in recent times. Institutional investors are trickling
in as the cryptocurrency markets mature, and regulatory agencies are crafting rules
specifically for them. Though Bitcoin pricing remains volatile, it is now a part of the
mainstream economy instead of a tool for speculators looking for quick profits.

2009–2015

Bitcoin had a price of zero when it was introduced in 2009. On July 17, 2010, its price
jumped to $.09. Bitcoin's price rose again on April 13, 2011, from $1 to a peak of $29.60
by June 7, 2011, a gain of 2,960% within three months. A sharp recession in
cryptocurrency markets followed, and Bitcoin's price bottomed out at $2.05 by mid-
November. The following year, its price rose from $4.85 on May 9 to $13.50 by Aug. 15.

2012 proved to be a generally uneventful year for Bitcoin, but 2013 witnessed strong gains
in price. It began the year trading at $13.28 and reached $230 on April 8; an equally rapid
deceleration in its price followed, bringing its price down to $68.50 a few weeks later on
July 4.

In early October, Bitcoin was trading at $123.00; by December, it had spiked to $1,237.55
and fell to $687.02 three days later.7 Bitcoin's prices slumped through 2014 and touched
$315.21 at the start of 2015.

2016–2020

Prices slowly climbed through 2016 to over $900 by the end of the year in 2017, Bitcoin's
price hovered around $1,000 until it broke $2,000 in mid-May and then skyrocketed to
42
$19,345.49 on Dec. 15. Mainstream investors, governments, economists, and scientists
took notice, and other entities began developing cryptocurrencies to compete with Bitcoin.

Bitcoin's price moved sideways for the next two years with small bursts of activity. For
example, there was a resurgence in price and trading volume in June 2019, with prices
surpassing $10,000. However, it fell to $6,635.84 by mid-December.

In 2020 the economy shut down due to the COIVD-19 pandemic—Bitcoin's price burst
into activity once again. The cryptocurrency started the year at $6,965.72. The pandemic
shutdown and subsequent government policy fed investors' fears about the global
economy and accelerated Bitcoin's rise. At close on Nov. 23, Bitcoin was trading for
$19,157.16. Bitcoin's price reached just under $29,000 in December 2020, increasing
416% from the start of that year.

2021

Bitcoin took less than a month in 2021 to smash its 2020 price record, surpassing $40,000 by Jan.
7, 2021. By mid-April, Bitcoin prices reached new all-time highs of over $60,000 as Coinbase, a
cryptocurrency exchange, went public. Institutional interest further propelled its price upward,
and Bitcoin reached a peak of more than $63,000 on April 12, 2021.

By the summer of 2021, prices were down by 50%, hitting $29,795.55 at the lowest on July 19.
Autumn saw another bull run in September, with prices scraping $52,693.32, but a large
drawdown took it to $40,709.59 about two weeks later.

On Nov. 10, 2021, Bitcoin again reached an all-time high, $68,990.90. In early December 2021,
Bitcoin fell to $49,243.39 before fluctuating more as uncertainty about inflation continued to
spook investors alongside the emergence of a new variant of COVID-19, Omicron.

43
 1.5.14 Which Factors Influence Current Bitcoin Price

Like other currencies, products, or services within a country or economy, Bitcoin and
other cryptocurrency prices depend on perceived value and supply and demand. If people
believe that Bitcoin is worth a specific amount, they will pay it, especially if they think it
will increase in value.

By design, there will only ever be 21 million Bitcoins created. The closer Bitcoin gets to
its limit, the higher its price will be, as long as demand remains the same or increases.

Bitcoins are created by mining software and hardware at a specified rate. This rate splits
in half every four years, slowing down the number of coins created. Following the laws
of supply and demand, Bitcoin's price should continue to rise as its supply may not be able
to meet its demand—as long as it continues to grow in popularity. However, if popularity
wanes and demand falls, there will be more supply than demand, and Bitcoin's price
should drop unless it maintains its value for other reasons.

Another factor that affects Bitcoin's price falls in line with supply and demand; Bitcoin
has also become an instrument that investors and financial institutions use to store value
and generate returns. Derivatives are being created and traded by brokers, investors, and
traders, acting to influence Bitcoin's price further. Speculation, investment product hype,
irrational exuberance, or investor panic and fear can also be expected to affect Bitcoin's
price because demand will rise and fall with investors' sentiments.

Other cryptocurrencies may also affect Bitcoin's price. There are several cryptocurrencies,
and the number continues to rise as regulators, institutions, and merchants address
concerns and adopt them as acceptable forms of payment and currency. Lastly, if
consumers and investors believe that other coins will prove to be more valuable than
Bitcoin, demand will fall, taking prices with it—or demand will rise, along with prices, if
sentiments change in the opposite direction.

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 Chapter 2

Introduction to research methodology

2.1 introduction

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.

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). All Bitcoin
transactions are verified by a massive amount of computing power via a process known as
"mining." Bitcoin is not issued or backed by any banks or governments, nor is an individual
bitcoin valuable as a commodity. Despite it not being legal tender in most parts of the
world, Bitcoin is very popular and has triggered the launch of hundreds of other
cryptocurrencies, collectively referred to as altcoins. Bitcoin is commonly abbreviated as
BTC when traded.

2.2 objectives of study

* how many people investing of bitcoin n India.

*To analyze the impact of bit coin on Indian Economy.

* To understand the major influences.

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2.2.1 how many people investing of bitcoin n India.

“Bitcoin (BTC) prices dictate the rest of the market. I am not getting a clear sense
of how it will move in the near future, so I am tracking it closely.

Aided by high decibel campaigns and crypto prices touching all-time highs in
April 2021 (BTC touched $63,729 on April 3), many small Indian investors put their risk
capital in cryptocurrencies.

As a result, crypto platforms witnessed record growth in users and transaction

volumes. The biggest Indian crypto broking platform, Coin Switch Kuber, registered a
3,500% rise in transaction volumes and touched 14 million users recently.
Leading cryptocurrency exchange, Weir, witnessed record trading volume of over $43
billion in 2021the highest in India growth of 1,735% from 2020.Bibs, another leading
exchange, increased its user base by 849 percent and trading volumes by more than 45 time
in the last year. “2021 was a blowout year for most crypto companies,” says Gaurav Dhaka,
founder and chief executive of cryptocurrency exchange Bibs. According to a report by
cryptocurrency research firm Chain lysis, India is one of the world's fastest growing crypto
markets, increasing by 641% between July 2020 and June 2021.

2.2.2 To analyze the impact of bit coin on Indian Economy.

Cryptocurrency like Bitcoin has become popular in India like other nations
as the volume of Indian rupee being traded in cryptocurrency have been at the highest post
demonetization. Researches shows that the volume generated by the rupee dominated
cryptocurrency is the third largest volume traded after American dollar and yen. The
demonetization policy of 2016 may have encouraged the implementation of
cryptocurrencies amongst a substantial share of the population but realities rapidly began
to come out that have subdued the growth of the market in the country. In spite of its
enormous population, India only contributes two percent of the whole global
cryptocurrency market capitalization. Cryptocurrencies in Indian context portrays few
limitations.
46
2.2.3 To understand the major influences bitcoin price

Like most cryptocurrencies, Bitcoin is a very volatile digital currency. Its price has
increased by more than 220% between November and December 2017 for example. In the
opposite direction, the price of Bitcoin also underwent a sharp correction between January
and February 2018 to lose nearly 60% before sinking into a bear mar kept of several months.
The year 2019 with a return to a bull market only confirmed this ultra-volatile nature of
Bitcoin.

If there is no question of giving up investing in Bitcoin because of its high volatility, it is

important to ask the right questions and think about the factors that drive Bitcoin’s ups and
downs.

Even better, you will have probably noticed that most cryptocurrencies are generally
indexed to Bitcoin. This implies that its fluctuations will have the same effect on most
cryptocurrencies, both upwards and downwards. Determining the factors underlying the ups
and downs of Bitcoin will allow us to better predict and understand developments in the
cryptocurrency market as a whole.

In addition, it should be noted that the effects of these factors on the price of Bitcoin and
other cryptocurrencies are often exacerbated. This is because the world of cryptocurrencies
is new and therefore sometimes unknown to some investors, which can lead to
disproportionate reactions to buying or selling.

That being said, I suggest that you discover the Top 4 Factors that are at the root of the ups
and downs of the Bitcoin price. Of course, this list is far from exhaustive, but these are the
top factors

1) The Law of Supply and Demand

2) Media Influence

3) Political events

4) Regulatory Changes Decided by Governments

47
2.3 statement of problem

• Bitcoin is not money: -

Theoretically and legally, cryptocurrencies such as bitcoin
are not money despite what some people may think. Money serves three functions: it is a
medium of exchange, a unit of account and a store of value.

Not many goods and services are priced in and settled by bitcoin (or other
cryptocurrencies). Bitcoin is not universally accepted as a unit of account and a means of
payment. Granted, many cryptocurrency payment apps have been created in recent years
to promote its use. But none of them has made it to the core of the world’s daily transactions
and payments, except for some underworld transactions.

Crucially, crypts are priced in USD (or other fiat currencies). So, they are no different from
any item priced in USD standing on the opposite side of money in a transaction.

To legally qualify as money, a means of payment must be granted a status by a country’s

laws as its official monetary unit. This legal tender status allows debtors to pay their
obligations/liabilities by transferring them to creditors as recognized and approved by law.

Recent research found that 80% of the world’s central banks were either not allowed to
issue digital currency under the existing laws, or their legal frameworks are ambiguous and
do not clearly permit them to do so. China, however, passed a law in 2020 allowing its
central bank to issue a digital currency, hence the birth of the world’s first official digital
currency, the Digital Currency Electronic Payment (DCEP). Despite being digital, DCEP
is strictly speaking not a cryptocurrency.
Legal tender status is usually given to means of payment that can be easily transferred and
used by the population in daily life. To use bitcoin, or cryptocurrencies, a digital

48
infrastructure including computers, smartphones, internet networks and connectivity must
be in place. This condition makes it unrealistic for cryptocurrencies to become money. It
echoes Mark Cuban’s argument against bitcoin as money.

2.4 scope of the study: -

This study will help me understand what percent of

people in India want to invest in bitcoin and what percent of people have so for invested in
bitcoin and how they have benefited from they have benefited from the investment. So, I
have chosen this topic for research.

2.5 Data collection method: -

I am going to survey method to collect data. I will ask

some questions which will be answered yes or not. From this survey I will know how many
people in India who invest in bitcoin and benefit from it.

2.6 sample method: -

In the sampling method I will use the graph method to

understand how people react to bitcoin investment.

2.7 technique used for analysis: -

I have used mobile and computer for analysis.

2.8 limitation of study: -

When I do survey, I will take care that no one will ask

question that will make the mind feel wrong.

49
 Chapter 3

Literature review

3.1 S. Josephin Arulmozhi 1, K. Praveenkumar2 and Dr. G.

Vinayagamoorthi Research Scholar1,2 and Assistant Professor2, Department of
Commerce, Alagappa University, Karaikudi

The current literature investigated in the light of the present study could be
categorized into three fundamental sections. In the first group, the studies oriented on the
Value at Risk (Vary) from various aspects were investigated. The second group included
studies concentrated on the Bitcoin subject. In the third group, the studies investigating the
Bitcoin and Vary method together were included. In the relevant current literature, studies
on Vary are mostly concentrated on a comparison of calculation methods and testing
potential daily losses at various confidence levels. The first group Vary studies were
presented in chronological order.

3.2 Jonathan Chiu (2017) Jonathan Chiu explained that General equilibrium
monetary model is developed to study the optimal design of a cryptocurrency system based
on a block chain. The model is then calibrated to Bitcoin transaction data to perform a
quantitative assessment of the scheme. We formalize the critical elements of a
cryptocurrency: the block chain to keep a history of transactions, the distributed updating
of information and consensus through competition for such updating. We show that, unlike
cash, a cryptocurrency system does not support an immediate, final settlement. In addition,
the current Bitcoin scheme generates a welfare loss of 1.4% of consumption. Such loss can
be lowered substantially to 0.08% by adopting the optimal policy which reduces mining
and relies on money growth rather than transaction fees to Nance mining rewards. The
efficiency can potentially be improved further by adopting an alternative consensus

50
protocols such as the proof-of-stake. A key economic feature of a cryptocurrency system
is that mining is a public good, while double spending to defraud the cryptocurrency
depends on individual incentives to reverse a particular transaction. As a result, a
cryptocurrency works best when the volume of transactions is large relative to the
individual transaction size.

3.3 Kithara & Fukushima (2018) Explained, it is not digital cash, which has
prevailed all over the world. Unlike central bank and government-issued currency, Bitcoin
can be inflated at will, the supply of Bitcoin is limited to a certain volume, which cannot
be changed.

3.4 Rahman and Dawood (2019) In their Bitcoin and Future of Cryptocurrency
focused on cryptocurrency as an imaginative and technically advanced alternative for
globalization. It examined the possibility of an alternative for processing payments across
geographical boundaries and if regulated effectively cryptocurrency could remove a lot of
the Nancie challenges faced in the present.

3.5 C.A. (Dr.) Pramod Kumar Pandey (2017) In his Bitcoin as Emerging
Virtual Currency and Its Related Impact on India focused on the high returns and the high
risk that comes along. He believed bitcoins aren't mature and investing in bitcoins would
be like jumping in a dark well without knowing the depth, since bitcoin is not backed by
anything. One of the challenges to be faced would be to establish it as a currency or
commodity. If this is established as a currency, probably RBI will play a leading role in its
regulation, while if this is a commodity, SEBI will initiate regulations.

51
3.4 Komal Dhande (2017) In his Bitcoin and Its Prospects in India study focuses
on the remarkable growth in the acceptance of cryptocurrencies but does not see it replacing
paper currencies anytime soon. The problem is to structure it for the law enforcement
agencies and users to ensure safety in transactions and the problems to determine a way to
charge cryptocurrency tax. The high growth on bitcoins has attracted a lot of interest but
the high amount of risk involved in keeping the investment hesitant to invest. Though the
study shows belief in virtual currencies, a good legal and regulatory framework is required
for investors to trust this form of currency in India.

3.5 Dr. Vijeta Banwari (2017) CRYPTOCURRENCY-SCOPE IN INDIA discusses

the change in Nance and the world of money. Cryptocurrencies have a huge risk factor but are
increasingly popular and it will be difficult for the government to control the transaction. According
to the Block Chain Foundation of India, (lobby of around 45 crypto dealers,) claimed that more
than 30 new exchanges have applied for membership in the recent two months. (The Print, 2018).
Block chain has huge potential recent two months. (The Print, 2018). Block chain has huge
potential to improve the way data is stored. Despite the ban on cryptocurrency, the block chain is
adopted in various government organizations (Andhra Pradesh, Maharashtra, and so on). Over the
counter, markets could come up in the future instead of routing transactions through banks.

3.6 Shalika Jain (2018) In his The Growth of Cryptocurrency in India focuses on aspects

such as the impact of cryptocurrencies in India and the opportunities that come along with it. It also
talks about the various aspects of other countries and their rules and legislature revolving around
the Introduction of cryptocurrencies.

52
3.7 Rahul J. Nikam (2018) In his Model draft regulation on Cryptocurrencies in India

focuses on aspects of India to start taking a ram decision on cryptocurrency trading and regulate it
and also speaks about how the RBI should be more open to the idea of cryptocurrencies and
understand the value and opportunities that come with it.

3.8 Gunjan Jindal and Sheza Azeen (2017) In their Legal acceptance of bitcoin

in India discuss how bitcoin plays a pivotal role in aggregating the growth percentage of the nation
and how it would not be possible unless the government pushes towards making the transactions
legal and implies its regulations on it.

3.9 Neil Shroff and Padma Venkataraman (2017) In their paper, endeavor
to set out an administrative system for Block Chain Protocol Tokens, tending to both ICO
Tokens and Cryptocurrency. They outline 3 expansive classes of tokens, further partitioned
in 5 kinds dependent on their inclination, and dangers for the two controllers and
purchasers. At that point, they proposed one of two administrative methodologies: exacting
consistency with existing laws or boosted reception of rules, contingent upon the capacity
and reason for the token concerned. We have looked to safeguard the expected motivation
n behind various ICO Tokens while setting consistent necessities, as per existing laws,
including Securities Regulations, Tax Laws, Companies Law, and KYC standards
("KYC/AML/CFT").

3.10 M Trivedi (2018) In his project, discusses the Strengths, Weaknesses,

Opportunities, and Threats of Cryptocurrency also, its extension in India. Cryptographic forms of
money have been viewed as productive interests for a long time. On account of its different points
of interest: Easy accessibility, No contribution of any middle person, Fast installments, Low
exchange charges, and Information security. Be that as it may, Cryptographic forms of money

53
additionally experience the ill effects of certain shortcomings. The security of information and
digital currency has been a significant concern.

3.11 Rehman and AK Dawood (2013) In their project say that due to the rapid
development of information and communication technologies, many activities in our daily
life have been merged online and they become more exile and more effective. The massive
growth in the number of virtual users has activated virtual word concepts and created a
new business phenomenon which is a cryptocurrency to facilitate canonical activities such
as buying, selling, and trading. Cryptocurrency represents important and intangible assets
which are used electronically in different applications and networks such as online social
networks, online social games, virtual worlds, and peer to peer networks. The use of virtual
currency has become widespread in many different systems in recent years. This paper
aims at matching the user's expectations of the future of cryptocurrency.

3.12 Parlour (2018) Be curious but also be cautious. It is important to recognize that
there is not a complete regulatory framework in this area. So, it is important to do your
homework. First, consider the venue that you use to access the market. There are regulated
crypto exchanges and trading places, however there are also unregulated ones. Second,
while most tokens are based on open source code, it is not the case that they have the same
disclosure regimes as blue-chip stocks. So, be careful and investigate the nature of the
underlying token. Note that in other countries (Canada, Europe), there are ETFs and ETPs
that track crypto portfolios, these have not received regulatory approval yet in the US. If
and when they are offered to consumers, these will be a low-cost way of accessing the
crypto market and then someone else will.

54
3.13 Lenz (2020) Learn and keep learning, the developments in the space are
happening at a rapid pace, so much so that new knowledge is being generated constantly.
As a professor teaching blockchain this is the hardest part, reinventing the course every
semester, but it keeps my students and me as current as possible. This doesn't mean
neglecting base knowledge, having this is crucial, as well as some sense of the history to
understand why developments have occurred at specific times.

3.14 Ozair (2017) Blockchain technology is definitely the future. There is no

escaping that. However, it is difficult to predict which projects will last and which will fail
and be forgotten. Most blockchain technology companies are in their early, if not very early
stages. Hence, investing in companies utilizing blockchain technologies has all the same
risks as investing in a start-up. And like in any start-up, the risk-reward ratio is high.

3.15 Adam Levy (2018) It's possible to get filthy rich by investing in
cryptocurrency in 2022. But you could also lose all of your money. How can both be true?
Investing in crypto assets is risky but also potentially extremely profitable.

Cryptocurrency is a good investment if you want to gain direct exposure to the demand for
digital currency, while a safer but potentially less lucrative alternative is to buy the stocks
of companies with exposure to cryptocurrency.

3.16 ERIKA RASURE (2020) When it comes to cryptocurrencies, one of the biggest
challenges for investors is not getting caught up in the hype. Digital currencies have quickly risen
to prominence in the portfolios of many retail and institutional investors. At the same time,
analysts have continued to caution investors about the volatile nature and unpredictability of
cryptocurrencies.

55
If you’ve decided to invest in the cryptocurrency market, it’s important—same as with
any other investment—to do your research. Below, we’ll explore what you should know
before you invest.

3.17 Parthajit Kayal (2019) Another key motivation of this paper is to understand
the underlying principle of this digital currency from the economic and financial point of
view. For the survey to be comprehensive, the paper is categorized into varied themes:
price dynamics, volatility, bubble dynamics, mode of recognition in the financial market,
efficiency, economics, social media and investor sentiment, and lastly regulation and
legality. We argue that Bitcoin is still in an embryonic phase and needs to evolve with time
especially keeping in pace with technological advancements. It should be robust to get
accepted as an alternative currency and be able to prevent any fraudulent exploitation.

3.18 Sharma, Jain, Mahendru, Bansal, & Kumar (2020)The literature

review in the current study is limited to Web of Science and Science Direct databases,
excluding purely law and technology-based papers. It is up to future researchers, therefore,
to include other databases, journals, and references, as well as purely law and technology-
based papers, in order to gain a better insight into and understanding of Bitcoin and other
cryptocurrencies. Our evaluation of each of the papers selected for systematic review was
based on subjective interpretation of the literature. There is a need, therefore, for additional
discussion in future research. This systematic review of the literature provides an overview
and summary of existing studies relating to cryptocurrencies and offers a starting point for
future research in this area.

56
3.19 Sunita Dasman (2019) This study aims to explore the potential use of the
cryptocurrency bitcoin as an investment instrument in Indonesia. The return obtained from
bitcoin cryptocurrency is compared to other investment instruments, namely stock returns,
gold and the rupiah exchange rate. The research period was carried out based on research
data from 2011 to 2020. This study employee compares means test (t test) and analysis of
variance (F test) on rate of return of bitcoin investment.

3.20 Kinsun Tam (2020) Bitcoin is an innovative virtual currency, which has
gained much commercial traction, yet is widely overlooked by the accounting profession.
Due to its parallels with actual currencies and its growing use, accountants should be aware
of what bitcoin is, including its risks and benefits, in order to properly leverage its business
uses. Of the existing financial instruments, derivatives stand out in their potential to
stabilize the bitcoin market. Bitcoin regulation is sparse, but evolving, especially in the
face of the emerging bitcoin securities and derivatives markets. The accounting profession
is poised to play a major role in facilitating the future of proper regulation and oversight of
Bitcoin.

57
 Chapter 4

Data analysis interpretation

Q.1) gender

Table 4.1

Gender No. of respondents Percentage

Male 36 54.3%

Female 25 45.7%

Gender

Interpretation: -

From this graph, it is understood that 45.7% of the investment rates as far as I known are
female and the remaining 54.3% are male. From this graph it is clear that men are the
biggest investors in India. We should also bring women forward so that this graph looks
the same.

58
Q.2) Age

Table 4.2

Age No. of respondents Percentage

18-25 40 50%

25-30 13 47.8%

30-35 0 0%

35-40 8 2.2%

Age

Interpretation: -

From this graph it is understood that people in the age group of 18 to 25 investing the
most 50% in bitcoin then 47.80% of people in the age group of 25 to 30 investing in bitcoin
and the remaining 2.2% are people between the ages of 35 to 40 who investing in bitcoin.

59
Q.3) OCCUPATION

Table 4.3

Sr .no Occupation No of response

1 Self employee 32

2 Business 19

3 Work with organization 8

4 Other 2

Occupation

Interprotation :-

This graph shows that 45.8% of the people are self employe, 30.4% of the people are in a
different fiald 19.6%of the people work with some organisation and 4.2% of the people run
their own business.

60
Q.4) do you know about bitcoin in cryptocurrency?

Table 4.4

Sr.no You know bitcoin No of response

1 Yes 40

2 No 12

3 Maybe 9

Bitcoin

13%

20%

67%

yes no maybe

Interpritation :-

From this graph it is undarsood that 67% of people know that bitcoin is a cryptocurrency
while the other 20% are unaware that bitcoin is a cryptocurrency and of course 13% of
people just guess thet bitcoin is a cryptoccurency.

61
Q.5) do you invest in bitcoin?

Table 4.5

Sr. no Investment No of response

1 Yes 44

2 No 17

Investment

Interprotation :-

From the graph it is understood that out of 100% of people I know, 71.7% of people invest
in bitcoi and the remaining 28.3% of locks do not ivest in bitcoin.

62
Q.6) will you ever invest in bitcoin in the future?

Table 4.6

Sr.no Future investment No. of response

1 Yes 41

2 No 0

3 Maybe 20

Future invetament

Interpritation :-

From this graph, it is clear that 31.6% of people will not invest in bitcoin in the future, and
the remaining 68.4% will continue to ivest in bitcoin.

63
Q.7) how many years have you been investing in bitcoin ?

Table 4.7

Sr.no Invetment years No. of response

1 1 year 33

2 2 year 12

3 3 year 13

4 4 year 0

5 Upto 5 year 3

Investment years

Interpretation :-

From this graph it is undarstood that 55.6% of my people have been investing in bitcoin
for the last 1 year, 22.2% of people have been investing in bitcoin for 3 years, 20% of
people have been investing in bitcoin for 2 years and the remaining 2.2% are 5 years ago
investment in bitcoin

64
Q.8 do you know that you need to investing at least $10 in bitcoin ?

Table 4.8

Sr.no Minimum investment No of response

1 Yes 36

2 No 25

Minimum investment

Interpretation :-

From this graph it is understood that 41.3% of people think that you can invest in bitcoin
only when you have 10$ mony and the remening 58.7% pople say that even if you have
less that 10$ to invest in bitcoin you still invest in bitcoin.

65
Q.9 have you got the right information when investing in bitcoin ?

Table 4.9

Sr.no Right informtion No of response

1 yes 48

2 No 13

Right information

Intarpretation:-

From this graph it is understood that 78.3% of the people know about that importance of
nvestment in bitcoin and the remaining 21.7% of people do not know enough about
investing in bitcoin.

66
Q.10) whetar bitcoin is legal or not?

Table 4.10

Sr.no Legal or not No of respons

1 Yes 57

2 No 4

Bitcoin leagle or not

Intrapretation :-

From this graph it is understood thet 95.7% of people know that bitcoin investment is legal
and only 4.3% of people say that bitcoin invetment is not legale.

67
Q.11) what parcent of government has imposed GST on bitcoin in
india?

Table 4.11

Sr.no Gst No of response

1 30% 53

2 40% 4

3 60% 4

Gst

Interpritation :-

From this graph it is understood that 89.1 % of people are aware thet 30% GST has been
imposed on bitcoin in india and the remaining 10.9% are people who still do not know that
india has imposed 30% GST on bitcoin.

68
Q.12) did you know that bitcoin is traded international ?

Table 4.12

Sr.no Trade intarnational No of response

1 yes 32

2 No 10

3 Meybe 19

Treade internationl

Intepretation :-

From thise graph it is understood that 50% of people think that we can invest in bitcoin
internationally and 32.6% of people think that maybe we can invest in bitcoin internationlly
ande 17.4% of people think that we can invest in bitcoin internationally.

69
Q.13) did you know that bitcoin is most commonly used on the dark
web ?

Table 4.13

Sr.no Used on dark web No of response

1 Yes 51

2 No 10

Used on dark web

Interpretation :-

From this graph, it is understood that 84.8% of people think that bitcoin is the most treaded
on the dark web and only 15.2% of people think that bitcoin is not used on the dark web.

70
Q.14) when did the indian government impose GST on bitcoin ?

Table 4.14

Sr.no Impose gst on bitcoin No of respone

1 2018 7

2 2020 6

3 2022 44

4 Other 4

Gst on bitcoin

Interpatetion :-

From this graph it Is understood that 69.6% people know that GST on bitcoin will be
implemented in 2022. The remaining 30.4% people do not know thet GST on bitcoin will
be implemented in 2022 .

71
Q.15 does bitcoin have an impact on indian economic ?

Table 4.15

Sr.no Impact on indian economic No of response

1 Yes 39

2 No 10

3 Maybe 12

Impact on indian economy

Intarpritation :-

Form this graph it is undarstood that 65.2% of people think that bitcoin investment has an
effect on our indin economy and 17.4 % people think that it may have an affect. The
remaining 174% people think thet bitcoin investment has on our indian economy

72
Q.16) can you physically touch bitcoin ?

Table 4.16

Sr.no Touch bitcoin No of response

1 Yes 44

2 No 17

Touch bitcoin

Interpretetion :-

From this graph it is understood that 76.1% of people kow that you cannot touch bitcoin

And the remaining 23.9% of people think that you can touch biycoin.

73
Q.17) its bitcoin seured?

Table 4.17

Sr.no Secured No of response

1 Yes 25

2 No 26

3 Maybe 10

Seurity

Intarapretation :-

Form this graph it is understood that 43.5% of people think that investing in bitcoin is not
safe and 41.3% of people say that it is safe to invest in bitcoin and the remaining 15.2% of
people say that they are guessing that investing in bitcoin is safe.

74
Q.18) will bitcoin be used more the future ?

Table 4.18

Sr.no Used more the future No of response

1 Yes 50

2 No 11

Used more the future

Interpretation :-

From this graph it is understood that 82.6% of people think that bitcoin will be used a lot
in future and 17.4% of people think that bitcoin will not be used in futue.

75
 Chapter 5

Conclusion

With the revolutionary changes in the cryptocurrency the future of the virtuality cannot be
determined in near future. Moreover, virtual currency is illegal in almost all over the world.
Some organizations are still using this currency, but majority of companies completely ban
them in transaction. If the cryptocurrency in the modern era have become famous, then it
is impossible for the countries to completely ignore it. Moreover, cryptocurrencies have
the power to become one global currency. There is legality to the use of Bitcoin is a debate,
but the acceptance of cryptocurrencies can be happened in the next few years in the digital
world. Eventually we can say that needs of the customers for the cryptocurrency
application it is essential to note that that what are the main success factors for learning the
application on cryptocurrency. One obvious thing we see for the use of cryptocurrency is
that the people who are the investors in cryptocurrency are having the income which is
higher from others and they are also possessing the other methods of investment.
Beekeeping in mind, the importance of cryptocurrency those persons who are investing
their profiles can be decided and which results in the m-learning application of
cryptocurrency which is the main planning of the customer caring. One more thing is to be
added also that by using the deductive logic the application which we use in mobiles the
success factors can be used for the application of cryptocurrency also and highest factor
rate can be given special attention for the safeguard, accomplishment, easy use and
invention in order to design the application of mobile. However, the most important feature
in using the m-learning on cryptocurrency is that it will become the one stop app for the
persons who are interested in cryptocurrencies. The only problem comes after researching
on this topic is that the concept of blockchain technology and the cryptocurrency is totally
new to the people and itis known mainly to the IT field department. The market of
cryptocurrencies is growing day by day and all the spotlight are on the concept of new
ecosystem of cryptocurrencies. As we all now cybercriminals are always fast in work, they

76
are smart and can adopt in unbelievable situations as they always want to know new tricks
and techniques, opportunities to make the things easy, changeable and according to their
environment. Ransomware we can say in this is such an example of virus or malware that
prevents the users and limit their jurisdiction regarding the use of their resources of system.
It forcefully makes the victims to pay the ransom through various modes of online method
of payment to access their system or to get their data back which belongs to victim only.
Cybercriminal main agenda is to refine their techniques and tools so that their ransomware
will progress. So, it became important for the existing users to protect themselves in a best
possible way against the threat of ransomware. The most famous ransomware case is of
the mobile attacks as it is increasing day by day due to the shifting of the business in the
hands of the person and so it become important to identify how, when, where and why the
operation of threat came. In the last few years, the word cryptocurrency has increased in a
faster way which is visible to the eyes of the general public. On today’s world,
cryptocurrency is becoming important to the public who knows the value of privacy and
the idea for whom there is use of cryptography to authoritative power does not sound like
the farfetched. The creation and sharing of currency. Now a day’s cryptocurrency is leading
by the Bitcoin, Litecoin, Ether etc. are creating the world of finance by storm as more and
more people investing and they are buying these currencies. But still there are confusion
worldwide regarding the biasness which is also creating impact on the overall effectiveness
policy of cryptocurrency. The education about cryptocurrency to the user must be given
which is very essential as its nature is in volatile form. In this article we provide a wide
outlook towards the cryptocurrency and it is affecting the world as we all know today. The
usage of cryptocurrency is all time high and there are many misconceptions about its usage.
Some people still ask some questions about it as why use Bitcoin? As different algorithms
are used for the currencies and many unconventional ways are used for the trade of the
cryptocurrency so many people have to look different characteristics before investment in
the Bitcoin. This includes the trading of the daily volume and the capitalization of the
market which can be seen overall. Cryptocurrency in the capitalization of the market is in
its worth form as its value is higher than the normal currency which are currently
circulating in the market. Although the form of this new cryptocurrency is not acceptable
by many people and availability of the cryptocurrency is little bit difficult therefore the

77
high market capitalization is not there. Moreover, the trading of the cryptocurrency
depends upon the volume which can be considered successful if it is higher. The channels
of verification of each cryptocurrency have its own method. The common method which
is used for verification in cryptocurrency is known as Proof of Work. To verify the
transaction computer, must take time and spend it and power of the computing to solve the
problem of mathematics which is difficult. Proof of Stake method on the hand allows the
user with the cryptocurrency with the largest share to verify the transactions and it also
requires the less power of computing. The cryptocurrency acceptance is of issue now a
days unless it is not accepted by the retailers its does not stand much use. Bitcoins is still
the most popular form of currency which is digital in nature because of its widespread and
is accepted by many businesses and by the retailers

78
 Suggestion

Recommendations for further research should be conducted in new cryptography as

it is the building block of the digital world as well as considering adding a robustness
analysis involving another method to test the robustness of the obtained results. Humanity
needs to determine whether the current consensus is dependable in the long term.
Additionally, the ability of buying Bitcoin with cryptocurrencies that are fully anonymous
needs discussion as they support illicit dealings. This is true as one can expect a rise of
fully anonymous currencies over time. Lastly, more research is recommended on ethical
considerations with decentralized technology, and its application of smart contract.
As conditions of smart contracts are abstract, they can be used to implement logic and
procedures in domains beyond commercial agreements such as universally accepted rules
and models of governance.

79
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APPENDIX

1) Name

Your answer

2) E-mail

Your answer

3) gander

a) Male

b) Female

4)age

a) 18-25

b) 25-30

c) 30-35

d) 35-40

5) occupation

a) self-employee

b) business

c) work with organization

d) other

6) do you know about bitcoin in cryptocurrency?

a) yes

b) no

i
7) do you invest in bitcoin?

a) yes

b) no

8) will you ever invest in bitcoin in the future?

a) yes

b) no

c) maybe

9) how many years have you been investing in bitcoin?

a) 1yr

b) 2yr

c) 3yr

d) 4yr

e) up to 5yr

10) do you know that you need to investing at last $10 in bitcoin?

a) yes

b) no

11) have you got the right information when investing in bitcoin?

a) yes

b) no

ii
12) whiter bitcoin is legal or not?

a) yes

b) no

13) what percent of government has imposed GST on bitcoin in India?

a) 30%

b) 40%

c) 60%

14) did you know that bitcoin is tread international?

a) yes

b) no

c) maybe

15) did you know that bitcoin is most commonly used on the dark web?

a) yes

b) no

16) when did the Indian government impose GST on bitcoin?

a) 2018

b) 2020

c) 2022

d) other

iii
17)does bitcoin have an impact on Indian economy?

a) yes

b) no

c) maybe

18) can you physically touch bitcoin?

a) yes

b) no

19) its bitcoin secured?

a) yes

b) no

c) maybe

20) will bitcoin be used more than future?

a) yes

b) no

21) bitcoin exchange if you have any opinion given it.

Your answer

iv