Bitcoin FAQ

What is Bitcoin?
Bitcoin is a digital currency or cryptocurrency. It is also considered as a digital asset and a payment system.

Read: What is Bitcoin and How it Works

How Bitcoin is generated?
Bitcoin is created through the process of Mining.

What is Bitcoin mining?
Bitcoin mining is a process of verifying and adding every Bitcoin transactions to a public ledger (called blockchain).

The recent transactions are compiled into blocks using the internet and dedicated hardware. The miner also tries to solve a computationally difficult puzzle.

Whoever manages to solve this puzzle the quickest, gets rewarded by new Bitcoins. And this is how new Bitcoins are released.

In addition, the miners also get transaction fee for compiling transactions in the blockchain.

The amount of Bitcoin released with each mining (or by solving the mentioned puzzle) is halved every 2,10,000 blocks or about 4-5 years. In 2009, 50 Bitcoins was released after successful mining. In 2014, that number was halved to 25.

So the total number of Bitcoins is limited to around 21 million.

Who controls Bitcoin?
NO ONE!!!! And this is its biggest advantages. Bitcoin is totally decentralized. It’s an open source software that no person, company, institution or country controls—just like the internet.

Who created Bitcoin?
It isn’t very clear. It was invented in 2009 by Satoshi Nakamoto. But the existence of Satoshi Nakamoto isn’t confirmed yet. It can be a name of a person or a group.

Is investing in Bitcoin secure?
Yes. There’s very less probability of fraud. Once you buy Bitcoins, you can safely store them in different types of Bitcoin Wallet.

What is Bitcoin Wallet?
It is similar to your money wallet or bank where you store your money. Once you purchase your Bitcoins, you can store them in your Bitcoin wallet. You simply transfer the private keys of your Bitcoin to this wallet and you’re done.

There are 2 different categories of Bitcoin Wallets: (1) Hot Wallet OR Online Wallets; (2) Cold Storage Wallets OR Offline Wallets. There are 4 different types of Bitcoin Wallets:

• Online Wallet
• Software Wallet
• Paper Wallet
• Hardware Wallet.
Hardware wallet is the safest way to store and secure your Bitcoins.

How to add money to Bitcoin wallet?
The Bitcoin wallet where you want to transfer or send your Bitcoin to will have an address. In your current account/exchange, go to the send option, type in that address and the amount will be transferred.

How to buy Bitcoin in India? (How to sell Bitcoin India?)
You should do your research first. Learn everything about bitcoin India- at least the basic.

Find a good Bitcoin exchange. Invest the money there. And buy the desired number of Bitcoins through them. The same exchange will also have ‘sell’ and ‘withdraw’ option.

Where to buy and sell Bitcoins in India?
On Bitcoin Exchanges. Example: Zebpay, Unocoin.

Read: 15 Most Popular Bitcoin Exchanges in India

How to create a Bitcoin account?
You select a Bitcoin exchange. Fill in their formalities and you will have your Bitcoin account with you in no time. (If any) The KYC verification process may take some time, from few hours to days.

Don’t worry. Every Bitcoin exchange usually has thorough guides and simple steps to keep things simple and easy for the users.

Where can I store my Bitcoins?
(Mentioned already) In Bitcoin Wallet. These days, top exchanges usually also offer wallets to store your Bitcoins. This is much more convenient.

However, if you’re a long-term trader and is planning to hold your Bitcoins, it is always advised to store your Bitcoins much safely in a different wallet other than your exchange’s. Hardware wallet is always the best option!

What are the requirements to buy Bitcoins?
It depends on which Bitcoin exchange you’re trading on. Some of these exchanges are well regulated and have mandatory KYC verification procedure.

There are also few of these exchanges who facilitate direct cash transfer from one trader to another. Here, you won’t be needing any document. In general, keep your Aadhaar Card, PAN Card Number, and Bank Account Details at ready.

How much money can I make from Bitcoin?
Much like any investment opportunity, how much can you make from your investment in Bitcoin depends on a host of factors. One can never be sure of the exact amount. A lot of risks is involved; market fluctuates fast. To know more, join the conversation at Bitcoin India Forum.

Read the stories of Bitcoin Millionaires.

Note: Here’s a general piece of advice. Never invest money (in Bitcoin or any other asset) that you cannot afford to lose.

Can I lose money in Bitcoin?
It depends on the market movement and price fluctuation. Any investment, be it in Bitcoin or the stock market, involves risk. One cannot guarantee a profit, neither can they predict a loss.

Before investing your money in anything, you’re always advised to look at the past performance, current trends, technical charts, news and other factors.

Is Bitcoin legal in India?
Bitcoin isn’t regulated in India by the Government. Meaning, it is neither legal nor illegal. So if you’re buying and selling Bitcoins, remember it IS NOT ILLEGAL.

Read More on This: Is Bitcoin Illegal in India?

What if Indian government bans Bitcoin transaction?
If Indian Government announces to ban Bitcoins and make it illegal, all the Bitcoin exchanges would have to be shut down. At such instance, the decision would strictly be on individual exchanges, whether to return the money to their customers or not. And this is one of the many reasons, why traders are advised to go only for a good and reputed exchange. A good exchange would assumingly notify the traders and return back their money, including the profits.

Note: Even if it becomes illegal, Indians can still use foreign exchanges to trade Bitcoins and make transactions through the likes of PayPal.

Read: What If Bitcoin Becomes Illegal in India?

What will be the value of Bitcoin in next 10 year?
There are people who believe the value of 1 Bitcoin might even reach USD 1 Million in the next 10 years. Then there also those who think this “bubble” will bust sooner than later. One cannot be sure of anything. Do your own calculation and analysis.

Can Bitcoin replace fiat money?
Bitcoin is decentralized. This is both its benefit and curse. While it’s away from any regulation, it might also lead to money laundering and other illegal activities. Governments around the world are trying to figure out the growth of Bitcoins in the mainstream. In India, in particular, the authorities are still struggling to come to terms with this digital currency.

Will or will not Bitcoin replace fiat money, one cannot be very sure. However, as of right now, it’s not happening for years to come.

What can I do with the purchased Bitcoin? (How to use Bitcoin?)
There are short-term traders (or day trader) and then long-term traders. If you’re looking to make quick money from Bitcoins, you can take advantage of market volatility. Buy at a low price and sell at high price. (This is easier said than done though!).

But if you’re a long-term investor, you simply purchase Bitcoins and then keep it safe in a good Bitcoin wallet. As the value of Bitcoins increases, so will your riches. Once it reaches your take-profit position and you have reached your return goals, sell it on any exchange.

Meanwhile, you can also make shop online using Bitcoins. Many shopping platforms and service providers have emerged in recent times who are accepting Bitcoins as a mode of transaction.

Do I have to pay taxes on money made from Bitcoin in India?
Yes, income earned from Bitcoins is taxable. But whether it is capital gain or revenue gain, it’s still debatable given lack of regulations. Experts believe returns for Bitcoins INVESTORS should be treated as capital gains, while for Bitcoin TRADERS, it is business income.

If you’re an individual with the relatively small holding of Bitcoins, you shouldn’t really worry about coming under the scanner. When enchasing your Bitcoins, your exchange is likely transferring the money to your bank account, where the amount would be taxed. Everything is quite out there in the open and transparent.

How can I transfer Bitcoins to others?
The transfer options vary from exchange to exchange. At-large though, the process is quite simple. If you want to send Bitcoins or some money to others, you need their Bitcoin address. Just like that, if you want someone to pay you through Bitcoin, you will have to give the sender your Bitcoin address.

Read: How To Transfer Bitcoin From Zebpay to Koinex?

How to transfer Bitcoin to India bank account?
Every Bitcoin exchange has a ‘Withdraw’ option. If your Bitcoin account is connected to your Bank account, you can simply click on this withdraw option and get the money in your bank account. If not then you should first integrate your bank account with the Bitcoin account.

If you have any more question that is neither mentioned on this FAQ page nor on our Bitcoin India Blog, ask us directly. Mail us at contact(at)bitcoinindiawiki.xyz or shoot a message on our contact page.

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