Rajeev Bhatia, a retired director of a multinational corporation is thinking of selling one of his many properties to invest large sums into bitcoins. He had recently invested in a few Bitcoins during December 2016 to spread risks after demonetisation. And with mind boggling profits in less than a year, he dreams of going big into investment of crypto-currencies. It is volatile but highly profitable. “I was advised by one of my ex-colleagues living in Chicago on how to join the bandwagon of the super rich” says Bhatia.”I kept aside Rs 300,000 for investment which I called burn money in the days of note-bandi and jumped in to take the risk. I invested in five Bitcoins then at a rate of Rs 56,000 each. They are worth approximately Rs 295,000 each today giving me more than a five-fold return in less than a year “says a beaming Bhatia. This despite the crash of Bitcoin, Ethereum and other cryptocurrencies last months following China’s refusal to recognise the same.
Welcome to the wonderland of crypto-currencies, the high-risk high gain investment for the bold and the maverick investor. Created by the computer programmer Satoshi Nakamoto. (possibly an anonymous identity) in January 2009, the gold rush of cryptocurrencies has well and truly begun. Nakamoto disappeared from internet’s public gaze in 2011 when the value of the bit coin traded on hundreds of exchanges around the world was touching nearly $30. Today, he owns a million Bitcoins and investors around the world own $100 billion worth of cryptocurrencies. Several celebrities like Paris Hilton and Floyd Mayweather have jumped into the cryptocurrency bandwagon endorsing them as well.
Which nations recognise Bitcoins? Several nations have accepted it partially. The US and Canada lists it as a digital currency and classifies it as a commodity. It is widely used in the derivatives market and is subject to anti-money laundering laws. The income generated by Bitcoins is considered as business income and the transactions are classified as barter transactions. The taxation of Bitcoin is dependent on its nature of transaction in North America.
Belgium, one of the first European nations to recognise Bitcoins, has given it a value added tax exempt status. Cyprus permits unregulated bitcoins while Switzerland, Italy and UK are moving towards creating a regulatory framework for cryptocurrencies. France wants to know investor identity before legalizing, which is not a feature of Bitcoin. The Australian Tax Office is classifying Bitcoin transactions as barter trade and hence it is subject to related taxation laws.
Acceptance is inevitable. Though cryptocurrencies suffered volatile price shocks after China refused to accept it, being the biggest miner, it is expected to change stand in due course. The RBI has also not accepted the Bitcoin though you can buy gold, movie tickets and petrol with it in India. The RBI in an advisory in April 2017, clarified that it has not given any license to operate schemes that deal with bitcoins or any virtual currencies and the investors will be doing so at their own risk. Russia has also banned cryptocurrencies calling it a serious risk.
But bitcoin barter trade is flourishing in India as everyone knows that it is the currency of future. Both the Bank of China and RBI will relent sooner or later say experts. And regulatory frameworks will be set up as more and more investors queue up for the cryptocurrencies. There are currently nearly a thousand cryptocurrencies being mined. As a matter of fact, several experts and enthusiasts are of the opinion that digital currencies should be used as the standard referral currency. This because it cannot be controlled by one nation or one federal authority.
Bitcoin the most popular and safe of the current day digital currencies can be bought and sold through your debit card or credit card in India. We will let you know how and where to buy and how to tackle the risks faced with cryptocurrencies in the coming days.