INFOKARA RESEARCH ISSN NO: 1021-9056

NEW ERA OF BIT COINS AND CRYPTO CURRENCY

Dr. V.Kalaivani.,

Principal, Chellammal women’s college, Guindy. Chennai.

[email protected]

ABSTRACT is a , or a digital currency, that uses rules of cryptography for

regulation and generation of units of currency. Bitcoin is talk of town these days. Indian

government also is not looking happy with Bitcoin. Bitcoin is a crypto currency, a form of

electronic cash. It is the world's first decentralized digital currency, and it was designed to work

without a central bank or single administrator. Bitcoin is either virtual currency or reference to

the technology. Bitcoin can be used to book hotels on Expedia, shop for furniture on Overstock

and buy Xbox games. Bitcoin does not necessarily work well as a currency.

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New Era Of Bit Coins and Crypto Currency

A type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. Bitcoin has become a hot commodity among speculators. " can be used for online transactions between individuals" As a new user, anyone can get started with Bitcoin without understanding the technical details. Once any one installed a Bitcoin wallet on their computer or mobile phone, it will generate their first Bitcoin address and they can create more whenever they need one. Anyone can disclose their addresses to their friends so that they can pay them or vice versa. In fact, this is pretty similar to how email works, except that Bitcoin addresses should be used only once.

Creation : The domain name "bitcoin.org" was registered on 18 August 2008 In November 2008, a link to a paper authored by titled Bitcoin: A Peer-to-Peer Electronic Cash System was posted to a cryptography mailing list. Nakamoto implemented the bitcoin software as open source code and released it in January 2009. The identity of Nakamoto remains unknown. In January 2009, the bit coin network was created when Nakamoto mined the first block of the chain, known as the genesis block. Nakamoto is estimated to have mined 1 million bitcoins before disappearing in 2010, when he handed the network alert key and control of the Bitcoin Core code repository over to Gavin Andersen. Andresen later became lead developer at the Bit coin foundation. Andresen then sought to decentralize control. This left opportunity for controversy to develop over the future development path of bitcoin.

Units : The unit of account of the bitcoin system is a bitcoin. Ticker sympols used to represent bitcoin are BTC and XBT. Its Unicode character is Small amounts of bitcoin used as alternative units are millibitcoin (mBTC), and satoshi (sat). Named in homage to bitcoin's creator, a satoshi is the smallest amount within bitcoin representing 0.00000001 bitcoins, one hundred millionth of a bitcoin. A millibitcoin equals 0.001 bitcoins, one thousandth of a bitcoin or 100,000 satoshis. BLOCK CHAIN: The block chain is a public on which the entire relies. All confirmed transactions are included in the block chain. It allows Bitcoin

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wallets to calculate their spendable balance so that new transactions can be verified thereby ensuring they're actually owned by the spender. The integrity and the chronological order of the block chain are enforced with Cryptography. Transactions- Private keys : A transaction is a transfer of value between Bitcoin wallets that gets included in the block chain. Bitcoin wallets keep a secret piece of data called a private key or seed, which is used to sign transactions, providing a mathematical proof that they have.

Mining is a record-keeping service done through the use of computer processing power. Miners keep the consistent, complete, and unalterable by repeatedly grouping newly broadcast transactions into a block, which is then broadcast to the network and verified by recipient nodescome from the owner of the wallet. The signature also prevents the transaction from being altered by anybody once it has been issued. All transactions are broadcast to the network and usually begin to be confirmed within 10-20 minutes, through a process called mining.

Pooled mining : Computing power is often bundled together or "pooled" to reduce variance in miner income. Individual mining rigs often have to wait for long periods to confirm a block of transactions and receive payment. In a pool, all participating miners get paid every time a participating server solves a block. This payment depends on the amount of work an individual miner contributed to help find that block.

Prices of Bit coins (2017 – 2018) : Bitcoin prices in 2017 were exceptionally volatile, starting at $998 and rising 1,245% to $13,412.44 on January 1, 2018. On December 17 bitcoin's price reached an all time high of $19,666 and then fell 70% to $5,920 on February 6, 2018

China banned trading in bitcoin, with the first steps taken in September 2017, and a complete ban starting 1 February 2018. Bitcoin prices then fell from $9,052 to $6,914 on 5 February 2018. Bitcoin prices were negatively affected by several hacks or thefts from cryptocurrency exchanges, including thefts from in January 2018, Coinrail and in June, and Bancor in July. For the first six months of 2018, $761 million worth of was reported stolen from exchanges. Bitcoin's price was affected even though other cryptocurrencies were stolen at Coinrail and Bancor, as investors worried about the overall security of cryptocurrencies.

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Forks : On 1 August 2017, a hard of bitcoin was created, known as . Bitcoin Cash has a larger block size limit and had an identical blockchain at the time of fork. On 24 October 2017 another hard fork, , was created. Bitcoin Gold changes the proof-of-work algorithm used in mining. Scaling Debates : When Bitcoin XT was declined, some community members still wanted block sizes to increase. In response, a group of developers launched, Bitcoin classic which intended to increase the block size to only 2 megabytes. set itself apart by allowing miners to decide on the size of their blocks, with nodes and miners limiting the size of blocks they accept, up to 16 megabytes.

New Features : Bitcoin Gold was a hard fork that followed several months later in October 2017 that changed the proof-of-work algorithm with the aim of restoring mining functionality to basic graphics processing units (GPU), as the developers felt that mining had become too specialized. Bitcoin private , launched in March 2018, added the ability to keep certain details private in a transaction, in contrast to bitcoin which has a transparent transaction history.

Transaction fees : An actual bitcoin transaction including the fee from a web based to a hardware wallet. Though transaction fees are optional, miners can choose which transactions to process and prioritize those that pay higher fees. Miners may choose transactions based on the fee paid relative to their storage size, not the absolute amount of money paid as a fee. These fees are generally measured in satoshis per byte (sat/b). The size of transactions is dependent on the number of inputs used to create the transaction, and the number of output. Ownership : Simplified chain of ownership. In reality, a transaction can have more than one input and more than one output. In the blockchain, bitcoins are registered to bitcoin addresses. Creating a bitcoin address is nothing more than picking a random valid private key and computing the corresponding bitcoin address. This computation can be done in a split second. But the reverse (computing the private key of a given bitcoin address) is mathematically unfeasible and so users can tell others and make public a bitcoin address without compromising its corresponding private key. Moreover, the number of valid private keys is so vast that it is extremely unlikely someone will compute a key-pair that is already in use and has funds. The

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vast number of valid private keys makes it unfeasible that brute force could be used for that. To be able to spend the bitcoins, the owner must know the corresponding private key and digitally sign the transaction. The network verifies the signature using the public key. If the private key is lost, the bitcoin network will not recognize any other evidence of ownership; A backup of his key(s) would have prevented this. About 20% of all bitcoins are believed to be lost. The lost coins would have a market value of about $20 billion at July 2018 prices. Approximately 1 million bitcoins have been stolen, which would have a value of about $7 billion at July 2018 prices

Supply : Bitcoin's inventor Nakamoto set a monetary policy based on artificial policy at bitcoin's inception that there would only ever be 21 million bitcoins in total. Their numbers are being released roughly every ten minutes and the rate at which they are generated would drop by half every four years until all were in circulation.

Wallets: Electrum bitcoin wallet :A wallet stores the information necessary to transact bitcoins. While wallets are often described as a place to hold or store bitcoins, due to the nature of the system, bitcoins are inseparable from the blockchain transaction ledger. A better way to describe a wallet is something that "stores the digital credentials for your bitcoin holdings and allows one to access (and spend) them. Bitcoin uses public-key cryptography, in which two cryptographic keys, one public and one private, are generated. At its most basic, a wallet is a collection of these keys.

Decentralization : Bitcoin was designed not to need a central authority and the bitcoin network is considered to be decentralized ever, researchers have pointed out a visible "trend towards centralization" by the means of miners joining large mining pools to minimise the variance of their income According to researchers, other parts of the ecosystem are also "controlled by a small set of entities", notably online wallets and simplified payment verification (SPV) clients.

Privacy : Bitcoin is pseudonymous, meaning that funds are not tied to real-world entities but rather bitcoin addresses. Owners of bitcoin addresses are not explicitly identified, but all transactions on the blockchain are public.

Fungibility : Wallets and similar software technically handle all bitcoins as equivalent, establishing the basic level of fungibility. Researchers have pointed out that the history of each bitcoin is registered and publicly available in the blockchain ledger, and that some users may

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refuse to accept bitcoins coming from controversial transactions, which would harm bitcoin's fungibility.

Scalability : Bocks in the blockchain were originally limited to 32 megabyte in size. The block size limit of one megabyte was introduced by Satoshi Nakamoto in 2010. Eventually the block size limit of one megabyte created problems for transaction processing, such as increasing transaction fees and delayed processing of transactions.

Economics : Bitcoin is a digital asset invented by Satoshi Nakamoto that was designed to work as a currency. It is commonly referred to as digital currency, digital cash, virtual currency, electronic currency, or cryptocurrency Bitcoin does not necessarily work well as a currency. Bitcoins have three qualities useful in a currency, according to The Economist in January 2015: they are "hard to earn, limited in supply and easy to verify". Economists define money as a store of value, a medium of exchange, and a unit of account and agree that bitcoin does not meet all these criteria. As of March 2014, the bitcoin market suffered from volatility, limiting the ability of bitcoin to act as a stable store of value, and retailers accepting bitcoin use other currencies as their principal unit of account.

General use: Liquidity. According to research by Cambridge University, between 2.9 million and 5.8 million unique users used a in 2017, most of them for bitcoin. The number of users has grown significantly since 2013, when there were 300,000 to 1.3 million users

Acceptance by merchants : The overwhelming majority of bitcoin transactions take place on an exchange, rather than being used in transactions with merchants.

Financial institutions : Bitcoins can be bought on digital currency exchanges.

As an investment : The Winklevoss twins have invested into bitcoins. Other methods of investment are bitcoin funds. The first regulated bitcoin fund was established in Jersey in July 2014 and approved by the Jersey Financial Services Commission.

Venture capital : Venture capitalists, such as Peter Thiel's Founders Fund, which invested US$3 million in BitPay, do not purchase bitcoins themselves, but instead fund bitcoin infrastructure that provides payment systems to merchants, exchanges, wallet services, etc.

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Price and volatility : The price of bitcoins has gone through cycles of appreciation and depreciation referred to by some as bubbles and busts. According to Mark T.Williams , as of 2014, bitcoin s volatility seven times greater than gold, eight times greater than the S&P 500, and 18 times greater than the US dollar.

Legal status, tax and regulation : The legal status of bitcoin varies substantially from country to country and is still undefined or changing in many of them. While some countries have explicitly allowed its use and trade, others have banned or restricted it. Regulations and bans that apply to bitcoin probably extend to similar cryptocurrency systems.

Criticism: 1.Identification as a speculative bubble. 2.Energy consumption. 3. Use in illegal transactions.

Crypto currencies in India

It is a baffling situation that the Indian crypro community finds themselves in as their central bank is slowing the progress of Bitcoin, blockchain, and cryptocurrencies in general. The government does not have a positive outlook on crypto, but they are not banning it. The next step in India’s battle for cryptocurrency legitimacy will come on July 20, when the courts sit down and look over the new petitions, but until then, the crypto community has to try to survive even with the banking squeeze.

The use of bitcoin by criminals has attracted the attention of financial regulators, legislative bodies, law enforcement, and the media.

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