Post on 04-Feb-2018
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Bitcoin
1.Evolution of Money
2.Functions of Money
3.Bitcoin system: features
4.Pros and Cons5.Money laundering Crime
!.Mt."o# $an%ru&tcy'
(.)a#micoin *B+ stand
CSAT, RBI Grade“”B” IBPS, SBI
[GS3] Mone
laundering
Interview SMCA!C
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,im&lest
Foreign E#c-ange regime/Concentration of 0ealt-./
Barter system: Benets
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ou$le coincidence of 0ants
ivision of la$or/Peris-a$le
Barter system: Pro$lems
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,aving Ca&ital..6
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Circular 7o0 of income/
ivisi$ility Fungi$ility./
Barter system: Pro$lems
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Fungi$ility: Mutual su$stitution
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Functions of money'
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1. Medium of
E#c-ange2. Measure of 8alue
Why?
3. *eadilyacce&ta$le.
4. ura$ilityPorta$le
*ecogni9a$le
Primary functions
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Functions of money'
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1. ,tore of 8alue ;,avings
+nvestment<2. =ransfer of 8alue ;>as-mir 2>anya%umari<
3. eferred Payment ;=ime value oMoney<
erivative Functions
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Functions of money'
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1. istri$ution ofational income
6t-er $enets:
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,ocial em&o0erment
Factors ofProduction
Reward $$
)and ;lease< *ent
)a$or ?ages
Ca&ital
+nterest
ividendEntre&ren@
eurs-i&Prot
6= t-e root of evil
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,o far
1.Barter system: &ros cons
2.Functions of money
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Evolution of Money
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Commodity to measure value
A,: to$acco Corn iron nails Be&elts
9tec: cocoa $eans
+ndia Pacic: Co0riesFii: ?-ale teet-
??2 Po?: cigarettes
Commodity Money
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"ood
•
+ntrinsic value
Commodity Money: &ros D con
C di D
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Bad
►Face 8alue not st-roug-out regio
►Face value not sfor outsiders ;Co
►Peris-a$le@ y&+n7ation
►Bul%y to Carry
►ivision of la$ou
Commodity Money: &ros D con
E l ti f M
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Evolution of Money
M t lli M
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,tarted as commodity money
=raders D >ings: uniformity &rec"old: -ig- value
,ilver: moderate
Co&&er Bron9e: day to day &urc-
Metallic Money
M t lli M " d
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1. +ntrinsic value
2. on@&eris-a$le3. ivisi$le Fungi$le Melt@com$in
4. Even foreign trade &ossi$le. ;0it
e#c-ange rate<5. Production lo0 Prices sta$le
!. y&erin7ation/
Metallic Money: "ood
M t lli M $l '
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1. "old coin ;Mu-r<
2. ,ilver ;*u&aiyaa<3. Co&&er ;am
Paisa<
Mansa$dari Pay
-"old 5
-,ilver 25
-Co&&er 25
Metallic Money: &ro$lems'
Co&&er GamH e$asement
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Co&&er GamH: e$asement
"# g$ %3 g$
%& Barter 'y'te$"& Ta( )olle)tion3& !a't India
Metallic Money Bad
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Bul%y to carry
,-i& sin%s ?ealt- lost,muggling for intrinsic value e$asement
$ad money drives out good.;"ris-amIs la0<
Metallic Money: Bad
Evolution of Money
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Evolution of Money
?-at is Fiat Money'
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GFiatH legally $inding command
Fiat Money $y t-e command of government.
A, dollar +ndian *u&ee Euro Jen Juan
)egally recogni9ed to settle all deD &ayments 0it-in territorial
urisdiction.
?-at is Fiat Money'
?-at is not Fiat Money'
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1. )egal $ac%ing./
2. >irana 0alla &lastic coins D cou3. Fa%e currency 0it- lm star &-o
4. ,-ares Bonds e$entures "@,$ill
5. C-eKues Credit Card =M
!. Bitcoin D ot-er igital currency
?-at is not Fiat Money'
Fiat Money ty&es
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Fiat Money ty&es
, L 22 i " ld
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1. 1 A, L 22 grains "old
2. 1 Britis- Pound 113
3. 1 Pound 11322 4. A,L4. uring 0arcolla&se
5. Post ??2: +MF@"old
standardcolla&se
,t
1 C t l B % f t i t
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1. Central Ban% free to &rintcurrency 0it-out gold$ac%ing.
2. E#c-ange *ates:
1. Fi#ed E#c-ange rate
2. Floating
3. GManagedH
,t
+ndia: &a&er standard
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RBI
otes from *s.2 to1. ;earlier1<
*B+ ct 1N34
*s.1 notell coins.
*s 1 and 2 notesdiscontinued. ;e#
circulated<Coinage ct 21note. Fin.,ecretaMe-ris-i $ilingua
Governme
+ndia: &a&er standard
Fiat Money: Pro$lems'
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1. e$asement: 6ver &rinting y&in7ation
2. ,till Bul%y to carry
3. =-eft re counterfeit
4. C-ange &ro$lem
5. *ounding oO: ;4& # 1 )4%<
Fiat Money: Pro$lems'
Evolution of Money
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Evolution of Money
1 C- $ % d ftE#
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1. C-eKues $an% drafts
2. Credit card de$it cards
3. 8isacard Master card *u&aycard
4. =M card EF= *=",
M
E#
Ban% Money'
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Ban% Money'
1 Easy to transfer over long
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1. Easy to transfer over long distance
2. E#act amount can $etransferred ;c-ange &ro$lem../<
3. ard to counterfeit
4. Can free9e if stolen >JCQ
5. )egally recogni9ed for -ig-value &ayment.
B
M
Evolution of Money
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Evolution of Money
1 ,u$&rime crisis A, RE M
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1. ,u$&rime crisis A, RE +ncreased dollar su&&ly
2. ollarIs Purc-asing &o0er S
3. Ban%s c-arge fees on onlinetransfer credit card =M
4. narc-ist grou&s: Fiatcurrency./
8
Cu
Bitcoin: Beginning
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•2 Pa&er $y,atos-i a%omoto
•*eal identityun%no0n
•2N started
Bitcoin: Beginning
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Total
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Total "% M
"
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Reward de)line' over ti$eit- ea)- "&% la+- *ata.lo)+'
/# BTC "/ BTC %"&/ 0&"/
Total
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Total "% M
%BT2%#456 S
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Mining 'o7tware ,olving s&eeas-ratese)a&to&: 3 %-s.3 B=C ;24 -
M+A, lig-t$ill
Reward di'tri.
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Mining Pool
e a d d 't .A' 8er 9a'-
% BTC2 %#456 S1 ,atos-i .
B=C
B
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Min• "P
-a
• ig
• CP
B
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• 5 "
PC
• 6vdo
Min
Reward di'tri.
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Mining Pool
A' 8er 9a'-% BTC2 %#456 S1 ,atos-i .
B=C
Evolution of money
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y
Bitcoin conce&t
Bitcoin mining
Bitcoin =ransfer'
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Pu$lic address ;email address<
Private %ey ;&ass0ord<
o names o +P o &-one num$e
igital ?allet E@?allet soft0a
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E il li t Bit i (diou$le s&ending'
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Email client(outloo!
6ne mail for0arded
to many
ou$les&ending'...o
Bitcoin (di"wallet!
Bl + C- i
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Blo)+ C-ain
Pu.li) ledger :alidity o7 !a)- tran'a)tion
%# $inute'
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Bitcoin vs.EF= D *=",Positive
egative
Bitcoin vs ,B+ et$an%ing
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RTG ; Real Ti$e
Gro'' ettle$ent
<!=T; <ational
!le)troni) =und
Tran'7er
Bit)o
Retail# %&
'ororate# )&
5% at atime
o ce
Processin"
fees&%&& R*+
(*ER,I'E -./!
2.5@25 on
InstantG1 -ourH
cycles
u&to
minu
Bitcoin vs et$an%ing
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RTG <!=T Bit)o
?ee%days: MT !.3PM
,aturday: to 1.3,unday: oliday
24(
Central monitoring *B+ oneCan recover &ass0ord gone
Bitcoin vs et$an%ing
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RTG <!=T Bit)o
1.Ban% account num$er
2.Branc- +F,C code
6nly &u
address 0allet
• Bot- need $an% account• fulll >JC norms
even ro$can.
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Money laundering
=errorism "am$lingillegal activities
+n Bitcoin system'
Mining
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S8e)ulator'>)t&?%3; @"*e)? %3; @%=e.? %/; @"3
Mining
Sellinggood''ervi)
Blo)+ C-ain
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Blo)+ C-ain
>nly Pu.li) 8rivate +ey<o na$e', 8-one nu$.er', addre
<o Central aut-ority to re)ord
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T A B 9 A : ! <
C o
n v e
r t t o
@ @
6nline s-o&&ing using Bitcoin
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1. ,il%road: cocaine B
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2. 213: FB+ s-ut do0n
3. )egit 6nline s-o&&ing sites
4. ,ome Pi99a &arlors fas-ionstores
5. += &rofessionals ;not F+=<
Buse
?-y: Bitcoin e#c-ange'
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S8e)ulator';*e)&?%3; @%"##=e.&?%/; @"3#
213: Bitcoin E#c-ange ;Mt."o
7 C- i n
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@C@"##@D##@0##@5##
@%,###
@%,"##@%,D##
@%E#
@% "##
@/5#
@DE#
0 B-' 1 $2222 +
P e o 8
l e ? ' B a
n + o 7
C
R B I
1. Gecentralised igitalC H G8i t l
B
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CurrencyH or G8irtualCurrencyH
2. 3 0ays to aKuire1. Mining
2. =rading goods@services
3. E#c-ange 0it- Fiatcurrency
*Be
1. o central $an% -ast- i d Bit i
B
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aut-ori9ed Bitcoins
2. ot =raded t-roug- B,E ,E
Commodity e#c-ange ;,EB+FMC<
3. o Fore# dealers under
FEM: Converting LL*sBitcoin illegals
*Be
1. Bitcoin E#c-ange 0e$site l l t t l
B
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legal status unclear
2. anger: -ac%ing &-is-ing
mal0are &ass0ord lost
3. Consumer courts cannot -el&
*Be
1. Mere digital code no intrinsicvalue not $ac%ed $y "old
B
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value not $ac%ed $y "oldsilver or crude oil.
2. ,&eculation volatility;122<
*Be
1. Media re&orts on illegal drugmoney laundering terror
B
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money laundering terror@nancing.
2. unintentionally $reac- anti@money laundering nti@terror la0s
3. ,ame 0it- litecoins$$Kcoins dogecoins etc.
*Be
Buysell$itco in
I$ad *aid ;ecem$er 213<
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Buysell$itco.in
First Bitcoin e#c-ange in +ndia
Ma-im "u&ta Bo&al
E FEM ;ut-ori9ed dealers<
Prevention of Money laundering
22 ;3@( years U 5 la%-<
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S)reen'-ot "#%/, =e.6
Buy; F%D,5##Sell; F%D,D##
Mitt %i ;A,< d
)a#micoin.com
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•Mitts a%i ;A,< and*a angi ;Banglore<
• 3V "6 &oor•o *B+ re&ly ;since213<
•
*B+ stand:“Examining theissues in Digitalcurrency”
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Mt."o# scamMt. "o# Ban%ru&tcy'
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• So7tware .ug• Bit)oin 2re'end .a)+•
5,/#,### Bit)oin 'tolen [o77line• @ /## $illion lo't• =iled Ban+ru8t)y in a8an Cou• A8ril "#%D; liJuidation
Bitcoin =a#a$le Pro&erty commo
+*, A, ;Marc- 214<
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Bitcoin =a#a$le Pro&erty commo
Ca&ital "ains ta# ;23V<
?it--olding norms.
1 o0 does Bitcoin system 0or%'
+ntervie0 Ruestions
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1. o0 does Bitcoin system 0or%'
2. Benets and limitations'
3. ,-ould it $e given legal recogniin +ndia'
4. Measures to cur$ money launde
terror@nancing drug rac%ets'