bitcoins and money

7/21/2019 Bitcoins and Money

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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



,im&lest

Foreign E#c-ange regime/Concentration of 0ealt-./

Barter system: Benets



ou$le coincidence of 0ants

ivision of la$or/Peris-a$le

Barter system: Pro$lems



,aving Ca&ital..6



Circular 7o0 of income/

ivisi$ility Fungi$ility./

Barter system: Pro$lems



Fungi$ility: Mutual su$stitution



Functions of money'



1. Medium of

E#c-ange2. Measure of 8alue

Why?

3. *eadilyacce&ta$le.

4. ura$ilityPorta$le

*ecogni9a$le

Primary functions



Functions of money'



1. ,tore of 8alue ;,avings

+nvestment<2. =ransfer of 8alue ;>as-mir 2>anya%umari<

3. eferred Payment ;=ime value oMoney<

erivative Functions



Functions of money'



1. istri$ution ofational income

6t-er $enets:



,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



,o far

1.Barter system: &ros cons

2.Functions of money



Evolution of Money



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



"ood

•

+ntrinsic value

Commodity Money: &ros D con

C di D



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



Evolution of Money

M t lli M



,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



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 '



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



Co&&er GamH: e$asement

"# g$ %3 g$

%& Barter 'y'te$"& Ta( )olle)tion3& !a't India

Metallic Money Bad



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



Evolution of Money

?-at is Fiat Money'



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'



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



Fiat Money ty&es

, L 22 i " ld



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



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



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'



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



Evolution of Money

1 C- $ % d ftE#



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'



Ban% Money'

1 Easy to transfer over long



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



Evolution of Money

1 ,u$&rime crisis A, RE M



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



•2 Pa&er $y,atos-i a%omoto

•*eal identityun%no0n

•2N started

Bitcoin: Beginning



Total



Total "% M

"



Reward de)line' over ti$eit- ea)- "&% la+- *ata.lo)+'

/# BTC "/ BTC %"&/ 0&"/

Total



Total "% M

%BT2%#456 S



Mining 'o7tware ,olving s&eeas-ratese)a&to&: 3 %-s.3 B=C ;24 -

M+A, lig-t$ill

Reward di'tri.



Mining Pool

e a d d 't .A' 8er 9a'-

% BTC2 %#456 S1 ,atos-i .

B=C

B



Min• "P

-a

• ig

• CP

B



• 5 "

PC

• 6vdo

Min

Reward di'tri.



Mining Pool

A' 8er 9a'-% BTC2 %#456 S1 ,atos-i .

B=C

Evolution of money



y

Bitcoin conce&t

Bitcoin mining

Bitcoin =ransfer'



Pu$lic address ;email address<

Private %ey ;&ass0ord<

o names o +P o &-one num$e

igital ?allet E@?allet soft0a



E il li t Bit i (diou$le s&ending'



Email client(outloo!

6ne mail for0arded

to many

ou$les&ending'...o

Bitcoin (di"wallet!

Bl + C- i



Blo)+ C-ain

Pu.li) ledger :alidity o7 !a)- tran'a)tion

%# $inute'



Bitcoin vs.EF= D *=",Positive

egative

Bitcoin vs ,B+ et$an%ing



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



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



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.



Money laundering

=errorism "am$lingillegal activities

+n Bitcoin system'

Mining



S8e)ulator'>)t&?%3; @"*e)? %3; @%=e.? %/; @"3

Mining

Sellinggood''ervi)

Blo)+ C-ain



Blo)+ C-ain

>nly Pu.li) 8rivate +ey<o na$e', 8-one nu$.er', addre

<o Central aut-ority to re)ord



T A B 9 A : ! <

C o

n v e

r t t o

@ @

6nline s-o&&ing using Bitcoin



1. ,il%road: cocaine B



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'



S8e)ulator';*e)&?%3; @%"##=e.&?%/; @"3#

213: Bitcoin E#c-ange ;Mt."o

7 C- i n



@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



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



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



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



value not $ac%ed $y "oldsilver or crude oil.

2. ,&eculation volatility;122<

*Be

1. Media re&orts on illegal drugmoney laundering terror

B



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<



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%-<



S)reen'-ot "#%/, =e.6

Buy; F%D,5##Sell; F%D,D##

Mitt %i ;A,< d

)a#micoin.com



•Mitts a%i ;A,< and*a angi ;Banglore<

• 3V "6 &oor•o *B+ re&ly ;since213<

•

*B+ stand:“Examining theissues in Digitalcurrency”



Mt."o# scamMt. "o# Ban%ru&tcy'



• 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<



Bitcoin =a#a$le Pro&erty commo

Ca&ital "ains ta# ;23V<

?it--olding norms.

1 o0 does Bitcoin system 0or%'

+ntervie0 Ruestions



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'

bitcoins and money

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