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The Legal Status of Bitcoin in India

Introducing Bitcoins and Blockchain:

With the increase in technology, the need for governmental central bodies is vanishing. One such advancement in the field of technology is the formation and wide use of Bitcoins. Bitcoins are transferred from one participant to the other via messages and it is guarded by a system called Blockchain. When a transaction takes place, the blockchain generates a puzzle and sends it to all the miners present in the chain.

The computers then perform calculations and the information about the transaction stores at a number of nodes. This decreases the chance of fraud and deletion of any information about the transaction. This method is known as cryptography. The puzzle that is created at the time of transaction could consist of letters, alphabets, or numbers, etc.

This code changes after every transaction. The whole process uses two keys that are private key and public key. The information about the public key is public and everyone in the chain knows it but that of the private key is personal and it is in reach of the owner alone because this key is used for performing transactions and accessing bitcoins.

Incognito Transactions:

The transactions that take place through Blockchain are in complete privacy. The track of the transaction can be sketched out by the investigators during the process of transformation of the virtual currency into regular currency. But at times all the conversions take place in the chain and are highly anonymous. The track of the transaction can be detected but the owner of that currency stays unknown.

The Legal Status of Bitcoin in India:

The law of India does not allow the use of Bitcoins in India be it in any way like trading or mining. This makes the buying and selling of cryptocurrency totally forbidden in India. The main reason associated with it is that Bitcoins operate only on the Dark Web that requires the use of Tor.

Once the Dark Web will become accessible to every common man, the world will turn into a different place. Everybody on the Dark Web is anonymous and you never come to know with whom you are trading. Most of the transactions through the Dark Web are related to drugs and killings. This is the core reason behind making this virtual currency and transaction illegal in the Indian secular state.

The issues of illegal trade, hacking, and corruption are at the doorstep of India that hinders India from using this totally encrypted system of money transaction. This method of transaction keeps a record but that record is completely untraceable and even if the track is traced the users will retain their anonymity and the person behind all the mess will enjoy it openly. There is some more material on

The ban on Indian use of cryptocurrency started in 2018 when RBI imposed the ban on all of the state and private banks dealing with cryptocurrency but this stance of RBI was challenged by IAMAI. The matter was taken to the court and the court decided in the favor of the legislature. Reserve Bank of India (RBI) imposed a ban on the buying and selling of virtual money because it thought that the virtual money is causing disruption for the financial institutes.

RBI failed to provide empirical pieces of evidence in front of the court to show the real evidence where the regular financial market was hurt by the virtual transactions. Some of the states came under the rule of making the virtual money illegal where evidence was collected of the harm that virtual money has caused but the rest of the states in India were free.

This formed a way for India the creation of their own digital currency that they named Digital Rupee that was formed by the Central Bank.


The topic under discussion is discussing the legal status of virtual currency in India. Since the transactions that take place through Bitcoins are guarded by Blockchain. Blockchain is a highly encrypted path that is very difficult to trace and if somebody cracks it even then the users sending and receiving the money remain unknown. If you are still ambiguous about the concerned topic.

The anonymous method of sending and receiving money is usually used for the buying and selling of illegal goods especially drugs so the people involved in crimes will remain hidden. That is the reason why virtual currency is not allowed in India.