Bitcoins in India: Long way to go

Mahin Guptaisthe CEOof buysellbitco.in. His company, as the name indicates, allowsIndiansto trade in Bitcoin, the open source peer-to-peer payment network, using Indian rupees for transactions."I do around a crore of transactions each month," he says. His company is only a few months old. But, Gupta is not happy. "We desperately need a regulatory framework forBitcointransactions," he says. "Is my company anon-banking financial company? Are we foreignexchange traders? The thing with Bitcoin is that it is so new -- and so unprecedented that we are not sure where we stand.""We have some long-term investors. Some people buy Bitcoins as a hedge, others are in it looking for a place to park their wealth," says Gupta. "But most of the interest around Bitcoincomes from speculators," he says."Essentially, the Bitcoin is a'thing' created by a computer. In that respect, there are already laws that cover such 'things'. Under Indian law -specificallythe IT(Amendment) Act of 2008, technically, a Bitcoin is an electronic document," saysNa Vijayashankar, managing director ofUjvala Consultants, a cyberlaw consultancy firm.Guptawas one of the panelists at the Global Bitcoin Conference held on Sunday, the first time in India and only the second of its kind in Asia. The mood at the conference was a mixture of curiosity, enthusiasm and tentativeness. Everybody had heard about the Bitcoin phenomenon. There was an air of certainty that this was going to be big, but how it would play out in the future seemed anyone's guess. Outside the conference hall, there were conversations about the inflationarynature of fiat currency, and attendees discussed the pros of Ludwig Von Mises and Austrian economics and the cons of Keynesian policies.Bitcoins are created by a process called 'mining', a software-driven process usually handled by the tech-savvy. Bitcoins are generated everytime a solution to a complicated mathematical problem is algorithmically found by the network of computers participating in the mining process.A miner keeps shuffling random data in a blockto produce a desired result. When the result matches the right answer , the miner submits itto the Bitcoin network. Once the network confirms the solution is correct, the miner is rewarded with a number of Bitcoins (currently, that number is 25).Vikram Nikkam, one of the conference's organizers, says that the interest in Bitcoin has exceeded his expectations. "We were expectingabout 80 attendees. We got around 150," he says. Nikkam runs MadOverCoins.com, a site that attempts to harness Bitcoins for charitable microtransactions.Sunny Ray, director of business development atButtercoin, a company that offers platforms forbuilding Bitcoin exchanges, and one of the people behind the event, says he is gratified bythe kind of interest he has seen in Bangalore."Our next stop is Mumbai," he says."The RBI will be watching the discussions around Bitcoin with a lot of interest," says Vijayashankar. "They have three options: to reject Bitcoin entirely, which would be the easiest option; to accept Bitcoin, which would mean that someone will have to make that call and defend it politically -- either to this government or the next; and finally, to adopt Bitcoin, to embrace the whole idea, allow transactions, encourage its use. And it is vital that Bitcoin enthusiasts organize themselves and educate the authorities about all aspects ofBitcoin," he says.