Unified Payment Interface (UPI), launched by National Payments Corporation of India, which is expected to bring revolutionary changes to the payments landscape in India has gone live recently. Several banks, including ICICI Bank, Canara Bank and Yes Bank, have already announced the launch of UPI-enabled apps, which can be used by both customers of the respective banks or an account holder of another bank to transact payments. UPI allows both sending and receiving money through the new mechanism.
But how do the new apps work? Many of us would be asking this question as more and more banks come up with their UPI apps. NPCI has listed out detailed steps on how a bank customer can use the various app. It has explained in a simplified manner how money can be sent or received right from registration to concluding the transaction.
Here is how it works:
Steps for Registration:
Download the UPI application from the App Store / Banks website
Create profile by entering details like name, virtual id (payment address), password etc.
Go to “Add/Link/Manage Bank Account” option and links the bank and account number with the virtual id
Select the bank account from which you want to initiate the transaction
User clicks one of the options:
a. Mobile Banking Registration/Generate MPIN
b. Change M-PIN
For registering or generating M-PIN:
You will receive One Time Password (OTP) from the issuer bank on his/her registered mobile number
You have to enter last 6 digits of debit card number and expiry date
Enter OTP and preferred numeric MPIN (MPIN to be set) and clicks on ‘submit’
After clicking submit, customer gets notification (successful or decline) for changing M-PIN
Enters old MPIN and preferred new MPIN (MPIN to be set) and click on ‘Submit’
After clicking submit, customer gets notification (successful or failure)
How a UPI transaction is performed: PUSH – Sending money using virtual address
Log on to UPI application
After successful login, select the option of Send Money/Payment
Enter beneficiary’s/Payee virtual id and amount and select account to be debited
You will get confirmation screen to review the payment details and clicks on ‘Confirm’
Get ‘successful’ or ‘failure’ message
PULL – Requesting money
Log in to the bank’s UPI application.
After successful login, select the option of collect money (request for payment)
Enter remitters/payer’s virtual id, amount and account to be credited
You will get confirmation screen to review the payment details and clicks on confirm
The payer will get the notification on his mobile for request money
Payer now clicks on the notification and opens his banks UPI app where he reviews payment request
Payer then decides to click on accept or decline
In case of accept payment, payer will enter MPIN to authorise the transaction
Transaction complete, payer gets ‘successful’ or ‘decline’ transaction notification
Payee/requester gets notification and SMS from bank for credit of his bank account.
Bitcoin Core0.13.0, the thirteenth generation of Bitcoin’s reference client as first launched by Satoshi Nakamoto almost eight years ago, has now been tagged for release. This is one of the final steps in the software release process and initiates theGitian build process.
Bitcoin Core 0.13.0 was developed by some 100 contributors over a period of about five months. And while much of the development effort over this time has also been focused on Segregated Witness, which will be activated only in a future minor release of the software, Bitcoin Core 0.13.0 includes about a dozen notable improvements compared to Bitcoin Core 0.12.0.
These are the most important changes.
Child Pays for Parent
The number of transactions on the Bitcoin network has been steadily growing over time. As a result, more blocks have been filling up, and miners typically charge higher fees to include transactions into blocks. Transactions that don’t include sufficient fees usually take longer to confirm, or perhaps even never confirm at all. This has proved to be somewhat problematic, especially in periods where so-called “stress tests” were conducted on the network, with spikes in the total number of transactions on the network and substantial transaction delays.
Individual users can solve this problem by including a higher fee on their transactions, incentivizing miners to prioritise these transactions. This is possible even after a transaction is sent, using Opt-in Replace-by-Fee (RBF); however, not many wallets include this option yet. Additionally, RBF is only an option for the sender of a transaction. Up till now, the receiver had no way to bump the fee for an incoming transaction to speed up confirmation.
This problem is effectively solved with a trick called “Child Pays for Parent” (CPFP). CPFP is a policy used by miners to select which transactions to include in blocks. With CPFP, miners don’t necessarily pick the highest paying (and valid) transactions, but instead, pick the most profitablesetof transactions. In other words: they will select a low-fee transaction if a subsequent transaction thatrelieson the low-fee transaction offers a high enough fee to compensate. The miner will include both at the same time.
In practice, this means that the receiver of a low-fee transaction can “attach” a high-fee transaction, spending the same coins to himself. Incentivized by the new, high-fee transaction, a miner will include the set of transactions. As such, the receiver won’t have to wait as long for a confirmation, while the miner can increase his income.
Compact Block Support
Bitcoin’s peer-to-peer protocol is currently somewhat inefficient. Nodes send each other most transaction data twice: once as a transaction as it is initially sent over the network, and once as part of a block when the transaction is confirmed.
This has some disadvantages. For one, sending transaction data twice requires more bandwidth than it really should, which adds to the cost of running Bitcoin Core. Second, and perhaps more importantly, forwarding new blocks to several peers at the same time can cause significant outbound bandwidth spikes. This potentially disrupts internet-usage each time a new block is found, which is potentially annoying for users. And perhaps, more importantly, it can slow down block propagation over the network as well. Slow block propagation can, in turn, favour bigger mining pools, thereby incentivizing a more centralised mining landscape.
Compact Blocks (BIP 152), developed by Bitcoin Core andBlockstreamdeveloper Matt Corallo, are designed to decrease excess data-transmission. When a new block is found, nodes initially only communicate very compact hashes of transaction data. As nodes have already received the full transaction data when it was originally sent over the network, they can use these hashes to figure out which transactions are included in the block and reconstruct the block themselves.
This trick does not always work out perfectly, however. If a node did not yet receive the initial transaction before receiving the hashes, that node, of course, can’t select the transaction. Additionally, in rare cases awrong transaction may hash into arighthash, fooling the node into believing it received the right transaction until it tries to reconstruct the block and finds it doesn’t add up.
In both these cases of failure, the node simply requests the specific transaction data after all. Even with only some complete transactions in them, Compact Blocks will transmit over the network much faster, and require significantly less bandwidth.
Hierarchical Deterministic Key Generation
Up till now, Bitcoin Core generated a new and completely random public and private key pair for each new Bitcoin address. While this is important for security and privacy reasons, it can also be a bit of a burden for users. In order to secure all private keys against loss, they need to make regular backups.
Hierarchical Deterministic (HD) Key Generation (BIP 32), a cryptographic trick developed throughout 2012 and 2013 by Bitcoin Core developers Gregory Maxwell and Dr. Pieter Wuille, and Armory-developer Alan Reiner, solves this problem. With HD key generation, Bitcoin Core creates a completely new key pair for each new address, but all these keys are derived from a single, 12-word seed. As long as users remember this 12-word seed, they can re-generate all private keys and access all their funds.
It should be noted that HD Key Generation is not a new feature in the Bitcoin world. Many wallets already included the option for several years. It just never existed in Bitcoin’s reference client — until now.
Performance & Security
And of course, Bitcoin Core 0.13.0 introduces a significant list of performance and security upgrades. The full extent of these improvements is beyond the scope of this article (see Bitcoin Core 0.13.0’s release notesfor all the details) but in short…
The database cache memory has been increased, which allows nodes to speed up transaction validation and more. The Bitcoin command line tool now allows users to type passphrases and other sensitive information interactively, improving security by not storing this information in plain text. The software is updated to use C++11 and Python 3, newer versions of the programming languages, that allow for more powerful features. ARM (a specific microprocessor architecture) binaries for Linux are now part of the release, so users don’t have to compile this for themselves. Data concerning which transactions in a mempool rely on each other (as utilised with CPFP) can be communicated to external programs. Nodes on the network can request to receive only transactions that meet a certain fee threshold to prevent DoS attacks. And, lastly, there have been a lot of low-level improvements to the peer-to-peer, remote procedure call, and messaging system (ZMQ) protocols.
Bitcoin has injected itself into a lot of conversations about the future of technology, economics, and the internet. The future of digital currencies remains a controversial topic. After reading these 10 things to know about the confusing world of digital currencies, you’ll feel confident joining the conversation.
The difference between virtual, digital, and cryptocurrencies
Virtual currencies were developed because of trust issues with financial institutions and digital transactions. Though they aren’t even considered to be “money” by everyone, virtual currencies are independent of traditional banks and could eventually pose competition for them.
First, there are three terms that are sometimes used interchangeably that we need to sort out: virtual currency, digital currency, and cryptocurrency.
Virtual currency was defined in 2012 by the European Central Bank as “a type of unregulated, digital money, which is issued and usually controlled by its developers, and used and accepted among the members of a specific virtual community.” Last year, the US Department of Treasury said that digital currency operates like traditional currency, but does not have all the same attributes — as in, it doesn’t have legal tender.
Digital currency, however, is a form of virtual currency that is electronically created and stored. Some types of digital currencies are cryptocurrencies, but not all of them are.
So that leads us to the more specific definition of a cryptocurrency, which is a subset of digital currencies that uses cryptography for security so that it is extremely difficult to counterfeit. A defining feature of these is the fact they are not issued by any central authority.
The origin of Bitcoin
Bitcoin is a cryptocurrency, a number associated with a Bitcoin address. In 2008, a programmer (or group of programmers) under the pseudonym Satoshi Nakamoto published a paper describing digital currencies. Then in 2009, it launched software that created the first Bitcoin network and cryptocurrency. Bitcoin was created to take power out of the hands of the government and central bankers, and put it back into the hands of the people.
There are currently about 12 million Bitcoins in circulation, though when it was created, the programmer said there is a finite limit of 21 million Bitcoins out there. They are currently valued at around $460 each, according to Bitcoin Charts, which tracks the activity. The value surged as high as $1000 each in December 2013.
The origin of Dogecoin
Dogecoin is a form of cryptocurrency that was created in December 2013. It features Doge, the Shiba Inu that has turned into a famous internet meme. It was created by Billy Markus from Portland, Oregon, who wanted to reach a broader demographic than Bitcoin did. As of March, more than 65 billion Dogecoins have been mined, and the production schedule of this cryptocurrency is in production faster than most.
Earlier this year, the Dogecoin community raised funds for the Jamaican bobsled team to attend the 2014 Winter Olympics when they could not afford to go. The community also raised 67.8 million coins (about $55,000) to sponsor NASCAR driver Josh Wise, who drove the Doge-themed car in several races.
Because there’s a lot of them, Dogecoin is valued pretty low — 1,000 Dogecoins are worth $0.46.
Other types of digital currencies
There are other types of digital currencies, though we don’t hear much about them. The next most popular is probably Litecoin, which is accepted by some online retailers. It was inspired by Bitcoin and is nearly identical, but it was created to improve upon Bitcoin by using open source design.
There are many other types of cryptocurrencies, such as Peercoin,Ripple, Mastercoin, and Namecoin. Cryptocurrencies get some flack because they are often replicates of other versions, with no real improvements.
Who is in charge of Bitcoin? The point of the currency is that it is decentralized, but there are legalities that differ in every country. Law enforcement and tax authorities are concerned about the use of this cryptocurrency because of its anonymity and the ease of using it for money laundering and other illegal activities. Bitcoin was the prime currency on Silk Road, which was used to sell illegal goods, including drugs. It was shut down in 2013 by the FBI.
The US Security and Exchange Commission (SEC) hasn’t yet issued specific regulations on digital currencies, but it often warns about investment schemes and fraud. The Financial Crimes Enforcement Network (FinCEN), an agency under the Department of Treasury, took initiative and published virtual currency guidelines in 2013. Many countries are still deciding how they will tax virtual currencies. The IRS is specifically concerned with virtual currencies being used for unreported income.
How Ben Bernanke changed the Bitcoin game
In late 2013, the first congressional hearing on virtual currency was held to outline the pros and cons of Bitcoin. The hearing ended up providing a financial boost for the currency, because US officials talked about it as a legitimate source of money, as opposed to only discussing its role in illegal activities.
Although he didn’t attend, Federal Reserve Chairman Ben Bernanke said in a letter to US senators that virtual currencies “may hold long-term promise, particularly if the innovations promote a faster, more secure, and more efficient payment system.” Bitcoin, which was valued around $13 in the beginning of 2013, jumped sharply after news of his comments broke.
How to get Bitcoins
There are three ways you can get Bitcoins: buy them on an exchange like Coinbase, accept them for products and services, and mine them. We’ll get to the latter process in the next section.
To start, download a Bitcoin wallet. There are many websites where you can download an app on your phone or computer to store Bitcoins. MultiBit is an app you can download for Windows, Mac and Linux. Bitcoin Wallet for Android runs on your phone or tablet. To store the Bitcoins, you have three options:
Desktop wallets leave you responsible for protecting the currency and doing your own backups.
Mobile wallets allow you to travel with the Bitcoins anywhere, and you are responsible for them. Mobile apps allow you to scan a QR code or tap to pay.
Web wallets are transacted through a third party service provider. If anything happens on their side or it gets hacked, you run the risk of losing the Bitcoins, so extra backups and secure passwords are suggested.
Problem is, Bitcoins can be stolen in huge quantities, just like money, and with no centralized bank, there’s no way to recoup the losses. There are several types of Bitcoin ATMs, which exchange Bitcoins for flat currencies. Most machines are expensive and rare, ranging from $5,000 to $2,000. Skyhook, a Portland, Oregon-based company, demoed a $1,000, machine at a conference this month. It is the first portable, open source ATM.
How to mine for Bitcoins
It’s like mining for gold, just on the computer. You need a Bitcoin wallet and specific software, which is free and open source. The most popular isGUIMiner, which searches for the special number combination to unlock a transaction. The more powerful your PC is, the faster you can mine. In the early days, it was easy to find Bitcoins, and some people found hundreds of thousands of dollars worth of the cryptocurrency using their computers. Now, though, more expensive hardware is required to find them. Each Bitcoin block chain is 25 Bitcoin addresses, so it takes a lot of time to find them on your own. The exact amount of time ranges depending on the hardware power, but mining all day could drive your energy bill up and only mine a tiny fraction of a Bitcoin — it may take days to mine enough to purchase anything.
To tackle that problem, there are now mining pools. Miners around the world can band together to combine the power of their computer systems and then share the profits between participants. The most popular one is Slush’s Pool, where smaller, more steady payouts are given instead of a lump sum.
Where you can use Bitcoin
There are many places you can use Bitcoin to purchase products or services. There’s no real rhyme or reason to the list, which includes big corporations and smaller, independent retailers including bakeries and restaurants. You can also use the currencies to buy flights, train tickets, and hotels on CheapAir; upgrades to your OK Cupid profile; products on Overstock.com; gift cards on eGifter. There’s a list on SpendBitcoins that shows all the places that accept the cryptocurrency.
The future of virtual currency
The value of Bitcoin has fluctuated drastically throughout the last year, and there are still 9 million of the coins out there in cyberspace. However, many security issues remain, and that will continue to be a problem. In 2013, Mt. Gox, a Japanese exchange, handled 70% of all Bitcoin transactions, but they lost some 750,000 Bitcoins in February 2014 and filed for bankruptcy, and nothing has been proven in the case. Since it’s universal, it’s useful for international transactions, and could be helpful for transactions in developing countries.
Some experts suggest putting a few aside if you have them and see what happens in the coming months and years, because there are sure to be regulations on the currency soon. With businesses jumping on the bandwagon and investors becoming interested in cryptocurrency, look for momentum to grow, but it will take time for the situation to stabilize as governments, the international community, and the people of the internet decide on how the next generation of currency will transition to a digital world.