Bitcoin is a cryptocurrency and a payment system, first proposed by an anonymous person or group of people under the name Satoshi Nakamoto in 2008.
Bitcoin is decentralized, meaning no single institution or government controls it. Transactions are peer-to-peer, and take place between users directly, without an intermediary.
These transactions are verified by network nodes through the use of cryptography and recorded in a public dispersed ledger called a blockchain. Bitcoin is unique in that there are a finite number of them: 21 million.
Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services.
As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment.
The legal status of bitcoin varies substantially from country to country and is still undefined or changing in many of them. Regulations and bans that apply to bitcoin probably extend to similar cryptocurrency systems.
In October 2013 the US FBI shut down the Silk Road online black market and seized 144,000 bitcoins worth US$28.5 million at the time.
 The US is considered bitcoin-friendly compared to other governments. In China, buying bitcoins with yuan is subject to restrictions, and bitcoin exchanges are not allowed to hold bank accounts..
On December 30, 2013, China banned the processing of bitcoin by financial institutions in China. After the announcement, the value of bitcoins dropped, and Baidu no longer accepted bitcoins for certain services.
 Bobby Lee, CEO of BTC China, said that his company stopped accepting bitcoins due to concerns about regulation..
Bitcoin trades on a variety of exchanges around the world and can also be traded directly for goods and services in some cases. India has been slow to catch on to the potential of Bitcoin with regulations being few and far between. However, there has been some movement recently on this front. The Reserve Bank of India (RBI) has cautioned users, holders and traders of virtual currencies (VCs), including Bitcoins, about potential risks they face while dealing with such instruments.
RBI said that VCs are not legal tender in India and warned their users that they could face losses on account of sudden fluctuations in prices. While RBI has not banned VCs outrightly, it has repeated multiple times that they have no regulatory permission or protection in India. The central bank clarified that it has not given any licence or authorisation to any entity or company to operate such schemes or deal with Bitcoin or any virtual currency. Users who trade in Bitcoins should be aware that their transaction will not have any legal protection in India .
Despite this apparent hostility from RBI Bitcoin trading has been going on through LocalBitcoins and Paxful peer-to-peer exchanges which allow INR deposits using NEFT/RTGS/IMPS banking methods with some trade volume happening on Zebpay albeit at lower levels than before the ban by RBI. There are also reports that Unocoin has resumed INR deposits but withdrawals are still halted currently. Koinex had also announced resumption of INR deposits but it seems they have backtracked on that currently as their website is inaccessible
Looking at the current scenario one can say that while Bitcoin trading cannot happen directly through banks as intermediaries have been cut off it is still possible to do so indirectly using peer-to-peer exchanges. This however comes with its own set of risks as these exchanges are mostly unregulated making them susceptible to fraud or hacks.