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Thursday, April 22, 2021

Can Cryptocurrency Have A Future In India?

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Since the evolution of mankind, the currency has played a huge part in our lives and it has been a very crucial part of human progress. It was the Barter System that was initially practised by the caveman and gradually during the 110 BC official currency was minted and later there were gold plated coins during the 1250 AD. Today we all are a part of the modern currency system which includes coins, paper currency, credit/debit cards, and a lot of other internet banking services.

We have been using money almost every day but we rarely get to appreciate it’s power. We are a part of a global economy and it’s high time we have a global currency

What do you mean by currency? 

To add value to something we have a currency and it acts as a medium for communication. Similarly, we have money through which we can encourage people to work on a particular thing all at the same time. 

How is cryptocurrency different from the modern currency?

Talking about cryptocurrency, it is a digital asset that acts as a medium for exchange using cryptography. Cryptocurrency is a decentralized digital exchange and the entire process of managing, transacting and, processing the money is recorded in a digital ledger known as the blockchain. If cryptocurrencies become a common thing then the government or any central body will have very little control over the money flowing around which is not the case in fiat money which is controlled through central banks and it is highly unlikely that the government would want to give up that power. What cryptocurrency does is, it provides the stability that we have and gives it to the rest of the world hence we can go back to how we normally transacted which is direct to each other without having the interference of the giant central bodies in between. Thus the concept of decentralization comes to play where the main agenda is to erase the idea of a single source failure. But when we have different nodes such as mobile phones, computer systems, hard drives and so on that have some money, the possibility of all the nodes to fail at the same time is highly unlikely and the network effect is unbreakable. 

If only people knew the economics of cryptocurrencies and the power of blockchain, they would understand that problems like inflation could be taken care of. In a world of a global economy, where there is talent everywhere opportunities are not evenly distributed. Technology is highly adaptive and it won’t matter what country you belong to as all that would matter is that you have a smartphone and internet connectivity and the skills and knowledge to contribute and be a part of this global economy where everybody can benefit from you. 

As of 2018, there are more than 1600 cryptocurrencies are available and a few of the most popular ones are Bitcoin, Ethereum, Z-cash. 

If we have to talk about the advantages of Cryptocurrency over fiat money, there is almost no transaction cost, 24/7 access to money with no limit to purchases or withdrawals and anybody has the freedom to use it. But due to the anonymity and decentralized nature, cryptocurrency is being used for a bunch of illegal activities such as smuggling, money laundering, narcotics, etc which fails to make people understand it’s credibility. 

Future of cryptocurrency in India : 

In India, the RBI and the various laws that exist have not favored cryptocurrency investors. After the 2018 crypto boom, RBI banned all cryptocurrency exchanges in India until recently the Supreme Court ruled over RBI’s decision after which the Indian government made another announcement that is not to the benefit of crypto investors in India. Most of the exchanges and companies went out of business and few who could afford to take refuge in other countries shifted their operation. Crypto exchanges and companies around the world in the USA, Europe, and China are booming because they have crypto-friendly laws.   

Malta, a small island country and a part of Europe has welcomed all blockchain and cryptocurrency startups with open arms and is therefore leading this technological revolution. At present, there is one exchange with India WazirX which is doing pretty good and has partnered with a HongKong – based crypto exchange Binance.  

What does the future hold for Cryptocurrency?

Ever since the Supreme Court has lifted the ban on cryptocurrency in March 2020, we can see an overall possibility for the entire cryptocurrency ecosystem in the country to take a step forward. The lockdown has given cryptocurrency a fresh start as investors are looking for various alternative investments. Despite all the speculations and rounds on cryptocurrency reports that a decision is yet to be made on a bill to ban cryptocurrencies in the long run under the draft “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019” is still on the table. Let’s talk about the biggest cryptocurrencies Bitcoin and Ripple. Bitcoin was the first-ever cryptocurrency created by Satoshi Nakamoto and Ripple has been by far the only one which has got major support from the government and the central banks and is used for a country to country money transfers and has started its journey with the Federal in India.

Our country is a pool of opportunities for the real money ecosystem and the crypto-world may not benefit the poor people but with the help of blockchain technologies, billions of Indians can benefit from it. The Government might bring cryptocurrency into action through proper licensing. Necessity is the mother of all inventions and for a country like India where opportunities are pouring and people are finding new efficient ways to invest in different platforms, cryptocurrencies have come a long way and have been long discussed and debated about. However, there is a large scale of population in the country who haven’t understood the nature and working of cryptocurrency and hence put all their faith in fiat money.

Thus only a niche category of people understand the concept of cryptocurrency and other related terms associated with it and ever since the demonetization, cryptocurrency has come to light and has gained a lot of popularity. With the changing market, cryptocurrency is an excellent ground to move into but then it is the government that holds the balls in the court, and while it possesses a high risk to the fiat money and has additional risks as well, which makes this whole situation of implementing cryptocurrency dicey. The Government can benefit from this if certain steps and measures are to be followed which allows them to track down, link and govern cryptocurrency through channels provided by the government.

Looking at the bigger picture, the future for cryptocurrency in India looks highly bleak but if the user has the urge to take the risk it might just be a game-changer for the country. Hence, it all depends on the Government to guide us through the transition of the new technological era. During a time where technology is advancing every minute and we can leverage the power of the internet, this would be a great time to be financially independent and wealthy.

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