Today the world is witnessing a technological transformation. One such development is the rise of Bitcoin and cryptocurrencies. The application and use of Bitcoin are transforming business operations. Yet, India’s take on Bitcoin is still not clear. India is still vacillating on the idea of accepting or banning Bitcoin. A lot is happening in the field of Bitcoin. Although the startups in India are promoting and welcoming Bitcoin. But, RBI is not positive about this concept. There are obvious reasons for the same and we will be exploring the same here.
The rise of Bitcoin
Before heading further, let’s understand what is Bitcoin? The concept has revolutionized the industries across the globe. Satoshi Nakamoto introduced the currency in 2009. But, here, it becomes important to understand why the cryptocurrency is significant? Why the world is focussing so much on these currencies. The digital money or Bitcoin makes use of cryptography to secure transactions. The process of cryptography ensures that the transaction is safe. Cryptography converts data into codes. These codes are difficult to crack, thus making the system completely safe and secure.
Key features of Bitcoin:
Bitcoin is a virtual currency. You can think of Bitcoin as a computer file that is stored in a digital wallet app. You can send Bitcoins or files from one digital wallet to another. Each of these transactions gets recorded in a ledger which we know as Blockchain.
Some of the features that make Bitcoin still rule the charts are :
- Decentralization: It is the key feature of Bitcoin. There is no third party interference. There is no permission of the third party necessary for cryptocurrency exchange. It makes the entire transaction process free from the protocol of validation.
- Anonymity: Another key feature of Bitcoin is anonymity. It means that the Bitcoin wallet is not linked to any identifying address. But, this feature facilitates illicit transactions. It is because of this reason that many nations, including India, are drifting away from the active use and popularization of Bitcoin.
- Transparency: One of the key features of Bitcoin is that the entire process is transparent. Since every information finds an entry into a public list of the ledger, the involved parties can see the data. In case of any change, the information also gets updated to the parties.
- Fast: Bitcoin exchange is faster. With no interference from the third party, the transaction becomes faster.
All these factors make Bitcoin a probable solution to the current problems that we are facing with digital currency exchange and platform. However, it has its downside, which makes many nations like India drift away from Bitcoin usage and application.
India’s take on Bitcoin:
India is a growing economy. It would not be wrong to claim that many developments are paving their way into the nation. We have seen some significant transformations when it comes economy happening in India. But when it comes to India’s take on Bitcoin, the story is a bit different. Ever since Bitcoin came into the picture, the government has not been very keen on it. It is essential to understand here the legality of Bitcoin. The legal status of Bitcoin varies from state to state. Many nations don’t find the usage of Bitcoin illegal, but its status as money varies and comes with regulator implications.
There are nations like the USA which are allowing its use and trade. There are countries like India which are working towards banning Bitcoin.
The rise and fall of Bitcoin in India
Ever since Bitcoin came into the picture, its role and substantiate are questionable. While it does offer a series of benefits to the user. We cannot undermine the fact that it has its own set of drawbacks which makes use question its sustenance in the future. Many believe that the rise in cryptocurrency is like a bubble that is soon going to blast. When we talk about the Indian perspective, then the story isn’t that lucrative and enticing. It was in 2018 that the late Finance Minister, Arun Jaitely announced the ban on the use of cryptocurrency. The bill passed by the government also asked the companies dealing with a cryptocurrency exchange to wind up their business. One of the reasons for this is the active use of cryptocurrency in money laundering. Black money and corruption are already impacting our economy adversely. Bitcoin and its ease of usage without any regulations will further identify the gravity of the problem. Government bodies like the Central Board of Indirect Taxes and Customs and Income Tax Department have supported the idea of banning cryptocurrency.
What’s the latest buzzing news around Bitcoin in India?
We have already discussed above the fact that many government bodies are promoting the idea of banning cryptocurrencies. A bill, “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill, 2019” has been proposed by the authorities which mention a complete ban on Bitcoin and other cryptocurrencies along with a fine of Rs. 25 crores. Besides, there is also imprisonment of 10 years to the person or the company found using virtual currencies.
Why is India not keen on Bitcoin?
When the world is moving towards Bitcoin it is surprising that India is not positive towards Bitcoin. Being a growing economy and one of the leading nations in terms of innovation and technology, why is India keeping itself away from Bitcoin. Many government agencies are supporting the idea of banning Bitcoin and cryptocurrencies. The support of the ban on Bitcoin have their valid reasons:
- We are already facing the issues of corruption, adding a digital currency that is not governed or regulated will further aggravate illicit acts like money laundering, smuggling, etc.
- Anonymity, while this is one of the possible features of Bitcoin, but in case fraud or default, you cannot track the anonymous person.
- Lack of a third party is a good thing when we take into account the transaction part, but when it comes to regulation, then it is missing. In case of any discrepancy or act of fraud, you do not have any rules that will save you.
Why should India rethink its decision?
Well, we are still dwindling with the fact of whether or not to accept Bitcoin and other cryptocurrencies. Facebook is coming up with cryptocurrency Libra. It makes us think whether such a big name will come up with a Ponzi scheme. It makes us wonder whether the decision to ban cryptocurrency by India is right or not? Banning Bitcoin in a scenario where more and more nations are working towards accepting and regulating Bitcoin exchange, India needs to rethink its take on the same. While India may not be keen enough on using and propagating Bitcoin, but the startups in this zone hold a different view. Ever since the ban on cryptocurrency surfaced, many crypto exchange startups have shifted their base to nations like Estonia where cryptocurrency exchange is legal. Countries like Estonia are positive towards Bitcoin exchange and are welcoming startups which are key to establish their name in the world of cryptocurrency.
Practical Implications
Well, banning Cryptocurrency in India is a loss to the nation because the holders of coins are now shifting towards International exchange platforms where they can easily buy and trade cryptocurrencies. They will get the amount in dollars that they later convert into Indian Rupee. This is the loss to the Indian economy. But the story is not all gloomy. The Indian crypto startups are propagating the regulation on cryptocurrency exchange. It will end the discrepancies associated with it. Some companies are ready to invest in India on this front; one such company is Bithumb Global which is a South Korean cryptocurrency and token exchange platform. The company has proposed to work together with the Government of India to regulate the use of Bitcoin. The company is currently looking forward to expanding in India. And if such regulation comes into the picture, then it will be a breather for cryptocurrency exchange companies.
Wrapping it up
When it comes to India’s take on Bitcoin and other cryptocurrencies, we may soon have some news coming on this, especially after setting up of IMC. As per the report of this committee, there will be a ban on Bitcoin and other cryptocurrencies, but the committee will work towards bringing its official digital currency. In such a scenario, the fate of the existing crypto-asset holders and companies remains vacillating. We cannot drift away from the fact that cryptocurrency exchange in the future. More and more nations are now working on bringing in regulations on Bitcoin exchange. India needs to rethink its take in Bitcoin.
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