Cryptocurrency In India

 

Cryptocurrency in India: Boon or Bane?

Cryptocurrency also known as crypto is the new form of online cashless currency without a centralized governing body. It is a collection of binary data which is designed to work as a medium of exchange and it is not issued by any centralized body. This form of exchange is usually stored in a publicized ledger also called a blockchain that records entries of online crypto exchanges. Bitcoin, Ethereum, Litecoin and Ripple are the most common types of cryptocurrencies. Bitcoin is the most popular form of cryptocurrency since its inception in 2009. Ethereum founded in 2015 is an online blockchain platform that makes its own coins and it is the second most popular form of cryptocurrency in the world.

 

Cryptocurrency in the Indian Context: India is no stranger to the latest technologies around the globe as the country has always opened its gates to technological innovations be it social media giants such as facebook, twitter or Instagram to the introduction of cryptocurrencies such as bitcoin, dodge coin etc. Cryptocurrency was introduced in India in the nation’s fort to move toward a global cashless economy and to meet with India’s financial goals. The first step in this direction is to attain 100% digitalized education at all levels- especially in the rural sectors. Firm efforts have been made by the Indian Government to educate farmers using computer technology since 2000.The country’s agricultural produce as well as technology used to generate surplus agricultural produce. This shows how India has had huge benefits from technology to increase productivity. Cryptocurrency’s blockchain can be used to increase the productivity of small-scale farmers in India. Cryptocurrency mobile services that use blockchain app can help farmers in creating, analysing,  tracking, farm inputs, track the demand for crops in market, market rate etc. Blockchain technology could help farmers to trace agricultural produce, registration of land, give a clear picture of trending prices and help farmers to increase their income. This is one example of how cryptocurrency and blockchain services can help farmers. However, there are also many pitfalls when it comes to cryptocurrency. This is one of the reasons why India is planning to ban cryptocurrency. Firstly, Cryptocurrency is very volatile.  This is high risk because when a form of digital cashless currency like crypto is backed by a hidden anonymous person or a group of people cryptocurrency becomes high-risk and highly volatile. Secondly, most businesses do not accept cryptocurrency as a large mode of payment especially in India. The absence of any asset or sovereign authority backing the currency also poses high risks. Thirdly, Cryptocurrency is largely speculative and risky as there may not yield high returns for the cryptocurrency investor. Taxability of cryptocurrency is another issue as investors cannot guarantee tax liability on all capital gains from investors. No central monitoring body has led to frauds, threat to investor protection as well as monitoring of movement of money in the economy. India is still holding onto the ‘Wait and Watch’ policy.

 

 

The absence of regulation of certain bitcoin exchanges such as Unicoin, Zebpay, etc. have initiated their operations with trading or cryptocurrencies with KYC norms.  The biggest reason the Indian Government wanting to ban Cryptocurrency is that the whole blockchain has become a platform for hackers, terror finance, drug transaction and money laundering. The RBI warned Indians against using cryptocurrency for terror financing and money laundering.

With the reasons mentioned above it is skeptical whether India wants to continue with cryptocurrency for of trade or not. Cryptocurrency despite being a cashless form of digital currency poses great risks that the RBI as well as the Indian Government fears. There should be a Regulatory Body that monitors Cryptocurrency transactions as well as providing stringent security measures that ensures that cryptocurrency transactions do not fall at the hands of anti-social and fraudulent elements. Cryptocurrency is a modern technology tool which needs to look forward for. Despite its many pitfalls, this form of digital technology has great scope for the country when it has so many explored/unexplored uses. The Agricultural sector can benefit hugely from Cryptocurrency blockchain. Cryptocurrency can also help in various other sectors of the Indian economy such as in education, social service, infrastructure as well as even in the social services sector. If Cryptocurrency is allowed to grow in India, then it can provide new form of employment in the digital sector. Cryptocurrency is extremely beneficial in stock market and provide an easier platform for commodity trading. There has been a steady increase in the number of investors in cryptocurrency over the last few years in India. Perhaps the Government could allow the reopening of private crypto currencies after putting cryptocurrency on haitus for sometime till the issue of cryptocurrency security has been addressed.

Finally, The Government needs to review all the above cryptocurrency parameters and reconsider imposing a ban on cryptocurrency according to the Cryptocurrency Bill Act of 2020.The future of cryptocurrency in India looks promising and there is a ray of hope for Indians as well as for the economy.

 

 

 

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