Nobody can deny the fact that technology has made tremendous progress in the 21st century. The world is moving towards digitalization and it has enormous benefits without a doubt. One can say that our future is Digital. The world around us is changing rapidly and one needs to be dynamic to adapt these changes. Some changes are foreseen and some are unexpected but the technology keeps on evolving.
Since 2009, there has been an entire new way of making payments. As the world is becoming digitalized, we see cryptocurrency making its way along with it. Gaining popularity so rapidly and having the high interest of investors, what do you think is the reason that the government has banned the use of cryptocurrency in India? What is it about this trading that makes it risky for investors and why is the government so concerned? How will it affect the economy? Will it snatch future opportunities? To know, read the full article.
What is cryptocurrency?
Cryptocurrency is a digital or virtual form of currency secured by cryptography (methods of protecting information with the help of codes), which makes it out of the question to counterfeit or double-spend. It is outside the control of the government and central authorities. Obviously, as a mean of providing quick transactions with secrecy and without any intervention of government, virtual currencies become popular in no time. It allows secure online payments and are referred as “tokens”. It has many benefits like- easier way to transfer funds without the involvement of third-party, secured by keys. One of the main disadvantages is that its market price is based on the supply and demand so their rate can oscillate significantly. So here comes the question that could this become the chief way of making transactions?
The first blockchain-based cryptocurrency was Bitcoin. It was launched in 2009 by the mysterious and pseudonymous Satoshi Nakamoto. It was created to facilitate instant payments. It offers the promise of lower transaction fees than the traditional one and that’s the reason it has been so popular since then.
Rise of cryptocurrency
On November 8, 2016, our Prime minister Narendra Modi announced the scrapping of Rs. 500 and Rs. 1000 notes in order to fight back corruption and black money. After demonetization, India gradually moved towards digital transactions. Center has been pushing since then to a cashless economy. How does it interest the people of India? Back in 2016, Indian investors rushed towards the digital money as everyone understood the importance of digital money as opposed to money involving cash which can be withdrawn or changed by government anytime or any policies can be announced by the government which may not be in a favor of people. Also, it’s clear that cryptocurrencies are an important element in today’s digital economy. A look at the overall trading volume of all cryptocurrencies over time can show its growth.
Story of elimination
Reserve bank of India has always warned people about the risks of using cryptocurrency as it involves numerous risks. Now, supreme court of India overturned a 2018 ruling by the Reserve bank of India, which prohibits Indian banks dealing with virtual currency due to consumer protection, market integrity, and money laundering.
The government was concerned regarding this issue as there was no central authorities that issues this money, unlike normal currencies which are dispensed by authorities. There are high chances that it can be used for illegal financial transactions as there are no regulations, investors can be easily fooled. Despite these issues and worries of the government, if we look at the data, the transactions of virtual currency have been doubled since Supreme Court’s judgement. As a matter of fact, we can say that this rise in number of transactions is aided by the lockdown and Covid-19 situation. This is the reason why India is more vulnerable to get attacked by the negative side of virtual currency. There have been instances of multiple cases of frauds. Another main reason to ban it is that it would help people towards a transaction that facilitate tax evasion. India is thus a weak spot and can be attacked very easily. All these concerns are what pushed the government to think about banning the use of cryptocurrency in India.
Many cryptocurrency exchanges like Koinex and Zebpay has shut down their operations due to RBI’s instructions to close every operation related to virtual currencies. No doubt, that growing interest in virtual currencies meant there was tremendous scope going forward but on the other hand we can’t let go the fact that use of cryptocurrency without any control of authorities may increase the number of illegal acts and affect the integrity of our country.
According to me, the use of cryptocurrency should not be banned as it undoubtedly will help in the growth of the economy. Instead, it should be made legal and all the other operations should be made under the control of central authorities so that it leads to a better future.
What are your views on this? What do you think- whether it’s better to have no use of cryptocurrency or should it be made legal?
Do let us know in the comments.