Future of Cryptocurrency in India
Ever imagined a world free from all economic biases? Where the value of the metaphorical ‘buck’ is ubiquitous? Cryptocurrency is the one answer you’ve been searching for.
What is Cryptocurrency?
Cryptocurrency is a type of electronic currency with a universal value depending on the market swing. It is absolutely unregulated. And, the transactions are encrypted by a peer to peer technology. Cryptocurrency uses secure blockchain technology to remain decentralized, transparent and immutable.
How did cryptocurrency evolve?
During the 1990s the world underwent an information revolution the likes of which could not have been predicted before. Several systems such as Flooz, Beenz and DigiCash emerged as market leaders in the fintech sector but they all inevitably failed due to a plethora of inter-twined reasons such as financial fraud, corrupt business practices, unavailability of adequate technology, scalability of operations, among others including human errors such as strife between the CEO and their bitcoin miner employees. Another issue that has been time and again recalled is the unregulated nature of cryptocurrencies that continues to pester major world powers against the use of cryptocurrencies as a part of their mainstream economy. Notably, all the aforementioned enterprises used a trusted third-party approach to provide crypto trading options which basically means that the third-party organisation verified and facilitated such transactions on behalf of the holding businesses. Due to operational failures experienced by these businesses the creation of a digital cash system was viewed through a reductionist viewpoint, as a lost cause for over a decade.
During 2009, an anonymous programmer using the alias ‘Satoshi Nakamoto’ introduced bitcoin as a ‘peer-to-peer electronic cash system’. As stated before, the idea was to create a completely decentralised approach to digital financial transactions that would not be regulated by any central controlling authority or a server-backed system such as the cloud. It involved mimicking the peer-to-peer networks available in the cyberspace for finance sharing purposes. Cryptocurrencies can be sent directly between two parties via the use of private and public keys which are now known as wallet addresses. The transfers can be done with minimal processing fees depending on the platform being used, allowing users to avoid the steep fees charged by traditional financial institutions for brokering and service.
In today’s world, cryptocurrencies such as bitcoins are soaring in terms of their intrinsic value. I bitcoin in the market amount to over 15 lakh Indian rupees- an all-time high. With gold prices taking a hit, the uncertainties of the bitcoin market continue to remain strong for investors and crypto miners alike.
What is bitcoin?
A bitcoin is the most popular cryptocurrency listed in the market today. It has a staggering market value. However, since bitcoins are completely electronic with no physical value, bitcoins do not have any intrinsic value. In other words, it is not backed by any asset nor does it have any collectable value. Generally, one of the most poignant issues with bitcoin is its status as a store of value. There are 21 million bitcoins around the world as of today and more are being pushed into the market every day.
The Indian Problem:
The Indian problem stems out of its utter disbelief towards using any form of digital currency. India lacks basic infrastructure and awareness as far as cryptocurrency transactions are concerned. However, a few organisations have taken up this domain of cryptocurrencies quite honestly. There are several made in India applications and software available to use as wallets and trade in cryptocurrencies. To rightly use cryptocurrencies, India needs to get its intermediary steps in order. The use of Central Bank Digital Currencies(CBDCs) are can be one such solution.
Are CBDCs different to cryptocurrencies?
CBDC is the currency backed by a government through one of its central banks. It is a virtual currency similar to cryptocurrencies but backed and regulated by a central authorial figure such as a Regulatory Board, Bank or the Government finance institutions. It encapsulates the power of blockchain with the logistical capabilities of Distributed Ledger Technology (DLT). Using this combination, data can be synchronised across multiple locations without establishing any centralised storage system.
What is the use of CBDCs?
In today’s world, as cryptocurrencies continue to persist despite scepticism among the financial giants, the emergence of CBDC is becoming much more concrete than any other virtual currency including bitcoin, ethereum, litecoins, bitcoin cash, dash and ripple.
Many investors view CDBCs as a necessary intermediate step before the world begins to adopt cryptocurrency transactions with the same level of confidence as a cash transaction. CBDCs can serve as ‘training wheels’ for a child learning to cycle like Lance Armstrong using cryptocurrencies.
The advent of CDBCs has also accelerated the development of security engines and transaction systems that will only better the crypto transactions shortly. If the common mass sees virtual currency issued by their trusted banks, more people will be drawn towards accepting the idea of cryptocurrency. Various national and central banks are working on the implementation of CBDC within their systems of monetary policies.
Which nations use CBDCs today?
Sweden,’s Riksbank which was one of the earliest testers of CBDC has been monitoring its ‘e-krona’ continuously to understand the behaviour of such currencies over a certain period in time. In response to a rapid drop in the use of conventional currencies, the Swedish government has now commenced working another pilot program for a new platform for its e-krona. Other nations such as Uruguay, Turkey, Saudi Arabia, UAE, China and France are also developing their own CBDC systems which are likely to be introduced into the formal economy within the next decade.
Answering the Indian Problem:
The problem in India, as discussed above, is the lack of awareness among the common mass and the lack of our capacity to institutionalise any infrastructure. If India wants to adopt the free-swinging crypto world, it can do so with one of its central banks undertaking ad distributing CBDCs first. However, India’s premier regulatory body- SEBI, is not updated enough to meet the challenges of CBDCs, let alone cryptocurrency. With a rise in digital transactions, CBDCs, when backed by major national banks, will open a new window of opportunity for financial traders to invest in. This needs to expand to most domains of our society before we can even dream of having cryptocurrency transactions and not be frowned upon.
I mean unless you tell our farmers that they can sell their produce at a rate they want, they will sell their produce at the rate that the Government has set for them. Similarly, unless you tell Indians crypto is the key to growing economically in a digitally bias world, they will keep purchasing gold with INR expecting to hit 3 trillion in terms of GDP by 2021- which is hilarious.
