Is crypto a threat to fiat money? Or the future of money? – The New Indian Express
Express news service
BENGALURU: Satoshi Nakamoto, the pseudonym of the person (s) behind the invention of Bitcoin – the first decentralized form of digital currency in 2008 – was to create a peer-to-peer electronic payment system without any intermediary such as the system government financial institution or business. Nakamoto’s white paper on Bitcoin indicated that transactions would be tracked via a blockchain, a ledger, like those used by financial institutions, except that this ledger would be distributed across an entire network, with exact duplicates held by all participants. and visible to all, secured by cryptographic means. There would never be more than 21 million Bitcoins, the legendary Nakamoto had vouched for.
With a value of just over a cent at the time (2008), Bitcoin has today become the fastest asset to reach a market cap of $ 1,000 billion, according to a secondary research paper recently released on the CryptoTech market in India.
There are around 15 million Indians who have invested in cryptocurrencies worth Rs 1,500 crore and there are 350 start-ups that operate in the blockchain and crypto space. This despite the fact that private cryptocurrency is not subject to any government regulation and remains a gray area.
The Reserve Bank of India (RBI) has consistently flagged private cryptocurrency and the impact of this burgeoning unregulated decentralized financial ‘asset’ as a potential threat to the country’s financial stability. “We have serious and major concerns about the cryptocurrency, which we have conveyed to the government,” RBI Governor Shaktikanta Das said last month. In February of this year, he voiced his concern. on this subject.
In 2018, the RBI had banned trading in cryptocurrency, which was later overturned by the Supreme Court. The Cryptocurrency and Official Digital Currency Regulation Bill, 2021, which is expected to formalize ‘central bank digital currency’ (CBDC) as legal digital currency, is in its final stages.
Union Finance Minister Nirmala Sitharaman said on August 16 that the Union Cabinet is expected to pass a bill soon to regulate cryptocurrency and its rising market in India. An interdepartmental group, led by former finance secretary Subhash Chandra Garg, recently submitted a report calling for a cryptocurrency ban and authorizing an RBI digital currency.
Cryptocurrency has also been reported by law enforcement as being used in illegal and criminal activities such as money laundering, illegal fundraising, fraud, pyramid schemes, and drug trafficking. China recently banned trading in cryptocurrency, raising concerns about its energy-intensive mining and national security.
Voices of change in the digital age, however, challenge the conservative logic of “security” in financial instruments and urge the government to allow people to use their money as best they see fit. Crypto investors vouch for its underlying blockchain application, which makes all transactions verifiable and immutable.
It is largely thanks to blockchain technology, backed by Know Your Customer (KYC) standards, that cryptocurrency has positioned itself globally as an alternative financial system that does not require centralized authority and helps users. to own money and make secure payments anonymously.
âLet the government tax cryptocurrency like commodities or assets, but allow trade,â said Dr Akash Rajpal (47), who vouches for the cryptocurrency investment. âI see it as a hedge and with a high risk reward angle. I place around 5-10% of my investments in crypto and only in the underlying fundamental coins, âsays Rajpal.
He was introduced to crypto at Singularity University, NASA, in 2012, when it was trading at $ 3. âI was interested in it because of the underlying blockchain concept,â he added. The National Association of Software and Services Companies (NASSCOM), in association with WazirX, the country’s largest cryptocurrency exchange, in its report titled “Crypto Industry in India” shed light on the developments of the Indian cryptocurrency market. an exponential rise.
“As more and more young Indian investors are excited to explore new investment options, they are embracing cryptocurrencies such as Bitcoin, Ethereum and Polygon to make investments that promise them viable returns,” the report.
One of the main predictions of the Nasscom report is that the CryptoTech industry will reach $ 241 million by 2030 in India and $ 2.3 billion by 2026 globally. According to the report, over 60% of Indian states are emerging as cryptotech adopters, and with more than 15 million retail investors, the industry is increasingly attracting start-ups to adopt cryptotech.
ATTRACTIVE FOR GEN-Z
What makes cryptocurrencies attractive to the risk-prone Gen-Z is their transparency, decentralized character, and volatility. The value of cryptocurrency is completely theoretical and depends on faith. The price follows the laws of supply and demand. In the absence of regulatory oversight and oversight, market manipulation can occur, which introduces volatility.
âCrypto is poised to advance our Prime Minister’s Digital India mission. In fact, our user count in Tier II and III cities grew by 2,648% and contributed to 55% of total signups on WazirX in 2021, “said Nischal Shetty, CEO of WazirX.” Crypto has immense potential to contribute to our $ 5,000 billion economic vision, and in the years to come we will see crypto overcome financial barriers for it. Rural India, create access to jobs, âhe added.
SOME CRYPTO STATISTICS
* More than 12,000 crypto-currencies exist today
* Total crypto market capacity: $ 1.96 trillion
In 2017, a high-level interministerial committee was set up to analyze issues related to virtual currencies and propose appropriate actions. The committee’s 2019 report highlights several risks associated with these decentralized virtual currencies by private parties, including risks of volatility, lack of regulation, technological risks such as phishing and Ponzi schemes, illegal use and criminal (such as terrorist financing and money laundering)
In June of this year, the Directorate of Enforcement (ED) issued a notice of justification to WazirX under the Foreign Exchange Management Act (FEMA), 1999, involving cryptocurrency transactions worth of Rs 2,790.74 crore. The ED said it opened the investigation based on a money laundering investigation into illegal Chinese-owned online betting apps. In his response, WazirX CEO Nischal Shetty said they were “in compliance with all applicable laws.”
BITCOIN WAS FIRST USED TO BUY PIZZA
On May 22, 2010, Florida resident Laszlo Hanyecz spent 10,000 Bitcoins at Papa John’s to buy himself two pizzas. Back then, his Bitcoins were only worth $ 40. But, since cryptocurrency was a non-entity in the trading world, Hanyecz contacted the Bitcointalk community and openly traded his Bitcoins to anyone who would buy him those pizzas.
FYI: You don’t have to buy a whole Bitcoin, which is worth around Rs 34 lakh. You can buy a fraction
of BTC (or any crypto) for as little as Rs 100
STEPS TO TAKE BEFORE INVESTING IN CRYPTO
Exercise due diligence
Read a project’s white paper and its use cases, roadmap and progress
Check the history of the team, its activity on social networks
Check if it’s listed on legitimate exchanges
Investing for Risk Appetite
BITCOIN AS AN INVESTMENT OPTION?
Fixed supply of 21 million, that is, only 21 million Bitcoins will be created
Digital asset that is not limited to any country or entity, but accessible to everyone in the world
Slowly emerging as an alternative asset class that offers a high risk, high return investment option
It is important to understand the high risk and high return aspect and to invest according to the risk appetite