Disclaimer: all the arguments and benefits and disadvantages are subjected to the author’s understanding and research on cryptocurrency. This in no way reflects the exact future or results of this much-speculated technology.
How aware are you of the recent cryptocurrency act being proposed? Under its Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, the Government of India plans to “outlaw all private cryptocurrencies in India but provides some provisions to support and use the underlying cryptocurrency technologies“.
So far investing and holding cryptocurrency was legal in India. But once this law is passed, this investing in cryptocurrency might as well be banned. Though the law hasn’t been presented in parliament, it has already been revealed that it will create a facilitative framework for the creation of official digital currencies to be issued by RBI.
For those who don’t know, cryptocurrencies are digital currencies that operate on blockchain technology. Blockchain technology involves the idea of a distributed ledger. It is as if all your data, instead of being stored in one central server, will be distributed. Cryptocurrency is a digital currency wherein the ownership records are encrypted in a ledger existing in the form of a computerised database.
With cryptocurrencies, your transactions are encrypted. This means, there is no interference of any central authority over the transaction between you and the other person receiving or lending you the money. There is, however, a third person in between, who is called a miner. Their aim is to solve a complex mathematical equation so as to make that transaction between you and your partner successful.
However, that miner would not come to know about the identity of the persons involved in the transaction. Such is the level of security that your money will be in your hand. Such a system can lower the influence of central authorities, thus making our financial transaction liberal. The value of the cryptocurrency you hold will not be influenced by one authority because no one person or central authority can control this kind of currency. This has its own benefits and fallouts.
You might want to consider being in a new world order, wherein you want to send money to your friend or family around the globe without any national border being a hurdle. You might want to work for a US multinational company remotely in your own home in a small town in India. Such scenarios would be best to describe the potential benefits of cryptocurrency.
Another scenario that would represent a potential benefit of cryptocurrency is, curbing the financial frauds. This is quite prevalent in the Indian context that the high-level defaulters like Vijay Mallya, Nirav Modi or Lalit Modi can easily run away with the public money. Such a scenario is, however impossible in cryptocurrency enabled market.
In such a liberal market, where banks and central authorities will go redundant and most of the public money in the liquid state might be safe in the public’s hands, such financial frauds will be impossible to be affected. At last, in cryptocurrency, the value of your asset would remain to be yours. No financial authority can increase or decrease the value of crypto.
All this comes up with certain disadvantages. We all know that when a transaction cannot be tracked, the chances of unauthorised money exchange would increase. This can indeed aid the unlawful activities like drug market, terrorism and unauthorised funding to political parties. You might want to consider being tracked instead of being unsafe, right? Well, actually, the choice is yours.
Frankly, the bill is yet to be presented in parliament and commenting on its sanctity, or it’s a necessity would be a futile attempt in any sense. However, you should have a choice to decide on the possible future you want out of the financial market you transact through. You should desire complete transparency and at the same time some restrictions on crony capitalists claiming large sums of loans from the banks. You might want to have your money in your hand.
For the last 5-6 years, we have seen how easy it has become for rich and politically connected individuals to take heavy loans and run away from the reach of the law. Checks on rising Non-Performing Assets and the security of public money shall always be your right. And questioning them and the authority in charge of your money shall always be your duty. Moreover, as the world moves towards globalisation, the rise of a liberal market structure is inevitable. In that case, why should Indians stay aloof from this rising global exchange?