INSUBCONTINENT EXCLUSIVE:
By Pareen LathiaEvery few months, we hear that bitcoin has been banned by some country or the other
As early as 2013, bitcoin was "banned" by Thailand
In 2017, it was big news when China banned bitcoin and the latest news carries a ban by the Indian Reserve Bank
The problem is this news is grossly misleading because it is simply not possible to ban bitcoin, or any crypto currency for that
This is in spite of the all the bans
This does not fit into any market logic
But that is the beauty of crypto currencies
They do not fit into traditional regulatory or banking framework
A different outlook is needed to understand how they work and why they were created in the first place.
DecentralisationThis is because
bitcoin and most crypto currencies that run on Blockchain technology are decentralised
It means they do not run on one server or URL or IP address
These virtual currencies run on multiple nodes that can be owned and run by anyone and are usually spread across the globe
There is no central point for the governments to attack or block
This is very similar to Torrent protocol
At the simplest level, if I hold bitcoin in my wallet and transfer it to your wallet, there is no way any government can block it because
this entry of transfer is recorded in a distributed ledger.
What has RBI doneSo, what is this ban If you read the RBI circular, they have
never used the words "ban" pertaining to bitcoins
It has only prevented any organisation regulated by the central bank to deal with businesses that have anything to do with crypto currencies
Practically, this means banks will have to stop deposits and withdrawals to and from Indian rupee on crypto currency exchanges
related to crypto currencies
It had also said there would be a crackdown on the illegal use of such cryptos.
But traders are still buying and selling crypto currencies
under a three-month notice period that was issued to all exchanges
Even after that, the RBI or the government cannot technically ban bitcoin
present the basis of this restriction on banks to the court.
Practical implicationsOther countries like China and the US have already tried
banning exchanges, ICOs and mining of crypto currencies
Although those events in 2017 caused the price of bitcoin to fall temporarily, it went on to peak at $19,783 on December 17
Since most of the trading happens on international exchanges, banning Indian bourses will only make Indians buy crypto currencies from
foreign sources or OTC (over the counter) options because it is simply not possible to track buying, trading or selling of crypto
currencies.
Bans in other countries like Japan have also resulted in exchanges moving base to countries with friendlier macro environments
This has only resulted in loss in terms of taxes for the governments of hostile countries.
For everyone who is holding any coins, they would
transfer it to a wallet or an international exchange and then sell it for USD and convert USD to INR
This just hurts India because we will not even be able to tax this income if this is done in cash
But there are sites that are already accepting crypto currency as a mode of payment
As more tokens emerge and have real usage, it will be difficult to keep them at bay.
With bitcoin, we have seen the Streisand Effect in play
follow KYC norms and legal compliances are in place
That would make it much safer for Indian citizens to buy, trade and profit from this revolution and be educated about its risks
In February 2018, the US government has called for inter-departmental cooperation and allocated resources with the aim to create new
legislation to govern virtual currencies.
There is also an opportunity for our country to become the Switzerland of the next century
If one government were to reduce taxes from trading of crypto currencies, the amount of crypto money to come in that country would be
This may seem like a pipedream, but Malta is already going down this path and attracting major Blockchain players, including the largest
But every government has tried and failed and in 2018, it is accepted that there will be regulation rather than bans.
The point of creating
bitcoinA lot of believers of bitcoin see it as a way to liberate ourselves from the control of governments and the financial system
The point is to eliminate the need for printing money and more importantly, banks
So, banks moving out of the equation is a cause for celebration in the community rather than seen as a bad thing.
As countries grapple with
regulation and laws, the crypto currency market cap keeps soaring every year
As they say, nothing is more powerful than an idea whose time has come.
(Pareen is a blockchain and crypto currency writer
He's also an investor and a tech entrepreneur)
