India v. Bitcoin
Bitcoin has been a contentious subject with world governments since its very inception. As a favorite currency of preppers, futurists; conspiracy theorists and professional criminals, it’s no wonder that some governments would look at it with askance. But the black market is not why bitcoin is in the news again. This time its India v. Bitcoin. To be more accurate it is Kirit Somaiya v. Bitcoin. Somaiya is a politician of the Bharatiya Janata Party who described bitcoin as a “Ponzi Scheme.” While the term has been used before in relation to bitcoin, it shows an amateur understanding of what the cryptocurrency really is, and no understanding of blockchain technology.
In basic terminology, a Ponzi scheme is fraud which requires that the perpetrator pay returns to the first investors by taking money from those who invest later. As a decentralized cryptocurrency, it may seem like something fraudulent is behind bitcoin, however, it is the raw integrity of the currency that makes it popular with criminals. It operates in absentia of any type of moderator, cannot be forged, is imminently secure and is virtually untraceable.
Somaiya and the Indian government are not the first to grapple with the ultimate meaning bitcoin and cryptocurrency poses to the world economy. Many other governments have and will try to regulate it. So far regulating bitcoin transactions have met with less than success. It seems likely difficult to forestall, if not impossible.
Unfortunately, Somaiya’s lack of understanding and clear frustration may come back to haunt him. He railed against Bitcoin and indicated his belief in its invalidity and fraudulent nature.This self-regulation is nonsense. In a Ponzi scheme, all such arguments like multi-level marketing and a pyramid structure have been floated.”
The official stance of the Indian government is somewhat different than Somaiya’s. Instead of directly opposing it, the Interdisciplinary Committee of India’s Ministry of Finance announced that it planned to provide regulation frameworks for Bitcoin users and businesses accepting it as currency. This moves it one step closer to being legal currency in India, which as a major economy, and a BRIC nation, could increase the value of bitcoin exponentially. Part of the value of Bitcoin is its inherent lack of regulation. Unlike currency issued by national governments, it may prove very difficult to enforce regulations.
Some Bitcoin organizations like Coinsecure have embraced the move though. in a recent interview Mohit Kalra, the CEO of Coinsecure stated “Finally, something positive for the industry. Authorities are now taking this technology seriously. We have been trying to get their attention for years now. I am glad it's all happening at the right time. At Coinsecure, we are seeing a massive increase in the number of users and volumes. We are positive with what will happen in these coming three months.”
What this means for Bitcoin, ultimately, remains to be seen. While Bitcoin is not the only cryptocurrency, competitors like Lytecoin and Dogecoin do not pose a serious threat to its dominance on the crypto market. Acceptance by a major government would be a very large step for bitcoin, which has already seen early investors become millionaires somewhat rapidly. Even with regulation, it is likely to still be widely used in black market transactions and among the government weary.
If India does recognize it as currency, a push among India’s trading partners to recognize it as well may emerge. Bitcoin makes the US Treasury very wary and its implications in the U.S are still not clear. Japan, however, is already seeing the mainstream adoption of Bitcoin, and it may prove to be the bellwether for how other countries will integrate it. China is currently the largest user of bitcoin, although 2017 has seen the trade of bitcoin drastically decrease in the country due to regulation crackdowns. China has attempted to limit speculation and impose a fee as well as impose a time limit on withdrawals.
The age of cryptocurrency may be emerging at a time when the U.S dollar, though still powerful, is no longer the only player in town. As different economies develop their own ways of treating bitcoin, it will be interesting to see how Bitcoin stabilizes. When Bitcoin first came out, many financial experts were reasonably skeptical, however, it has quickly become an important topic in the security and financial world. Whatever the fate of bitcoin, the usefulness of blockchain technology, the foundation of bitcoin trades, has been well proven. It is likely that it will become an integral part of the future of financial security.
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