Cryptocurrency: Is Banning it Right?

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Cryptocurrency Intro

A cryptocurrency (or “crypto”) is a financial instrument or virtual currency that may be used to purchase products, but it is secured by an online database and powerful cybersecurity. The majority of interest in these uncontrolled economies is for-profit investing, with investors driving values high at times.

Cryptocurrency is a type of online transaction that may be used to buy and sell products and services. Many firms have devised their own currencies, dubbed tokens, that can be swapped for the items and/or services they provide. They’re similar to arcade coins or gambling cards. To use the good or service, you’ll need to convert actual money for cryptocurrency.

The technology that allows cryptocurrencies to function is known as the blockchain. Blockchain is a decentralized system that allows several computers to handle and record transactions. Part of the appeal of this technology is its security.

According to CoinMarketCap.com, a market analysis site, around 15,000 different cryptocurrencies are publicly listed. Cryptocurrencies are still on the rise. On Nov. 29, 2021, the aggregate quantity of all cryptocurrencies was a little over $2.5 trillion, down from an all-time high of $2.9 trillion just weeks before. The overall market value of bitcoins, the most widely used digital money, was estimated to be around $1.1 trillion.

Cryptocurrency Mindset

In 2021, cryptocurrency as a long payback prospect still appears to be viable. As the year draws to a close, the massive market values, the introduction of new and legitimate businesses into the crypto-space, and, most significantly, the real-world potential based on the fundamental distributed ledger technology have emerged as major growth drivers.

But are these the only reasons for cryptocurrency’s global acceptance? Certainly not by a huge margin. The financial benefits of cryptocurrency are certainly important, but they are only the tip of the iceberg. There must be other explanations for this remarkable growth in crypto acceptability, with investors coming in to boost prominent crypto exchange platforms like Coin Switch Kuber.

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For those who believe in money’s objective qualities, bitcoin offers a promising alternative. Aside from price fluctuations, the most prominent cryptocurrencies, such as Ethereum and Bitcoin, have demonstrated enormous worth, encouraging investors.

 

The psychology of Bitcoin explains why people are so enthralled with it:

  • Bitcoin becomes an extension of your persona.

In December, millionaire Mark Cuban told Forbes that Bitcoin is “more religion than a solution to any problem.” Bitcoin enthusiasts have their lingo, which includes abbreviations and terms ranging from “HODL” to “whale,” and (pre-Covid) cryptocurrency events drew tens of thousands of people.

  • It is aided by social media

Social media feeds into bitcoin’s popularity, from celebrities who invest in bitcoin to a vibrant bitcoin community on various social media platforms. According to Utpal Dholakia, a professor in the department of marketing at Rice University who researches consumer financial decision-making, these social networks can also influence behavior. He tells CNBC Make It that research shows that when people talk about their investments in online social spaces, they become more risk-seeking in the forms of investments they make.

 

Cryptocurrency Indian User base

The cryptocurrency market continues to be volatile. There have been some significant drops. For the better part of this year, there have been discussions in India about a possible lawsuit on cryptocurrencies. Despite this, Indians continue to invest in prominent cryptocurrencies such as Bitcoin, Ethereum, and others. According to BrokerChooser, a broker discovery and comparison platform, the country already has more than 10 crore cryptocurrency owners. India now has a total of 10.07 crore cryptocurrency owners, putting it ahead of any other country on the planet.

What’s remarkable is the gap between India and the United States, which is narrowing by the second. The United States has 2.74 million cryptocurrency owners, followed by Russia (1.74 million) and Nigeria (1.74 million) (1.30 crore). This has to do with the population as well. Despite having a large crypto community, India ranks fifth in terms of crypto ownership as a percentage of the entire population. Crypto coins are owned by over 7.30 percent of India’s population.

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The high number of Indians investing in cryptocurrencies is surprising, especially given the legal uncertainties surrounding their legality. A bill outlawing all private sectors owned cryptocurrencies has been suggested by the government ahead of this year’s Union Budget. Nevertheless, the law was not launched, and a panel was constituted to provide recommendations. Ever since the government’s attitude on cryptocurrency has changed, and a total ban is unlikely.

The growth of famous crypto coins like Bitcoin has coincided with an increase in crypto owners. Since the beginning of the year, the cryptocurrency has returned 50%. Others, like Ripple, Ethereum, and Dogecoin, have also performed well.

 

Cryptocurrency Ban – Plan by GOI

In the winter session of Parliament, the government plans to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021. According to the official document published by the government, the bill intends to ban all private cryptocurrencies with “a few exceptions.” These exceptions are not clarified in the initial document. It claims that the Reserve Bank of India has decided to promote the official digital currency that would be produced. The RBI has expressed interest in launching its cryptocurrency but has yet to do so.

According to a parliamentary agenda for the winter session, India wants to introduce, examine, and implement a bill prohibiting “all private cryptocurrencies” in the country. The Indian government announced Tuesday evening that the proposed law will allow “some exclusions” to encourage cryptocurrency’s core technology and applications. According to the legislative agenda, the law, titled Cryptocurrency and Regulation of Official Digital Currency Bill 2021, will also create a “facilitative framework” for the formation of the country’s official digital currency. It’s worth noting that the bill’s description is identical to that of the previous parliamentary session earlier this year, according to New Delhi. For several quarters, Indian legislators have been debating the risks of cryptocurrency trading and experimenting with a central government-backed digital currency.

In recent months, India’s Prime Minister Narendra Modi, as well as various other lawmakers and business leaders, have convened several meetings to examine the cryptocurrency market and recent developments. According to a source familiar with the situation, at least one top Indian minister recently spoke with a famous money manager and stated that, following China’s move to restrict cryptocurrency trade and mining, India is likely to develop a law that will foster innovation.

Meanwhile, many MPs have expressed worries over the sort of advertisements provided by cryptocurrency exchanges. According to TechCrunch, a consensus was made at that conference that these “irresponsible commercials,” which promised people huge rewards if they invested in cryptocurrency, were misleading adolescents in the country and needed to be banned.

To provide a framework that will facilitate the formation of the Reserve Bank of India’s official digital currency. The Bill also aims to ban all private cryptocurrencies in India, although it makes exceptions to encourage the underlying technology of cryptocurrency and its applications, according to an official document obtained by India Today Tech. The administration plans to introduce 26 bills in the forthcoming winter session, including the Crypto bill.

Last year, the government planned to outlaw all cryptocurrencies, and a measure was even planned to be introduced at this year’s Budget. The bill was eventually dropped, and a committee was formed to further debate the issue with stakeholders. Since then, it has hinted that cryptocurrency and the Indian rupee can coexist, but that they may be regulated. The bill it intends to introduce says differently.

The Reserve Bank of India, on the other hand, has been dismissive of Cryptocurrencies like bitcoin. Just some few days ago, RBI governor Shaktikanta Das emphasized the risks associated with cryptocurrencies, calling them a menace to any financial system until they are regulated. He claimed that cryptocurrencies pose a severe threat to the country’s macroeconomic and financial stability and that the number of people trading on them, as well as their stated valuation, are both inflated.

It’s worth noting that India is one of the world’s largest cryptocurrency markets. According to recent research, India has over 10 crore cryptocurrency owners, while local crypto exchange businesses claim that approximately 2 crore Indians have ventured into cryptocurrencies.

 

Is Banning Crypto Right?

India’s government has a complicated relationship with money, as seen by its botched attempt five years ago to stamp out selfish evil gains and unlawful behavior with a note ban. Now, with the possibility of a ban on private cryptocurrencies looming, may we be in for another upheaval that falls short of its goals? Its Cryptocurrency and Supervision of Government Virtual Currencies Bill has been tabled for enactment in Parliament this winter session on Tuesday. Its goal is to “prohibit any private cryptocurrencies,” but it will make exceptions “to encourage the underlying technology,” as stated. A framework for the Reserve Bank of India (RBI) to develop a digital currency will also be included. While its final shape may bring sighs of relief to India’s crypto sphere, which has a lot on the line, it appears that the government is preparing to crack down on blockchain-based tokens for the time being.

Money is power, and cryptocurrencies have gained allocative efficiency as a result of their global success. Demonetization, remember, was the catalyst for Bitcoin’s rise in popularity, with stories of modest fortunes being stored away for exclusive access via secret codes. Although purchases made on open-source software can be tracked, the internet’s global reach allows owners to utilize or cash their chips anonymously. Because tokens issued outside of our jurisdiction cannot be destroyed, prohibiting them is likely to disrupt legitimate crypto enterprises but will ultimately be futile. Furthermore, if they leave the formal sector, we may be left in the dark about their impact on numerous economic policy inputs. While allowing ‘exceptions’ to enable blockchain-based wealth generation sounds like a good idea, it may be challenging to get technical distinctions right so that we can watch the market without being too discretionary.

 

Alternatives of Cryptocurrency

Developers may readily build on Bitcoin’s source code to create their unique alternatives cryptos, or ‘altcoins,’ because the source code is open source. Many popular cryptocurrencies have their origins in major cryptocurrencies. Dogecoin, for example, was a derivative of Litecoin, which was a precursor to Bitcoin.

  • Bitcoin Cash and Litecoin are similar to Bitcoin in function, but their rate of adoption is different. Litecoin was created to make transactions faster, and it has a different supply limit than Bitcoin. Bitcoin Cash is a fork of Bitcoin that has eight times the scalability of the original. It was a Bitcoin hard split in which one party tried to create a new cryptocurrency to address scalability difficulties.
  • Ripple and Stellar, for example, differ from the others in that they are intended as transactional platforms. Often these virtual currencies are designed to be kept as measures of value, while Ripple and Stellar were founded to use their tokens to digitalize conventional currency (renminbi) transactions. By employing blockchain technology, both digital currencies provide speedier payment alternatives. Ripple is designed for banks, while stellar is designed for individuals who trade foreign currencies. Because both have centralized control over how transactions are executed, it’s difficult to term them genuine ‘cryptocurrencies.’
  • The rest of the top ten cryptocurrencies are considerably more than just a store of wealth or a merchant services company. Users can build on top of Ethereum, Cardano, EOS, IOTA, and NEO among other cryptocurrencies. They were created to be constructed on top of rather than only as a currency. Ethereum was the first cryptocurrency created to make it simple to build apps on top of a blockchain. The others listed above effectively let people perform the same thing, although they differ from Ethereum in keyways.
  • Shiba Inu is the last but not the least on the list. With an 800 percent price increase in the last month, this catchphrase-based cryptocurrency has surpassed its long-standing rival dogecoin. SHIB’s currency performance in the market has outpaced several leading cryptocurrencies, even though we don’t know about its swings because it was only created in 2020. Furthermore, the Shiba Inu has lately reached the top ten list and is currently ranked ninth.
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