The crypto currency: a currency less revolution or just bait?

Updated: May 17


Akanksha Singh
With reference to its legality in the Indian market

Do you remember the days as per the historical records when gold and silver coins were everywhere just like the normal currency note inside your wallet? Well, we did evolve from gold transactions to holding a paper in our hand and still feel the worth of it, but it’s not about the cash that I am referring to. Even during the long gone antique days the currency was only trusted if it was government authorized. The note that you might pull out of your lavish leather wallet has been entrusted to you by the government and the monetary authority of the same. Now just ride the horse of your imagination and ask yourself a question that something with zero value a decade ago would ever be of any worth?


Well, just as imagination can take us to places and ideas can be transformed into reality the Bitcoin just reached its highest price point during this pandemic. it all started on the 31st of October 2008 when Satoshi Nakamoto published a paper were he talked about creation of a version of electronic cash that would have efficiently helped to allow payments to be made from one party to another party directly without having the need to go through a financial institution .A crypto currency basically is a digital asset that one possess over which no central bank or no financial institution have any regulation or control. Back then this version of electronic cash was just a mere idea generated in a person’s mind , but today

trading worth millions and billions are done via its crypto exchanges similar to the share exchanges that take place in the stock markets.

Economic history for understating the need of crypto


As I have mentioned above all the transactions and all the cash that we possess works on the simple concept of trust. the currency notes and coins are valued just because it is guaranteed to us by the banks and the government .After the tragic second world war America became the leading power among all the nations and all the rest nations had to attach there currency with the US dollar and the US dollar was aligned and guaranteed by gold reserves , because the actual vale is withheld in gold and silver and its completely not practical to carry gold and silver around in your pockets and flash your royalty . Just to cater to the convenience of the masses the currency notes were printed and used. Not long enough but this gold standard reserve practice was ended by US President Nixon in the year 1971 where he explicitly ended the convertibility of US Dollars to gold and announced wage and price controls. This happened because of the inflation that was on rise and the gold run was seen to be looming.



After the end of this rule the central banks of the other countries were able to print their own currency but how is the above mentioned event related to the rise of crypto currency?

After reviewing the financial history we can see that these financial banks and the government are so powerful as far money or monetary policies are concerned .As soon as one deposits its money in the banks , the bank then get absolute control over the deposited money. This money is then used by them to grant loans to individuals and companies and we depositors receive interest and returns due to the same process .these interest and returns received seems explicit and feels good to your wallet but it’s no new news to us that these banks have been irresponsible as far as lending money is concerned were they have granted loans to big know industrialists without performing the required checks and then all of this turns into bad debts and NPA’s and the depositor becomes the only one to suffer . In India itself in

the last 16 months duration we have witnessed the fall of three banks in a row, the YES BANK, PMC BANK, and the LAKSHMI VILAS BANK.


It’s not only the banks whose decisions hold the impact , let’s take in account the demonetization that occurred in India in the year 2016 which made nearly 86% of the cash in the nation useless in one night .the crypto currency on the other hand takes away such massive power and control out from the hands of the government . The crypto currency is an alternative financial system that cuts out the hands of the power holders and clears the unending control witnessed by the entire monetary system.


A new hope for financial system and its working


The great recession of the year 2008 in the USA and the western European nations was a great blow to all. In a few months duration the Lehman Brothers declared themselves bankrupt and all of this resulted in the largest bankruptcy in the entire US history. Huge names that underwent recession included the Washington Mutual, General Motors the CIT Group and many more with asset worth billions were absolutely bankrupt.

This was the time that crypto currency was born, Bitcoin being the first ever crypto currency which was then followed by many other crypto currencies such as Etherum, Ripple and Litecoin. In fact the beginning of 2020 witnessed more than 2000 crypto currencies that were available on the internet.


The crypto is basically used as an investment option and very rarely as an alternate currency exchange. But the main usage of crypto is in the form of investment only and so it becomes a store of value just like gold and silver to be exact. The first ever crypto purchase is believed to be made by Laszlo Hanyecz and it was also the first time when crypto was used as a currency alternative when he ordered two large sized pizzas from Papa John’s in the year 2010. At that particular time period each Bitcoin was worth even less than a penny and was about $ 0.003 to be quite exact. The cost of those pizzas was about $30 for which Laszlo paid off 10,000 Bitcoin. Now more than a decade later the Bitcoin crypto currency is the largest

and has a worth of $19,000 per coin, so if we do the mathematics then we see that the $30 worth of the Bitcoin used by him would now be worth more than $190 million


Though , it will not be wrong if I say that crypto currencies will become an easy exchange of money even to purchase bread and butter from the grocery store next to our place , but this change will certainly need a lot of time and will not be an overnight event to occur . This is so because the negative image that is instilled into peoples mind will not weary of easily and understanding the smart block chain system in which it works becomes a bit difficult to digest by common folks . Plus the 10 minuets wait time just to make one transaction happen so that the computer can perform the complex calculation

seems to be a lot of waiting in this fast forward lifestyle that we are now accustomed to.

With all this it becomes hard for me to ignore that facts that crypto certainly makes international payments to be really fast as compared to the normal banking structure that takes days all together to complete one international transaction . We see a similar scenario as far as credit card fees is concerned as comparatively crypto has proved to be more economical and certainly this is the reason why credit card companies, banks and remittance companies were and even today stand against the crypto

currencies as it is giving a huge competition to all of them together with its business model.


Covid pandemic and crypto growth

Last year has been the most fruitful year for crypto currencies. On one side we saw several industries suffer and mutual funds struggling to survive and on the other hand the crypto currencies like Bitcoin and Ethereum has witnessed a rise of more than 120 % and has eventually doubled its value.


PayPal that is considered to be the largest digital payment company in the world opened crypto services to millions of eligible account holders in the US and introduced the feature of crypto transaction. one of the biggest enemy, JP Morgan Bank , who’s CEO said crypto to be a fraud in the year 2017 when the crypto was on its bull run has now recently claimed that its values could triple and challenge the price of gold. JP Morgan has also opened corporate accounts for very famous crypto exchanges like Coinbase and Gemini trust.

All of this certainly reflects that there is open-mindedness about crypto – currency now and people are readily opening their arms and wallets to welcome this new revolutionary financial industry.


India and its landmark judgment in accordance to crypto


In the year 2018 RBI decided to freeze out the crypto currency industry from the entire banking system and shortly a new ATM in Bengaluru’s Kemp Fort Mall became the latest attraction to show off the rift between the Indian crypto community and the banking regulatory authority. However the media being media spiced up the entire situation and stated that RBI has imposed a ban on crypto currency which eventually was a technically inaccurate term and did nothing but created more chaos and confusion and help start a negative campaigning against crypto currency.


india never imposed a ban on the crypto industry it was merely the fact that RBI blocked the banking access of the crypto ecosystem. the effect of those blocking was that public could not deal in the Indian rupees on any crypto platform , banks were seen to have giving a really tough time to the crypto platform where accounts were frozen , and even payment to the employees were difficult to be made.

This was finally challenged in the Supreme Court of India in the case of Internet and Mobile Association vs. Reserve Bank Of India on 4th march 2020.


The RBI did this considering the negatives that crypto currency brings along with it mainly being money laundering and security concerns as people operating in the dark web on internet stated accepting payments in crypto mainly Bitcoin to sell and buy weapons and drugs. All of this caused a lot of difficulties to the law enforcing agencies as these transactions were easy to conceal as it lies outside the traditional financial structure. Another issue that exists was anyone can come up with a crypto currency company and many of them end up being bogus and frauds who simply take away people’s money promising to double and triple there invested amount. Similarly Amit Bhardawaj a fraud came up with a similar scheme known as “Gain Bitcoin “and is alleged of committing fraud worth rupees 2,000 crore .He was finally under arrest in April , 2018 and now is out on bail with the case still pending in the court.


All of this negative atmosphere needed some response and that is what the RBI did by imposing a ban on crypto .This however forced the India operators to file a petition against this unjust and also get a platform to explain how the block chain technology of the crypto works to the RBI and also to the Government . They proposed the fact that all these negatives that surround the crypto portraying it to be a hub of illegal transactions is also applicable to the other assets as well. There can be a money laundering issue over property, fake notes being printed is also not a new term to come across and fraud

schemes and other money laundering issues are still prevalent. The software of stock exchange or banks is also subjected to risk and can be hacked.


In response to this the Indian platforms included a lot of safety regulations and measures such as the KYC process was made mandatory during the sign up.

The 3 Judges bench of the Supreme Court finally struck down the RBI’S ban on the crypto currency trade in the subcontinent. The order upheld the principle of equal opportunity and fairness.


Conclusion

As we are reaching a new technological advancement with each new idea born out of a genius mind it is high time we start evolving as well .the stereotypical biases and notions that we inculcate is nothing but a hindrance in the path of our own evolutionary growth.


As I have already mentioned in my above narration that though this entire electronic financial system might take time to become an alternative exchange medium but we certainly are not far from reaching that time and as far as investment is considered in my opinion it does involves risk just like all the other markets but is definitely worth a try and worth taking the risk. I say so by critically examining the entire graphic representation of growth that this particular financial structure has achieved just in decades duration.



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