In India, 2017 was marked by the buzz created around the crypto-currencies which grew by leaps and bounds. The craze of chasing the crypto-currencies was so high that the prices of the first ever crypto currency, Bitcoin, rose by almost 1500% in a year. The event of “price rise” was so blindly hyped that the crypto “currencies” were merely left with status of crypto- “Stocks”, thereby losing its original purpose of being a digital currency!!
The basic purpose of any crypto currency is to provide a means to transact without the interference of any intermediary (like banks). This works on the decentralised distributed ledger system called as blockchain. The decentralised crypto graphed database system provides the highest level of security which seems to be the need of time as the current security of banking system is not so encouraging. Apart from this, features like immediate settlement, lower fees, protection from identity theft and fraud make a strong case for cryptos.
There is no doubt that the crypto currencies will be the major means of transacting in the future, but accepting the cryptos in the current form will be very difficult for the government as well as for the common man. The main problem today is the volatility of the present crypto-currencies. Volatility may be accepted by the investors but any common person who wants the crypto-currency as a means to transact doesn’t wants such volatile thing in his pocket. Next hurdle for the existing crypto-currencies is that they are not backed by any sovereign country. As expected, Indian finance ministry also termed it as nothing more than a Ponzi scheme.
The fact is that, our government cannot regularise the existing cryptocurrency. Here we must understand the difference between “legalised” and “regularised”. Government may declare it as legal or illegal but regularising them is not under government’s control. The crypto-currencies like Bitcoin are fully controlled by the users and there is no scope for any external entity regularising them. So, without being able to regularise the existing crypto-currency, the government will not give it a legal status of a currency. So the existing crypto currencies are out of question of being having any future in India as a currency.
In order to use crypto-currenncy as a legal tender RBI will have to issue its own crypto-currency. As RBI will be at one of the nodes of blockchain, it will be in position to impose some norms on the participants and thus RBI can regularise the currency. Surely this won't be the purest form of the blockchain system, but with this modified blockchain we can harness the benefits of the technology but there won't be complete anonymity of the participants. Today's blockchain technology is in the nascent stage, but as the technology will develope it will be eaiser for the common people (participants of blockchain) to join the blockchain.
With Digital India mission lined up, it won't be surprising if RBI plans to issue its own crypto-currenncy, which will be backed by government. This shift from paper to digital currency will surely bring drastic change in our way of doing business. As of now we can't predict the exact duration required for this change but within next 10 years digital currency will be a major part of Indian lives!