India is making news with some rumors that it might ban private cryptocurrency such as Bitcoin or Ethereum.
This is a country that has a mixed relationship with crypto. The government, similar to China, has been "on again, off again" with crypto. There are times when it embraces it whereas, others, it will reject it.
Actually, this seems to be the situation many countries find themselves in. Russia took a similar approach. When it was cracking down on the Russian people, the government was against crypto. However, due to the sanctions levied by the United States, it reversed course by turning to crypto. Of course, this was for the government.
What this shows is the danger that crypto poses to the establishment. The inability to control means that tyrannical entities are going to have a difficult time. Simply, this is the makeup of the world. Someone is always seeking to control others.
Governments excel at this.
Hence the quandary that India finds itself in.
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Is India Banning Crypto?
The rumor of this action is unfounded. Like most things online, there is a basis that was blown out of proportion.
India has had a complicated relationship with cryptocurrencies over the years. This relationship was in the spotlight recently after a local media report claimed that key regulators and institutions in the country are in favour of banning “private cryptos” like Bitcoin and Ethereum. According to Hindustan Times, these regulators believe that any advantages offered by the likes of the aforementioned “private cryptos” can be leveraged by the use of CBDCs.
Here is the starting point.
We see key regulators and institutions in favor of a banning. This is not without precedent. We saw the same thing in the United States.
Yet, in spite of that, crypto is still growing.
The likes of Elizabeth Warren feel crypto should be banned. Gary Gensler has done all he can to hand the industry over to Wall Street. For its part, people like Jamie Dimon attacked Bitcoin for years yet we have Larry Fink, CEO of Blackrock, going all in.
Of course, is any of this even true?
Here, it’s worth noting that the aforementioned report made no mention of the officials in question or the institutions that share this point of view. Hence, it’s difficult to ascertain how strongly the government itself feels about this proposition.
Perhaps this is nothing more than a clickbait article that gained some traction.
The Impotency of Government
What we do know is the government is looking at discussing the matter. Naturally, what is a government conversation about crypto without central bank digital currencies× (CBDC)?
“CBDCs can do whatever cryptos do. In fact, CBDCs have more benefits than cryptos, minus the risks associated with private cryptocurrencies.”
This is where we see these entities defaulting to. To politicians (and bureaucrats), this seems like a sensible compromise. Crypto is the enemy because it cannot be controlled so why not create a token that is within their power?
That is the mindset of these people.
Where this becomes a challenge is in understanding the basis of money. Many people believe money comes from government. It does not. The determining factor of money are merchants. It exists to facilitate trade. This is not dictated by governments, especially in a digital age where we operate on a global scale.
Many are familiar with Gresham's Law. This is the idea that "bad money drives good money out". It dates back to the days of commodity based currency. Actually, over the years, it was tied to legal tender status.
The point here is this is a useless concept. With crypto, those involved in trade will utilize what works best for them. Under most conditions, this is not going to be a CBDC. In fact, for this purpose, the winner might be US Dollar denominated stablecoins.
Once again, we see the impotency of government.
The final point is we are in a digital world. We are seeing massive changes occurring with the Internet. Most of the stack is being reworked, with AI playing a major role. This is only going to make life even more difficult for governments.
To illustrate the point, look at the mess governments are in with deepfakes and trying to sift through that. It is only one piece of a much larger technological puzzle that is emerging.
So India might want to ban crypto? Good luck with that. Even if the country does step in that direction, it is only ensuring that is falls further behind.
We saw this with the Internet. The West has a distinct advantage since it developed the Internet and was the first to embrace it on a wide scale. This put other countries behind.
Will we see the same with crypto? It is likely that history will rhyme.
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LoL @ calling Bitcoin a "private crypto".
Yeah the neutral open borderless permissionless tech is totally "private"
That is some fantastic double-speak right there.
At the end of the day India has been grappling with this for almost a decade.
It's very clear they've already lost the war, they just need to lose more battles to make it official.
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The indecision of some countries is hypocritical. Posing as a saint but they are real sinners.
A country that does not appreciate crypto is a non-existent to me.