Bitcoin blues: Should the government block cryptocurrency, or regulate it?

Cryptocurrency has been the recent glitch which is haunting the world’s exchequers. Governments of most of the countries want to put a restraint on it , but the punters have been making a deal of great fortunes in its trade.

Bitcoins is termed as an quasi-currency much to the dismay of its regulators. It has been described as anything except real money because neither can it be touched nor it is known to human eyes. It is like internet unseen to all except for its transaction purposes. Paul Ford, a geek writing for Bloomberg, saw a bubble in the Bitcoin. It stated that –“Bitcoin is at some levels just like a set of rules, defined by software, that has become one of the weirdest games of the world. Bitcoins will crash because of its course just like all the bubbles in world do.”

Bitcoins were created mysteriously in 2009 by mysterious figure who went by the name Satoshi Nakamoto. And the person doesn’t exist in physical form, there is no central bank and records of each transaction are stored in blocked chains. An estimated of Rs 10,000 crore was traded in India in December when the Bitcoin had peaked at $20,000 before crashing to $6,000 a month later though it is now clawing back amid what was believed that there was a strong Korean demand for them. Bitcoins can only be created through mining as for each Bitcoin transaction, a computer owned by a Bitcoin miner has to solve the mathematical problem. In this way the miner also receives a small fraction of the Bitcoin as a reward.

According to Ajeet Khurana, head, Blockchain and Cryptocurrency Committee (BACC) of India-“The currency is not a legal tender in India but the government has also not called it illegal either.” BACC is a part of the internet and Mobile Association of India. In December, India had set up a panel to study the impact of cryptocurrencies in the country also to make recommendation on its regulation in the country.

Some reviews presented by important people in the mobile industry state as follows:
“I’m bullish on cryptocurrency. The government has to take a clear stand — to ban or not. Before the end of 2018, we should see some concrete decisions on cryptocurrency in India,” says Bipin Preet Singh, founder, Mobikwik. The mobile wallet company is considering cryptocurrency, as is reportedly RelianceJio.

Guru Malladi, partner, EY Advisory Services, says, “For any technology change, the impact is overestimated in the short term and underestimated in the long term. Reaction to cryptocurrency is no different. Bitcoin is no longer for governments to ignore.” There are, he says, “at least 5-6 million investors in India”.

“There’s a grey area in regulation. There’s a need for investor protection, research and education. Digital currencies will evolve,” says Vivek Belgavi, leader, fintech, PwC.

Bitcoin, are one of the 1,500-odd cryptocurrencies, which is the most traded. Others include Ripple, LiteCoin, Etherium and Dash. Cryptocurrencies cannot be regulated because it is virtual and its does not share the nature of normal currency or fiat currency.

Bit By Bit

Despite many measures have been taken by the world, bit by bit: in January, KFC outlets in Canada began a limited period offer to accept Bitcoin for up to Canadian $20. In South Korea, which have overturned an early ban on Bitcoin saw that 30-40% of trade premium over the markets, with some analysts referring to this as “kimchi premium” Japan’s largest electronic retailer Yamada Denki is accepting Bitcoin payments. Russia’s largest state-owned bank, Sberbank, plans to bypass regulations at home by allowing its Swiss subsidiary to trade in cryptocurrency.

Even in India the government is going through a thorough study of the functioning of the bitcoins and is now kore positive about the underlying technology. Finance minister Arun Jaitley said that in the Budget of 2018 India would explore the use of blockchain to usher the digital economy. Blockchain is basically a decentralised and record of all transaction in real time unlike the central command operations of core banking systems. The Nirav Modi scam as believed by some experts that it could have been nibbled in the blockchains. The blockchains eliminate all the risk of holding all data at one place due to their functioning. Already ICIC BANK and State Bank of India are planning on coming together and creating a blockchain of its own which is a more secure infrastructure for digital records, assets and bank ATM chains said Khurrana of BACC.

Blockchains: Bitcoin and cryptocurrencies are stored in huge public ledgers called blockchians. It is a continuously growing list of records, called blocks, linked and secured using cryptography.