The fate of Indias cryptocurrency ecosystem has been in limbo for a while.
In April 2018, the countrys central bank cut off the communitys ties with the financial system by barring banks from dealing with crypto exchanges. In July this year, an inter-ministerial panel, set up to study bitcoins, led by the top bureaucrat Subhash Chandra Garg, recommended imprisonment for those who even hold cryptocoins.
Yet, a steering committee report by the finance ministry, released in September, recommended a softer approach, citing the importance of blockchain technology, which powers cryptocurrencies, to fintech.
The uncertainty arising from the lack of a legal framework for the sector has taken its toll. It is important to take a fresh look at bitcoin, and see it not just as a cryptocurrency, but also a computer network and a technology protocol.
As crypto investor Meltem Demirors recently argued before the US Congress, in a hearing on Facebooks Libra, bitcoin is a store of valuea digital gold of sorts. Despite its volatility, it is being used as a medium of exchange in places such as Venezuela, Argentina, and Zimbabwe.
Its true nature, though, goes beyond that.
Bitcoin is an open source technology protocol, not controlled by a single entity. In that sense, it resembles some of the more enduring vignettes of our times, such as Wikipedia or, arguably, the Linux operating system.
Cryptocurrencies can also be thought of as a network formed by computers running this open source code. This networks computing power is 72 million TH/s (trillion hashes per second). To put that in perspective, the computing power of Googles 10 million servers would be less than 1% of this.
It is their brute computing power that makes bitcoins uncensorable, inviolable, and ultimately, valuable.
Given these three ways to interpret bitcoins, the pertinent question is: what exactly should Indias regulators be regulating?
Apart from some anodyne lip service to blockchain technology, are policymakers trying to clearly parse out the distinction between the currency, the technology, and the network?
The Garg panels document seemed to be exclusively concerned with bitcoin as a cryptocurrency, and its destabilising effect on monetary policy. To be sure, these are valid concerns, and there are no easy, near-term answers.
Yet, the Indian government would do well to keep in mind the other two perspectives on bitcoin, which has inspired many to invest in cryptocoins.
In the period between the first quarter of 2017 and the second quarter of 2019, venture capital funds worth over $6.2 billion was poured into over 400 companies in this space, most of them in the US.
The top 10 unicorns in this space, led by Binance and Coinbase, are collectively worth around $50 billion, and companies built on top of the bitcoin protocol collectively employ hundreds of thousands of the sharpest business and technology minds globally.
Large corporations such as Facebook, Google, JP Morgan and Goldman Sachs are investing heavily in research and developmental efforts in this space. Institutions such as MIT, Stanford, and Berkeley are also emerging as leading centers of bitcoin research.
The important thing is, these efforts are not just focused on bitcoin, the cryptocurrency. They are looking at making the bitcoin network more scalable and more reliable so that people can send money to each other faster, corporations can settle international transactions more efficiently, participants in a supply chain can collaborate to make it more efficient, and some of the most disenfranchised people in the world can access financial services in a safe, secure, and convenient manner.
The current stifling of crypto enthusiasts in India will only hasten the exodus of some of the sharpest minds to global centers like Singapore, San Francisco, and Berlincities where they are likely to be welcomed with open arms, funding, and a friendly regulatory framework.
Indias Garg panel had also recommended that India must consider introducing an official virtual currency, the Digital Rupee, to replace private cryptocurrencies such as bitcoin.
This is an impractical idea.
For one, there is the infrastructure hurdle. Some entity (usually from the private sector) needs to invest heavily to build out the payment gateways and the user and exchange interfaces that will be needed to drive adoption of a crypto rupee.
The public sector has limited resources to develop virtual currencies.
The public sector has limited resources to develop or manage projects at this scale. Most Indian governmental websites still use the older, insecure, HTTP protocol without the SSL encryption. A wallet to store the proposed crypto rupee, for instance, would be considered highly unsafe, and find little traction.
Designing and developing critical components and building blocks like these is typically best left to motivated, young, geeky engineers congregating in hacker houses in Powai and Palo Alto, than to an army of for-rent consultants hired by the governments IT department through archaic tendering processes.
Some have termed cryptocurrencies as the Wild West of the financial world. Terrorists, pornographers, and money launderers can misuse it.
However, living in fear is to lose the battle to the neo-luddites and the rentiers reluctant to change the status quo. Given that bitcoin is here to stay globally, we might as well consider a progressive approach to a sector that is nascent, evolving rapidly and has transformational potential.
We welcome your comments at firstname.lastname@example.org.
Read more from the original source:
India must note that bitcoin is much more than a cryptocurrency - Quartz India
- U.S. Authorities Arrest Virgil Griffith For Teaching Cryptocurrency And Blockchain - Forbes - November 30th, 2019
- Nearly $50 Million of Ether Swiped From South Korean Cryptocurrency Exchange - The Wall Street Journal - November 30th, 2019
- What Hides Behind South Korean Cryptocurrency Regulation Policy? - The Diplomat - November 30th, 2019
- Thailand: Cryptocurrency Law Will Change in 2020 to Stay Competitive - Cointelegraph - November 30th, 2019
- The Cryptocurrency Market Update: Bitcoin back on recovery track, Ripple and Ethereum follow the lead - FXStreet - November 30th, 2019
- CipherTrace Q3 2019 Cryptocurrency AML Report: 2/3 of the Top 120 - AiThority - November 30th, 2019
- XRP and Ripple Name-Dropped on BBC Segment on Cryptocurrency - Ethereum World News - November 30th, 2019
- Cryptocurrency Crime Spikes This Year and SMBs are Paying the Price - Commercial Integrator - November 30th, 2019
- This Cryptocurrency Is Up 11310% in a Week. Legit Scam or Just Legit? - CCN.com - November 30th, 2019
- Akon has started building Akon City in Senegal with focus on cryptocurrency and renewable energy - Evening Standard - November 30th, 2019
- $150 Billion Cryptocurrency Boom Is Here Buy This ETF to Profit - Banyan Hill Publishing - November 30th, 2019
- Crypto Tidbits: RBC May Embrace Bitcoin, China Bashes Cryptocurrency, Ethereum DeFi Booming - newsBTC - November 17th, 2019
- Is a Cryptocurrency Derivatives Boom On Its Way? - Yahoo Finance - November 17th, 2019
- 2 men arrested in elaborate plot to steal $550K in cryptocurrency by hacking social media accounts - USA TODAY - November 17th, 2019
- This cryptocurrencys price just pumped 7,000%, but why? - Decrypt - November 17th, 2019
- The cryptocurrency market update: Bitcoin and major altcoins pass the time in ranges - FXStreet - November 17th, 2019
- Crypto-corruption In 2018, a major Russian cryptocurrency exchange lost $450 million in Bitcoin. Now, the exchange's founder is saying he transferred... - November 17th, 2019
- Big Canadian bank rumored to offer cryptocurrency accounts, Bitcoin trading - The Next Web - November 17th, 2019
- Switzerland gets another Bitcoin bank that holds cryptocurrency for customers - The Next Web - November 17th, 2019
- Banning Cryptocurrency Is Not On Indian Parliaments Winter Session Agenda - Inc42 Media - November 17th, 2019
- What Could Trigger the Next Cryptocurrency Alt Season? - Dash News - November 17th, 2019
- U.S. cant let criminals get the upper hand by using Chinas coming cryptocurrency - MarketWatch - November 17th, 2019
- China planning to reward its soldiers with cryptocurrency - FXStreet - November 17th, 2019
- Creativity and Value Will Win the Cryptocurrency Exchange Wars - newsBTC - November 17th, 2019
- Heres why the UK should launch its own cryptocurrency - Telegraph.co.uk - November 17th, 2019
- Cryptocurrency Exchange Bankruptcies Are the Failed ICOs of 2019 - BeInCrypto - November 17th, 2019
- Beware of cryptocurrency gurus like Dr Ruja and her OneCoin cult - Jim Duffy - The Scotsman - November 17th, 2019
- China to reward troops with cryptocurrency bonuses - Express - November 17th, 2019
- The cryptocurrency market update: Bitcoin and major altcoins are vulnerable to further losses - FXStreet - November 17th, 2019
- Helium is building a peer-to-peer internet-of-things network - Fast Company - November 17th, 2019
- Coinbase Announces its Upcoming Cryptocurrency IRA - The Merkle Hash - November 17th, 2019
- Three Classic Coins That Attempt To Preserve Existing Cryptocurrency Features - Bitrates - November 17th, 2019
- Cryptocurrency tracking improves -- but how? - FCW.com - November 9th, 2019
- Senator Romney Considers Action As A Nation On Cryptocurrency Threat To Homeland Security - Forbes - November 9th, 2019
- Why Is the Stellar Lumen Cryptocurrency Up 18% Today? - Motley Fool - November 9th, 2019
- Cryptocurrency This Week: Facebooks Marcus Terms Bitcoin Not A Currency; Regulation A Must, ... - Inc42 Media - November 9th, 2019
- Vancouver-based cryptocurrency exchange latest to shutter with millions owing to clients - Vancouver Sun - November 9th, 2019
- Governments race to beat Facebook's cryptocurrency, libra, at its own game: Don Pittis - CBC.ca - November 9th, 2019
- Cryptocurrency for Africa: Akon Reveals When He's Going to Launch His Own Coin - U.Today - November 9th, 2019
- Swell the News? XRP Drops 5% as Ripples Flagship Event Kicks Off - Cointelegraph - November 9th, 2019
- Why Are Cryptocurrencies Becoming a Mainstay of International Business Platforms? - CryptoNewsZ - November 9th, 2019
- Startup Targets Cryptocurrency Crime - But Will The Big Banks Come On Board? - Forbes - October 24th, 2019
- Major Bitcoin Miner Warns The Cryptocurrency Needs Better Privacy - Forbes - October 24th, 2019
- Why Cryptocurrency is in The Spotlight For More Central Banks - newsBTC - October 24th, 2019
- Cryptocurrency Mining Hardware Market 2019-2023 | Evolving Opportunities with Advanced Micro Devices, Inc and Baikal Miner | Technavio - Business Wire - October 24th, 2019
- Bank of Canada Warms To National Cryptocurrency, Will it Compete Against Bitcoin? - newsBTC - October 24th, 2019
- Facebook's Cryptocurrency Libra Could Threaten Alipay and WeChat Pay, Tencent Says - CryptoGlobe - October 24th, 2019
- Are Smart Cities The Pathway To Blockchain And Cryptocurrency Adoption? - Forbes - October 24th, 2019
- Where US Regulators Stand on Cryptocurrency - Bitcoin News - October 24th, 2019
- Europol: Bitcoin is the principal cryptocurrency used in the dark web - FXStreet - October 17th, 2019
- SEC puts a stop to Telegram's cryptocurrency plans in the US - Engadget - October 17th, 2019
- Alert: IRS Releases Long-Awaited Guidance on Taxation of Cryptocurrency Transactions - JD Supra - October 17th, 2019
- Chinas Global Cryptocurrency May Be on the Horizon - ETF Trends - October 17th, 2019
- As Facebook's libra faces headwinds, China is racing to launch its own global cryptocurrency - CNBC - October 16th, 2019
- Mastering Emotions and Managing Risk in Cryptocurrency Trading - Coindesk - October 16th, 2019
- Telegram might be forced to put its global cryptocurrency plans on ice - MIT Technology Review - October 16th, 2019
- Bitcoin Will Break Out Again in November, Suggests Cryptocurrency Trader - BeInCrypto - October 16th, 2019
- Theres A New Question On Your 1040 As IRS Gets Serious About Cryptocurrency - Forbes - October 16th, 2019
- An overview of Facebooks cryptocurrency supporters whos in and whos out - The Next Web - October 16th, 2019
- Cryptocurrency market update: Bulls swinging into action, Bitcoin, Ripple and Ethereum in the green - FXStreet - October 16th, 2019
- Another partner abandons Facebooks cryptocurrency - Marketplace.org - October 16th, 2019
- The New Guidance on Cryptocurrency - Accountingweb.com - October 16th, 2019
- The issuer of a star cryptocurrency is being sued for $1.4trn - The Economist - October 16th, 2019
- Casbaneiro is a threat to cryptocurrency in Latin America - Yahoo Finance - October 16th, 2019
- CipherTrace report: 87% of cryptocurrency trading is now traceable - FXStreet - October 16th, 2019
- Facebooks Blockchain-Based Cryptocurrency Libra: Everything You Need To Know - Forbes - October 8th, 2019
- Cryptocurrency: What to know about digital money - Fox Business - October 8th, 2019
- The Best Way to Play Bitcoin and the Cryptocurrency Market - The Motley Fool - October 8th, 2019
- 'We're closer than we've ever been' to bitcoin ETF approval, says Bitwise head of research - CNBC - October 8th, 2019
- The World's View of Cryptocurrency and Blockchain Is Rapidly Changing - Times of India - October 8th, 2019
- Have at It, Libra: Theres No Apple Cryptocurrency on the Horizon - Blockonomi - October 8th, 2019
- Cryptocurrency firm slapped with cease-and-desist after impersonating registered financial adviser - The Next Web - October 8th, 2019
- International exchanges campaign against UK cryptocurrency derivatives ban - The Next Web - October 8th, 2019
- 7 Top Cryptocurrency Traders to Follow on Twitter - BeInCrypto - October 8th, 2019
- Cryptocurrency buying and selling and how it works - What Investment - October 8th, 2019
- How Adoption Of Cryptocurrency Stablecoins Can Open Access To The 1.7 Billion Unbanked and Poor - Forbes - October 8th, 2019
- This Cryptocurrency Just Surpassed Bitcoin In One Key Adoption Metric - Forbes - October 2nd, 2019
- Will Facebook's Libra Overtake Bitcoin Cryptocurrency And The Ethereum Blockchain? How Will It Work? - Forbes - October 2nd, 2019
- Bitcoin has a massive carbon footprint. This clever new cryptocurrency doesnt - Digital Trends - October 2nd, 2019
- The Potential and Reality of Cryptocurrency in Video Gaming - Finextra - October 2nd, 2019