Bitcoin advocate Andreas Antonopoulos believes that if India plans to develop its own cryptocurrency backed by centralized identity, it would be “incredibly dangerous”. He echoes concerns raised by many in the crypto community regarding governments issuing their own virtual currencies, since this would defeat a defining feature of digital assets – decentralization
Antonopoulos, in his tweet, said that the country had demonstrated dangerous authoritarianism with respect to currency. He was likely referring to India’s demonetization policy in 2016, which was the start of the government’s plans to manage the country’s cash supply.
This is incredibly dangerous: Centralized digital cash, backed by centralized identity, in a country that has demonstrated dangerous authoritarianism when it comes to currency. $1.3bn people under totalitarian financial control = democracy dies. https://t.co/jfQHZdX22N
— Andreas M. Antonopoulos (@aantonop) August 30, 2018
Some crypto enthusiasts believe that the possible CBDC will be tied to the government identity system Aadhaar. However, it is important to not that the central bank did not mention this aspect in its annual report, where it first disclosed its plans.
Aadhaar is a 12-digit unique identity number for residents of India, based on biometric and demographic data.
The Reserve Bank of India (RBI), in its latest annual report, shed light on a possible central bank digital currency (CBDC) to help trim its large annual bill for printing physical rupee notes.
The report added that an inter-departmental team has been set up by the RBI to explore the possibility of introducing the digital currency.
“Rapid changes in the landscape of the payments industry, along with factors such as emergence of private digital tokens and the rising costs of managing fiat paper/metallic money, have led central banks around the world to explore the option of introducing fiat digital currencies,” the report stated.
Musings aside, this is not the first time that a CBDC is facing heat from the crypto community.
Another CBDC raises serious concernse
Venezuela recently introduced its own cryptocurrency Petro, which is backed by oil barrels produced by the state-run oil giant PDVSA. Ironically, PDVSA is battling a debt burden worth about $45 billion and many doubt the feasibility of backing Petro to its oil barrels.
A major concern regarding Petro is that only the government can produce and control it. If the government had pegged the virtual currency to Bitcoin [BTC], it would’ve been more appealing due to its decentralisation.
The cryptocurrency community has long advocated for decentralization, meaning no central authority or bank has any control over digital assets.
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