Bitcoin, Blockchain & Cryptocurrency Analyst, Vikram Nikkam, who is also the Founder and CEO at Instacrypto, has seen the Indian crypto market in its ups and downs. Reflecting upon the current ban issued by India’s Central Bank (Reserve Bank of India) and the current state of the crypto market, he talked about its impact and the future of cryptocurrencies in the India.
The Reserve Bank of India (RBI) has barred banks and financial institutions from dealing with virtual currencies. How badly the decision has and is adversely affecting the Indian crypto market?
The decision of the RBI seems rash and unprecedented but in all honesty, it isn’t surprising. Centralised financial institutions will be against Bitcoin and any other de-centralised currency because then the powers that control the economies of countries will lose that control. The RBI….like all others that are pro centralised currency are going to try their best to squash all decentralised currencies. They haven’t been successful so far with their press statements and comments so this directive is their new approach to tackling the “monster” that is lurking in the shadows.
The decision has obviously affected the Indian Crypto market adversely. People that were just beginning to gain interest in crypto are taking a step back. We have to understand the mentality of the common Indian man, who automatically refrains from doing anything against the law. People that wanted to invest and trade in crypto are being forcefully restricted by their banks have decided not to invest now.
The RBI is probably under the delusion that their strategy has worked since crypto-trading in India has reduced. But Bitcoin (and most other crypto) going through a correction phase (where prices are dropping) is probably the main reason for the general public hesitating to trade in Crypto.
Considering the current scenario, do you think users are compelled to transact in cash or any other payments forms?
The massive demonitisation drive in the country in 2016 already compelled users to use less cash and rely more on online transactions. People are using their cards and payment systems like UPI, BHIM etc more than they ever used to. The Indian public has realized the advantage and efficiency of online transactions and are exploiting these options in the correct way. Those dealing in nefarious and illegal activities though will never move away from cash since hard cash i.e paper money is the most liquid and untraceable.
The government is obviously not even collecting any tax on these incomes since they are unaware of their existence.. Now with this new directive, there is a huge likelihood that Indians are going to use cash to buy and sell crypto since RBI has restricted the banks from supporting crypto users. This will be quite disastrous for the government and the Indian economy as a whole. There will be no record of where the crypto came from and no account of whom it belongs to, bringing us once again to square one. The best move for the RBI or the Indian government, will be to regulate crypto transactions and facilitate banks (and their clients) to deal in crypto in a proper legal, monitored and controlled environment.
Do you think a national cryptocurrency pegged to fiat cash could help the economy? If yes, how?
Yes!! A national cryptocurrency pegged to fiat cash will speed-up transactions just by virtue of working on the blockchain technology. This will of course make a difference in the economy since transactions and movement of money will be quicker. But we have to realise that the real reason for the slow growth of the Indian economy is the corruption in governments and financial institutions that turn a blind eye to the pilferage of hard earned money by illegal entities. The Indian government’s demonitisation in 2016 was supposed to eliminate the “black money” in the country which is a good move. While this was not completely achieved, it did however get the country more digital where people have moved to transact more using the internet.
The government first needs to set good cryptocurrency regulations and follow this up with the introduction of a national Cryptocurrency. This new nationalised cryptocurrency should have similar characteristics to Bitcoin, i.e not just being open source and de-centralised but also has a finite number of currency available. If this type of currency is then pegged to our fiat currency, the Indian economy can improve by many folds within few years. How? Well, if we have our own crypto the Indian rupee will not get devalued v/s dollars. There will therefore be no loss of purchasing power for Indians in the Global Markets. Indians will have a better exchange rate for their money which will help in travel thereby enabling Indians to explore foreign markets, invest in other countries and expand their businesses globally as well. this is bound to help the economy of our country. Indians will get a better pay for their time according to the number of hours spent working.
Recently, Ripple (XRP) tried to take over 50% of India’s finance sector by processing payments with low fees, liquidity and more secured transactions. Some regional Indian banks like YES bank and AXIS bank, and financial institutions already have the Ripple cryptocurrencies. Highlighting this scenario, what do you think is the status of Bitcoin in the Indian market and how will it be in the future?
We wonder why the Indian economy suffers. Our politicians rally around with “Make in India” slogans…yet our financial institutions and big companies decide to use and pay for International services. The creators of ripple have figured out a way of making money for themselves by placating those that are currently in power. The financial institutions of the world will not have a problem with a a cryptocurrency like ripple since it is centralised and control will still remain in the hands of those that control existing fiat currencies. The reason why some regional banks are using ripple cryptocurrencies is a pure business decision. They stand to gain by these transactions.
Bitcoin and other cryptocurriencies by virtue of being de-centralised remove control of governments and financial institutions on the economy. It will take a paradigm shift in the mentality of Indians, who should now start thinking of a truly democratic country, starting with its currency and economy. This fighting chance was given to the middle classes of the world by Satoshi Nakamoto and thereafter some others through Bitcoin and other de-centralised cryptocurrencies. this however is being taken away by those in control. Until the working force of the country…which is its majority can make this shift in thought…the rich will get richer and the middle class will get poorer
The Supreme Court of India will on September 11 give the final hearing for all petitions relating to cryptocurrency regulations. How crucial is this phase till the final hearing for the exchanges in the country?
A de-centralised cryptocurrency can really help the economy. Regulations should be imposed, for the protection of crypto users but they should be fair and transparent so as to help the general public, the government and thereby the countries economy. All that is required is a proper KYC system so that there is a track of how much crypto is earned by whom and so that any transaction involving conversion of crypto to fiat is taxed as per income tax laws. If crypto is treated like anything in the asset class like gold, shares etc., it can really have a positive effect on the economy of the country. We just have to hope and pray that the supreme court makes a decision in favour of the Indian public by supporting de-centralised cryptocurrencies. Until then, it’s just a waiting game.
How will the Indian crypto market have a positive turn around for good?
At present it’s not just the Indian crypto market but the global crypto market as well, that is at an all time low. In fact the Indian crypto scene is better than others since crypto in India is still being transacted at a premium when compared to global crypto markets. The decision makers of our countries future have to realise the benefits of crypto-currencies as a whole.
A fair regulation of crypto trading in India will encourage and boost the crypto scene in India. Fair regulations on crypto transactions will give people more confidence and a sense of security while they deal in crypto. The Indian crypto markets will instantly go global. India can build better accounting and auditing firms with the help of Blockchain and tackle corrupt global companies like KPMG etc. With our vast IT talent,Tech related startups can boom in India and service the world. Indian Crypto related tech developers will get global importance and build solutions for many nations which IT giants like Infosys and TCS are already starting to explore. So, the positive turnaround in India’s crypto market will be a positive turn around for our country’s economy as well.
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