In 2013, Bitcoin came to India and raised quite a storm in the Indian economy. Immediately after its incorporation, the market witnessed an influx of Indians from many corners of society. In its early stages, cryptocurrency was very much a hit among the people of India. However, with time, the picture has drastically changed, culminating in the alleged bubble burst in 2018.
In this paper, let us explore the milestones in the Indian journey of the cryptocurrency. In doing so, we would also explore the validity of the title’s claim. So, first thing first, let’s take a brief look at the initial days of the cryptocurrency in India. The advent of cryptocurrency in India gives rise to a lot of mixed responses from Indian society.
On the one hand, the numerous upcoming start-ups saw cryptocurrencies as a boon and so did many other technology firms. Moreover, since more than 21% of Indians don’t have bank accounts, many preferred cryptocurrencies for making money transfers. This was heightened even further with the sudden demonetization undertaken by the Indian government in 2016. In fact, cryptocurrency’s first three-four years in India could well be seen as their golden years in this economy.
However, on the other hand, many were not very enthusiastic about this new development. Such apathy towards this new technology was quite significant as it was shared by the Reserve Bank of India. After initially supporting the cryptocurrency and the technology behind it, the Indian government eventually took a U-turn in this matter. Cryptocurrency’s falling out of the government’s favor culminated in their ban by the RBI in 2018.
From Boom to Ban – What happened in between?
As I’ve already mentioned, cryptocurrency made a great start in India and, for the first few years, transactions were peaking. Consequently, the crypto economy thrived during its early days in India, until the scenario started changing in 2017.
The demise began when the word came out that stricter regulations would be imposed on the usage of the cryptocurrencies. As a matter of fact, such news induced much panic among the users. Consequently, the demand was waning steadily and this resulted in a drastic fall in the prices.
In a matter of days, the value of Bitcoin went from a staggering $10,000 to a mere $6500-$6700. In this context, it is worthwhile to mention that Bitcoin was the most popular and valuable of all cryptos. As a matter of fact, it was also the most hyped.
Despite the popularity gained by cryptocurrencies, especially Bitcoin, its opponents indeed have genuine reasons to rally against it. The problems related to the use of these virtual assets are manifold, particularly in the Indian context.
The Problems with the Cryptos
For one thing, investing in cryptos is nothing but speculative betting because of which made the investors prone to financial loss. From the very beginning, RBI had been quite anxious about this fallacy and had repeatedly warned the investors. Yet, the hype-driven players of the market didn’t seem to pay any attention to the warnings.
Now, volatility of the cryptocurrencies is indeed a problem and a major cause for its failure. Yet, there are more essential and more serious reasons behind the government’s fall off with the cryptos. These fundamental issues emanate from the technology which runs the cryptocurrency or the blockchain. Basically, the primary problem with these cryptocurrencies is their anonymity.
Owing to such anonymity, the cryptos are simply perfect for any kind of illicit or illegal transactions. If allowed for popular usage, the cryptocurrency could well become a boon for many different kinds of fraudsters. Moreover, being a form of asset owned by private corporations, cryptos are not universal tenders like the Rupee or Dollar.
So, now that the RBI as rendered cryptocurrencies as illegal in India, concerns have been raised regarding its future. According to the opponents, one internal problem in the cryptocurrency industry is the massive competition. As a result of this, these companies mostly cancel each other out and gain only by hype.
In all, if the cryptocurrency has to ever succeed, there has to be a more regulated economic environment to protect the investors. Most importantly, there have to be laws to adequately regulate and monitor these transactions.