3 Ways The Indian Economy Will Be Impacted If The Government Doesn’t Legalize Cryptocurrency
Adoption of cryptocurrencies will also aid inflow of foreign investments from capital rich countries who are looking for projects to support in this field.
Cryptocurrencies, led by Bitcoin, are taking the world by storm. Fuelled by massive mobile connectivity and internet access, an estimated 150 million investors globally have already been exposed to the potential disruption cryptocurrencies can create. As we head into the fourth quarter of 2021, crypto adoption is slowly moving from the early adopters phase of the lifecycle to the early majority phase where at least a billion new investors are likely to be added over the next 4-5 years.
Imagine 2007 – before the advent of iPhone – did we know or predict the revolution that smartphones could bring? Today, smartphones have evolved and are prevalent. We expect a similar story to play out with cryptocurrencies and blockchain technology. Blockchain technology removes intermediaries from every transaction by authenticating it on a public ledger and by ensuring that it works 24x7 with zero downtime. Bitcoin is the first publicly tested use case of blockchain technology and is already adopted as a legal tender in El Salvador, a Central American country, with more countries evaluating a similar approach.
Currently, in India, investing in cryptocurrencies is legal while the Government is still deliberating a formal regulatory approach towards the same. This may imply that we are already lagging on adoption of an innovative and disruptive technology. As an asset class, more than 15 million Indians have parked some of their wealth on cryptocurrencies.
But, we humbly believe, India can do a lot more.
Decentralized Finance (DeFi):
More than 190 million Indians do not yet have a bank account. Cryptocurrencies can complement to our traditional finance system and offer scalable solutions such as savings account, lending and direct payment initiatives that the Government envisions. DeFi projects aim to help achieve financial inclusion by obviating requirements such as ‘Minimum Account Balance’ while authenticating users with KYC norms and negating the high fee structure of micro transactions.
As DeFi grows globally, an India made solution can be the ideal product for other emerging economies to adopt. This will grow trust in Indian products and services while bringing key capital and revenue to our country.
People and Companies:
Cryptocurrencies and Blockchain have potential to drive the next phase of job creation for India’s highly skilled youth. Right from our independence, new age technologies and products have been the go to space for our strong working class to secure a career along with financial freedom. Since 2000, growth in IT, telecom, e-commerce and recently food commerce have been major job creators for Indians. We envisage cryptocurrencies to be the next such industry that can trigger innovation along with new jobs. As a regulated industry, blockchain based companies can freely operate in India and showcase leadership to the world. Future innovations in the cryptocurrency/blockchain space can come from India and it can also be a new avenue for job-creation and economic growth.
Multiple blockchain projects with global implications are already being developed in-house here. We are all proud of Polygon (Matic Network), a top 20 cryptocurrency, that is building a protocol and framework to connect blockchain based networks. The startup has Indian founders but is currently operated from outside the country. Coinbase, a NASDAQ listed cryptocurrency exchange, has already planned to setup an engineering and operations office in India. Indians will be the most sought after global workforce if and when the economy is opened.
Economy and Trade
Global trade is still backed by US dollar, the supply of which is currently controlled by an external Government with its own motives. The Indian economy will be boosted if its dependence on the US dollar is softened and more predictable options for trade and payments arise. Bitcoin, a decentralized currency, has potential to be this solution. Adoption of cryptocurrencies will also aid inflow of foreign investments from capital rich countries who are looking for projects to support in this field.
Overall, we believe that cryptocurrency is a technology to back rather than a potential threat to Government. Just like the internet which gave millions of Indians the freedom to express and opened new avenues without disrupting the Government’s oversight, cryptocurrencies can also be embraced by us. If done early, we might be able to secure our economic strength for the foreseeable future.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house
Around The World