Betting Against the Odds on Bitcoins
In a digitally connected world, this new system can solve the challenges attached with money transfers, remittance, currency exchange and universal e-commerce.
Bitcoins have been around for a while. It’s one of those things that surfaces sporadically and then goes into oblivion for months together. Once again the debate is gaining traction. And so is the currency. Ever since Japan legalized it, we are witnessing unprecedented spikes in its value. That’s good news for those who are invested in the industry. But what is the future, is the question on everyone’s mind.
For a while now, many countries and regulatory bodies have been averse to bitcoin due to its tarnished image owing to use in illegitimate activities, tax evasion and unauthorized platforms like the darknet. Ironically, its inbuilt security system is the very reason why countries and banks should consider it more seriously. Using blocks that are mined regularly, the inherent system makes it difficult for hackers to break the complex chain, thereby almost negating the chances of theft. This automatically translates into high level of control over financial activities, be it banks conducting large transactions or regular peer-to-peer money transfers.
In India however, I don’t see it going mainstream or becoming an official currency in the near future. In a country where currency has traditionally been centralized, introducing a decentralized monetary system on a new and untested platform can be a challenge. Any crypto-currency will see movement only when institutions start backing it and merchants begin accepting it as a payment channel. As the regulatory body, RBI has been warning caution and is likely to take its own time to evaluate and legalise it, if at all. Thankfully, ever since the demonetisation drive the government and RBI are actively trying to steer the country towards a less-cash and more digital payment system and therefore, may be more open to the concept as against before. As I see it, it may choose between two options going ahead –one, where it comes up with its indigenous currency or two, come up with a framework allowing independent FinTech companies to innovate under its supervision.
However, what’s imperative to understand is that bitcoin as a currency is not what holds the treasure, but the underlying platform on which it functions. Using a similar protocol or infrastructure, a large number of innovations can be made which will dynamically influence the future of payments and transactions.
In a digitally connected world, this new system can solve the challenges attached with money transfers, remittance, currency exchange and universal e-commerce. For banks too, it could mean more savings in transaction costs, faster services and improved security.
I am bullish about the future of blockchain and cryptocurrencies, and I do hope the Internal Committee set up to examine the potential of virtual currencies in India explores it a plausible alternate payment system for the future. It may take some time for the population to get used to a digital style of transacting, possibly even a decade a two, but the groundwork will have to start from now.
The future is indeed unpredictable for this industry at the moment, and for technology enthusiasts monitoring every movement in this space, it is an exciting time.
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
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