With the youth storming the stock market with their vehement passion for investing, India needs to have a more straightforward statement and an overall better understanding on the investment of cryptocurrencies. To explain the concept of cryptocurrency, we need to understand how digital currency is operated and invested in. Cryptocurrencies are a digital payment system that can be used as legal tender in most countries, payment for good and services. Bitcoin, one of the more popular cryptocurrencies, was first introduced in 2009 by a pseudonym developer, Satoshi Nakamoto. They developed Bitcoin as a 'peer to peer transaction system'. It was similar to the idea of a payment system app, for example, Paytm or G-Pay.
The difference between Bitcoin and Paytm is, one needs to mine a Bitcoin. The process of mining a Bitcoin revolves around the state of the art technology called Blockchain technology. It requires a person to solve complex and compound problems by writing a code. These codes help the tech grow and perform better. When a miner has completed a specific code, they are rewarded a Bitcoin. The miner can then use Bitcoin as cash or sell it to people for a hefty sum.
Bitcoin has developed a digital wallet that keeps track of all the activity one has made. This information is stored in a network of computers across the globe. The diversion of information makes the network more secure and robust because no singular entity has the power to manipulate the value. Furthermore, the blockchain tech is permanent, which means that all transactions or any data entered into the system shall be retained forever. Hence the data is stored permanently, and anyone can view them.
From the day it was introduced to the world in 2009 to today, the value of Bitcoin has skyrocketed. Initially, Bitcoin had no value, it was valued at 0.008 dollars in 2011, but soon after, as people became aware of the currency, the market forces of demand and supply drove the price up. Currently, the currency is valued at $55,067.80. The buck doesn't stop here, as it is estimated that by the year 2030, this particular cryptocurrency would be valued at $397000, almost a 100 percent increase in its valuation. Into the bargain, multinational firms have shown keen interest and are investing in bitcoin, which has given Bitcoin the authenticity and confidence that a common man needs before investing.
To add to its appeal, digital payment apps such as PayPal have made it easy for the general population to have access to cryptocurrency as ensured the boost companies need to break the estimated margins. This access piques an investor's interest and makes then curious enough to give cryptocurrency investment a chance. All of the above factors have contributed to making Bitcoin a topic of discussion across the globe.
Furthermore, on 8th February 2021, the world's richest man and the owner of Tesla and SpaceX, Elon Musk, announced that his company will soon accept Bitcoin as a form of payment for their products services. This should advocate the value of Bitcoin to the people. His company Tesla has invested over 1.5 million dollars in Bitcoin and promoted people investing their money in this currency.
Indians have eyed the Bitcoin candy for quite some now. However, the government has refused to accept the currency as a part of the financial system. In 2018, Arun Jaitley, then the Finance Minister, refused to acknowledge cryptocurrency and announced that the ministry would ensure that it eliminates any source which does. Furthermore, the situation was exacerbated by the central bank of India, banning all banks from making trades with companies that operated in the cryptocurrency market. This forced many companies to shut and essentially stopped Indians from entering the virtual market.
The salient point of the ban and such extreme measures was to ensure that companies were valued fairly. The valuation of Bitcoin cannot be estimated, and it makes it difficult for an authority or a regulatory body to identify anomalies in the books of the company. The government of India was inclined to play it safe than take the risk of exploring a new market, especially after the fact that it introduced the GS tax just a year ago, and accountants and the businesses were still learning the laws and rules of the change in the books.
In the year 2020, the Supreme Court made an executive decision and decided to lift the ban on the banking sector and allowed them to service clients of cryptocurrency businesses. This provided a new hope to the digital currency traders and coders that the budget of 2021 would show allow them to invest in the upcoming market.
However, in the long speech given by the finance minister Ms Nirmala Sitharaman, she cryptically did not mention the term cryptocurrency. Delaying the acknowledgement of a growing market only leaves India at a disadvantage compared to the other growing economies. According to a study, by 2023, India will have the biggest concentration of software engineers in the world, nearly 5.2 million software engineers. By allowing the mining of Bitcoin to be made legal in India, the government would be providing the engineers with a new source of income. It is a known fact that India is one of the largest effluxes of tech geniuses. Talented labour leaves the country to provide their services to foreign companies. If India chooses to provide the same chance to them domestically, it will give the country a financial boost. It would also attract foreign investment.
Additionally, the government could regulate it like it does the stock market. A regulatory body like SEBI could be made in charge of keeping track of the trades that happen online. Special licenses could be issued to those who are interested in the mining and trading of Bitcoin. A proper list of rules and regulation could be implemented, making transactions and the system clear to manage and understand. This would make the trading of Bitcoin more sophisticated and clearer to the government. However, some cryptocurrency buyers may raise the concern of this system, affecting the decentralized structure that these cryptocurrencies have to offer. It would affect the free flow and smooth trading, but the benefit that the masses could gain with having access to cryptocurrency outweighs the hassle of bureaucracy and red tape.
They could impose a tax on the sale of Bitcoin and other cryptocurrencies. This would increase their tax revenue and enable them to use it for the development of the infrastructure in the country. Besides, it would boost business commercially as new applications and businesses would start to support the industry, benefiting the industry internally and externally.
The government did once introduce the idea of developing a cryptocurrency of its own, which shall be issued by the Reserve Bank of India, the idea doesn't sound as appealing as investing in a technology that is globally gaining traction, and neither has the government issued any follow up on the thought. If the providence did decide to follow through on this thought, it would require an immensely complex and technology to support the system, and it would imply creating a centrally monitored cryptocurrency, a step that no nation has yet taken.
In order to summarize, the current position of the Indian government shows the lack of initiative to keep abreast with developments. The ministry has chosen not to take a clear stand in order to keep the people in the grey. The fact that in 2020 itself, the number of Demat accounts opened increased by 22.05%, up to 4.9 million new people signed up to trade and invest in the stock market should have been a clear indication to the government that people want to invest in new avenues. Providing the general public with a unique proposition to invest would only be beneficial. With American companies looking to invest in India as an alternative to China to find cheap labour, it's time for India to parade its brains and attract nouveau business. It's time that finance becomes an essential topic of concern if India wants to stay in the race to the top. So this is a petition to make cryptocurrency legal.