Bitcoins have become synonyms to crypto currencies or digital currencies and has been the most disruptive concept of our times. The idea of a currency which is not controlled by a state or a corporation and which maintains privacy as well as transparency for its users is a much-needed relief for some and a threat to others especially the economic and political systems.
Recent reports claimed that the price of Bitcoin went up by over 210% during the past year, trading from about $450 in mid-2016 to record-breaking levels of $1,400 in May 2017. The global circulation of Bitcoins are estimated to be worth $24 billion (roughly about 16 million units).This proves that since its creation eight years ago, Bitcoin has come a long way and seen all from rejection to acceptance as an emerging asset.
It’s being predicted that Bitcoin will be closer to £3,000 by the end of 2017 and will see a larger market share globally. In India, government is working towards creating laws and regulations towards the use of Bitcoins. Inspite of it being a positive alternate to cash, in the wake of demonetization, there exists quite a bit of confusion in the market regarding its demand, supply and usage. Bitcoins are not issued or backed by banks or governments; nobody knows how investments in Bitcoins can be taxed and the absence of a regulator makes legal recourse almost non-existent. In India, exchanging of cash for Bitcoins is not allowed. Instead, they’re required to share their bank account details and undergo a KYC process to start trading in the online currency. Considering these speculations and doubts doing rounds, Cryptocurrency players in India came together recently and introduced DABFI – Digital Asset & Blockchain Foundation of India – for the orderly and transparent growth of the virtual currency market.
The foundation will work towards developing self-regulatory regimes for trading of Bitcoins and other blockchain based digital assets. It will also standardise KYC/AML/STRS norms for the member companies. Apart from this, the organisation will build credibility and create awareness about the benefits and risks of cryptocurrency, liaise with regulators and get clarity on taxation, attract investment and set up incubators to promote startups, build global relations and actively engage with International community, create a public website and regularly print reports on and around Bitcoins and blockchain.
It’s a known fact now that Bitcoins and other cryptocurrencies have tremendous benefits for most marginalised people, merchants, tax departments and regulatory authorities. It has better price discovery, is anti-inflationary and the transactions are irreversible. RBI has also noted that blockchain technology is best known for “its groundbreaking application in the modern cryptocurrency Bitcoin, and more-so because of the disruptive innovations it promises.” The institution has earmarked blockchain technology as “matured enough” to be the core technology toward digitizing the Indian rupee.
As merchants have started accepting Bitcoin payments since the asset can be liquidated with a small transaction fee of 1%, Bitcoin has emerged as an investment alternative that is affordable and efficient. Also, trade volumes are increasing using Bitcoin as the transaction medium, the value of Bitcoin will rise to equal that trade.
Japan has also recently recognized Bitcoin as a legal method of payment, although it continues to be treated as an asset, and not as a currency. The US has recognised it as a commodity. Bitcoins are definitely the new game changer in the era of the cashless economy, offering billions of Indians the ability to go cashless using digital currencies.