From the Viewsroom

India’s cryptophobia

Jinoy Jose P | Updated on July 23, 2019 Published on July 23, 2019

The government’s fear over cryptocurrencies is baseless

New technologies scare us. Rightly so. History has many examples. In 1903, a Norwegian-American scientist used the term ‘Radiophobia’ in his paper Radio-phobia and radio-mania to describe people’s fear of radiation. In the 1920s, the term included those who were scared of radio broadcasting — yes, there were many. It took years of efforts by radiologists, broadcasters and investors, for the public and policy to come to terms with the use and benefits of radio waves. In fact, policy took longer than the public to understand the benefits of the technology. Restrictions, licences and all kinds of riders existed over the years that made life difficult for entrepreneurs and technologists. There are many such examples, from the railways to the internet. At the outset they incite fear, confusion and chaos But history tells us patience pays.

India’s cryptophobia is one such baffling instance where policy gets paranoid about an emerging technology. The latest example of this is the just-out inter-ministerial panel report on cryptocurrency and blockchain technology. After a year’s delay, the panel finalised its findings this week, calling for a ban of cryptocurrencies. No doubt, cryptocurrencies are an unfinished business. Their operations lack transparency, are anarchic in nature and function, and their apostles exude a marked disregard towards centralisation and authority. That said, cryptocurrency is inarguably one of the most important innovations of this century. It has introduced the public ledger technology of blockchain which is transforming businesses across the world today. As Ginni Rometty, CEO of IBM, recently put it, blockchain can vastly improve efficiency of anything that can conceive of as a supply chain, be it people, numbers, data or money. Which is why cryptocurrencies such as bitcoin counts the likes of Bill Gates or Ben Bernanke among its supporters. Interestingly, the ministry panel also praises the potential of blockchain in areas such as land management, but fails to understand the creative disruption cryptocurrencies have introduced to the world of finance. The panel’s conclusion that financial institutions can utilise digital ledgers, but individuals should be barred from trading or holding them is hokum. That is micromanagement of the worst kind and reeks of nanny-state mentality. Time and again, advocates of cryptos have exposed the hypocrisy behind arguments that cryptocurrencies are used in money laundering or terrorism. In fact, most such deeds still occur in fiat currencies. Banning cryptos is not the way to regulate their misuse. Mainstreaming them is our best shot. If we lose the opportunity to let the public creatively exploit the potential of the crypto market, history will mock us.

Published on July 23, 2019

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