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Why we can’t ignore cryptocurrencies anymore

JINOY JOSE P | Updated on January 08, 2018 Published on October 25, 2017
What’s new on the crypto front?

Not all’s quiet on that front, I’d say. Of late, the universe of cryptocurrencies, mainly numero uno Bitcoin and competitors such as Ether, has seen a lot of action despite the news that countries such as China, South Korea and even Russia have been putting strong curbs on their use and trade. Bitcoin’s value went up almost six times this year. Last Friday, Reuters reported that Bitcoin hit a record high of more than $6,000, skyrocketing its market capitalisation to $100 billion “at one point”.

Wow! And this was a currency many said would die prematurely a few years ago.

You said it! In fact, so much has gone in favour of the digital currency in the recent past that many investors and market experts have mustered the nerve to call Bitcoin the next gold. Some, like Apple co-founder Steve Wozniak, have gone further to say it’s even better than gold. The Bitcoin Magazine reports that Wozniak, at the recent Money 20/20 conference in Las Vegas, said Bitcoin is superior to both gold and the “phony” US dollar.

Interesting! Wozniak is not your regular crypto fan. Tell me more about his remark.

Wozniak has said that the Bitcoin, which is often criticised for the fluctuations in its value, is in fact more stable than government currencies such as the dollar as it has a “fixed supply”, while fiat currencies are prone to manipulation and dilution. According to him, owning Bitcoin is like owning a house. Your house has value, he says, and if it is a house today, 40 years from now, it still is a house in value, even if the price goes up and the government draws more taxes out of it. “Bitcoin is even more mathematical (than gold) and regulated and nobody can change mathematics,” says Wozniak. Experts say Bitcoin — like other cryptocurrencies — is “self-regulated”.

Super! Is that why Singapore says it won’t regulate Bitcoin?

Well, Singapore Central Bank chief Ravi Menon has said the country, one of the most tech-savvy nations in the world, doesn’t plan to regulate cryptocurrencies such as Bitcoin, but will remain “alert to money laundering” and other potential risks stemming from their use. The Singapore Central Bank says it will look at the activities surrounding the cryptocurrency and evaluate the risks they pose and act upon them according to their merit. That’s a proactive approach, rather than calling for a blanket ban on cryptocurrencies, as some have done in India.

So, they are also worried about such currencies being used for illegal acts.

Well, that’s a worry shared by many central banks, including our own Reserve Bank. But the RBI is still sitting on the fence; like many in the crypto-world allege, it’s not updated on digital currencies at a time the Government, through various missions, is trying to direct the country towards a digital future. To be fair, reports say the RBI is preparing a policy on the use of cryptocurrency. There were also reports that the RBI was planning to introduce its own digital currency, but not much is known about that.

Think the RBI can take a cue from Singapore’s stand?

Or Japan, for that matter, which has become one of the largest hubs for trading Bitcoin. The country, reports FT, has seen a surge in the number of Bitcoin customers since the government introduced legislation in April. Japan now wants companies to apply for licences to use and trade Bitcoin and they must fulfil annual audits and KYC requirements. This triggered a lot of interest in cryptocurrencies in Japan where large retailers such as the Bic Camera and restaurant chain Heichinro accept Bitcoin. Elsewhere, well-known companies such as Etsy and Subway accept Bitcoins as payment. Cryptocurrencies are here to stay, whether you like it or not.

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Published on October 25, 2017
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