What will happen if Indian Government decides to bring it's own Virtual Currency?
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This is my answer to one of the questions asked by one of my Followers @akdx. This was the question he asked.
My Answer
I believe the whole point of Cryptocurrencies is to cut off the Middle Man and the charges that come with it. I am referring to our Banks in this Case. Plus the other Point is Inflation.
When a Cryptocurrency is created it has a certain Supply Cap which almost in most cases cannot be increased. This is the reason why the price of Bitcoin is so High. It's just Supply and Demand same as that of Gold. Since Gold is found in a limited amount it's Price is Higher than that of Silver.
Now if the Indian Government creates their own Fiat backed Cryptocurrency it would definitely not be Immune to Inflation infact it might Inflate our Currency even Further as they have cited that Paper Currency will also be Used at the same Time.
Now if we talk about how this Scenario will have an affect on the Cryptocurrency Market in India I just have to say that yes it would be Tough to get Fiat for Cryptocurrency but it wouldn't be Impossible on a Plus side the Government will have no chance of Knowing if you are Dealing on Cryptocurrencies. Over the Counter Trading will take off. Take China as an Example they are still Trading over the Counter as Bitcoin cannot be stopped by any Single Country.
The above Answer is entirely my Thought and I might be wrong about it so I would love for you Guys to Join me in the Comment Section and add something to my Knowledge.
Its amazing post about digital curency
It is good source of black money convert into white money with digital currency so GOVT about action digital currency under legal circle due to honesty personalities safe Black money cases.
Awesome post
My senior Friend.
People who keep Black Money will always launder those one way or the other.
Even before Cryptocurrencies came in the Limelight there were several incidences of Money Laundering.
Now the Government is just making Cryptocurrencies the Scapegoat for the Money Laundering they are not able to stop.
I agree also with your comment. I dont think any goverment can monopolize any crypto currency.
Because it has to be transparent, and that doesn't siut there agendas.
Thank you for voting for me too, my brother.
Frankly speaking I have got no idea how these Government People think and I am at a Crossroads about trying to find their point or just say Fuck it.
Here's a thought: if India makes its own cryptocurrency, it'll make cryptocurrency period much more popular.
This precedent might not carry, but that's what happened to Wall Street after World War 1. Before WW1, Wall Street was essentially a sideshow. Very few "Joe Average" types wanted to have anything to do with it. Amongst the average-Joe circuit, Wall Street had a reputation of a crook's carnival.
Then came WWI - and War Bonds. Lots of folks who formerly had nothing to do with securities bought war bonds for patriotic motives. Once in, lots of them became far more open to buying other types of bonds - and some got interested in stocks.
I really have no idea about WW1 and war related stuffs but what you said about the situation of Wall Street looks pretty similar to that of Cryptocurrencies right now.
That being said I am ok with Indian Government creating their own Cryptocurrency but I don't want that currency to be Fiat based as it will lead to further Inflation of our Currency.
Basically it would do a lot of good for the RBI. Firstly an estimate of Rs 3 to print the new Rs 500 note and Rs 3.7 for a Rs 2000 note, think of how much they can save in printing costs and then transportation costs,security and maintenance costs for ATM centers if people adopt to the digital rupee and are less dependent on cash. Also they want people to use the digital rupee more so banning other currencies makes kind of sense to me. and yes @arunava , stringent scrutiny over crypto traders is not possible I guess.
Thnx and lemme know what you think @arunava!
Yes you are right about the fact that if Indian Government goes for a Fiat based Cryptocurrency it will save a lot of Money in Printing Transportation etc but what I am worried is the Inflation.
Since it would be a Centralised Crypto they would be free to Inflate the Currency as they like and since there would be no cost for Making more Coins it makes them susceptible to the Temptation to make more Coins.
yes @arunava and also the governments change here and the new government will impose new rules, Moreover I think this dip is no normal dip. I guess some big whales and masterminds involvement over here!
I agree with your thought, Sir. Despite the ban in India, Indians can still trade and exchange their Cryptocurrencies in many other ways.
Creating their own virtual currency will result to inflation of their local fiat because I don't think many people will like to get involved with their virtual Currency.
It would take an awful lot of Time to educate the Citizens of such a Currency.
Even Bitcoin is not known to over 50% of the Population so I don't expect this Fiat Cryptocurrency to be successful.
Sure!
I agree with what @omravi said. I also like to add that unlike to decentralized cryptocurrency, this cryptocurrency will be centralized, on which the government will have full control. I think it will make government more capable to control people. Also, it would generate more revenue for the government as tax evasion will become virtually impossible. But this can make the government more autocratic and can empower some ruler to such an extent that he/she can become a dictator.
The only plus side of a Fiat Cryptocurrency would be the fact that there would be close to Zero Tax Evasion.
Other than that everything is in Negative.
I am preparing the Answer for your Second Question stay tuned.
Definitely, government controlled cryptocurrency will empower the governments to such an extent that they will become autocratic.
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nice post @arunava