Importance Of CryptoCurrency

Buzzwords such as cryptocurrency and Bitcoin have once again been put under the scanner in India in the wake of the legal contentions between the Reserve Bank of India (RBI) and the Supreme Court. This contention was regarding the Crypto Token and Crypto Asset Bill, which was issued by the RBI in 2018, and was finally struck down by the Supreme Court on the Internet and Mobile Association of India . Reserve Bank of India judgement delivered in March 2020. The watershed verdict noted that cryptocurrency could now be accepted as legitimate payment for the transaction of goods and services, and these payment regulations would fall under the purview of the RBI. Considering this, it is imperative to analyse the potential of cryptocurrency to revitalise the economy and supercharge economic growth.

The blockchain race between China and the USA speaks volumes of the significant traction of the cryptocurrency sector worldwide. ‘Astamuse’, a think tank based in Tokyo, reported that China had as early as 2016 overtaken the USA in the number of cryptocurrency patent applications filed. The International Data Corp reported that the global value of blockchain investment was authorised to reach $16 billion in the next five years. This dizzying rise has already benefited our neighbours in the South with emerging economies like the Philippines, which has initiated local crypto exchange licensing regulations and also strengthened investor protection and Singapore, which has received over $700 million in investments. For India to miss out on this new wave of fintech capital inflow would be a loss of epic proportions. Given India’s prowess in consistently producing a highly skilled IT workforce, we must harness this dual advantage of investment and innovation to boost our economic growth. Greater investment into the economy coupled with a transition of the local innovation sector towards a blockchain ecosystem will help us leverage our strengths towards revitalizing the economy.

There are many alluring prospects of cryptocurrency as, by initiating a wave of fresh innovation, it has the prospects to spawn new markets, start-ups, products, and services, all of which would invariably create a positive impact on the IT job market. All this, if supported and nurtured by institutions like the RBI and Supreme Court, can breathe a fresh wave of life into our economy. Not to be forgotten, cryptocurrency has an equally important role to play in the country’s financial inclusiveness. In India, a large populnation is still unbanked, for reasons like a lack of access to functioning traditional financial mechanisms. The cryptocurrency sector can create a more dynamic financial ecosystem by devising a parallel digital money magement service which could further lead to broader financial inclusion.

A firm legal stan on cryptocurrency such as the 2020 Supreme Court verdict, which upheld the validity of Article 19(g) in the context of cryptocurrency, aids in the awareness and acceptance of virtual currencies, ultimately leading to a legitimising of their role in the economy. A similar model has shown to be successful in Japan, which recognises the validity of digital currencies as legal property since 2017. According to a 2017 Business Insider report, this led to an almost 6x increase in the trading volume of Japan. The same report further mentioned that citizens in China invested more in these digital currencies as they perceived the fluctuations in these currencies to be less turbulent than the Chinese legal tender, the Yuan. Reports from both CRISIL and Goldman Sachs have predicted that India is currently facing its worst recession. However, data from Bitcoin marketplace Paxful provides an interesting insight that despite the Covid pandemic and economic decline, the Indian crypto industry has shown record- breaking growth by registering a whopping 883% increase in the trading value of Bitcoin compared to last year. Paxful data even goes as far as to claim that three out of four Indians who are aware of cryptocurrency have invested in it. OKEx, a globally established crypto exchange platform, reported that registrations from Indian users increased to almost 550%, which ultimately reflected both local and global trading volume multiplication. The overarching message seems to be clear: cryptocurrency has a high probability to generate economic, social and job opportunities, which can spell light at the end of a very bleak tunnel. In face of newly emerging fiscal needs, cryptocurrency can help fuel financial freedom in a New India.