{"id":50704,"date":"2019-07-29T19:00:18","date_gmt":"2019-07-29T13:30:18","guid":{"rendered":"https:\/\/blogadmin.forumias.com\/?p=50704"},"modified":"2019-07-29T17:42:34","modified_gmt":"2019-07-29T12:12:34","slug":"7-pm-ban-or-regulate-29th-july-2019","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/7-pm-ban-or-regulate-29th-july-2019\/","title":{"rendered":"7 PM | Ban or regulate? | 29th July, 2019"},"content":{"rendered":"\n<p><strong>Context<\/strong>: crypto\ncurrencies and its related issues<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Crypto currency is both\ndigital and virtual currency that is created based on some cryptographic\nalgorithm. No one &#8220;mints&#8221; this currency; they solve cryptographic\nalgorithms using hardware and electricity to get the representation of one unit\nof value, typically called a &#8220;coin&#8221;. Bitcoin, Litecoin, and altcoins\nare all crypto currencies.<\/li><li>A virtual currency is a digital\nrepresentation of value that can be digitally traded and functions as (a) a\nmedium of exchange, and\/ or (b) a unit of account, and\/ or (c) a store of\nvalue, but does not have LEGAL tender\nSTATUS. A virtual currency therefore may be a private medium of\nexchange, but does not in any way reflect a sovereign guarantee of the value or\nlegal tender status.<\/li><li>Digital currency can mean a digital\nrepresentation of either virtual currency (non-fiat) or e-money (fiat) and thus\nis often used interchangeably with the term \u201cvirtual currency\u201d.<\/li><\/ul>\n\n\n\n<p><strong>Crypto\ncurrencies around the World and its status:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Russia and Canada:<\/strong> Countries\nlike Russia and Canada allow virtual currencies to be traded for other goods or\nservices (Barter Transactions). These transactions are similar to using virtual\ncurrency as a mode of payment.<\/li><li><strong>Switzerland\nand Thailand:<\/strong> Some countries like Switzerland and Thailand allow\nfor virtual currencies to be modes of payment. However, since they are not\nclassified as legal tender, parties are not legally obliged to accept them.<\/li><li><strong>No\ncountry:<\/strong>\nNo country across the world treats virtual currencies as legal tender.<\/li><li><strong>China:<\/strong> Countries\nlike China have completely banned virtual currencies. It does not allow any\nsort of legal transactions in virtual currencies.<\/li><\/ul>\n\n\n\n<p><strong>Concerns\nwith crypto currencies:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Sovereign backing:<\/strong> Unlike\nfiat currencies, these crypto currencies do not have sovereign backing, nor do\nthey have a formal, verified backing of bullion. <\/li><li><strong>Trust\nand consensus based:<\/strong> Since these crypto currencies are\nbacked by trust and consensus-based algorithms, processing transactions is\ntime-consuming due to validation procedures and network latency.<\/li><li>The large gap in transaction processing\nspeed between crypto currencies (especially Bitcoin), and other electronic\npayment methods, hinders their ability to be used as medium of exchange.<\/li><li><strong>Shocks\nor fluctuations:<\/strong> the crypto currencies might have functional\nbenefits; however, the market potential of these functionalities is subject to\ntechnological and behavioral changes, as well as the scope of financial\ninvestment that the crypto currencies can raise. All these factors, make the\nintrinsic value of crypto currencies negligible, and subject to severe shocks\nor fluctuations.<\/li><li><strong>Frauds:<\/strong>\nNon-official virtual currencies can be used to defraud consumers, particularly\nunsophisticated consumers. For example, a recently unveiled RS 2,000crore scam\ninvolving GainBitcoin was uncovered in India, where people were promised\nreturns on their investment in GainBitcoin in the form of Bitcoin.<\/li><li><strong>Booms\nand Busts:<\/strong>\nIn December 2017 Bitcoin was valued at around USD 20,000 per coin. However by\nNovember end bitcoin\u2019s value toppled to approximately 80 percent of its peak\nvalue and bitcoin was trading at a price of USD 3800. There were numerous\ninvestors who suffered losses due to the fall in the valuation of crypto currency.<\/li><li><strong>Resource intensive:<\/strong> The\nmining of non-official virtual currencies is very resource intensive. And to a\nnational level retail payments system, a virtual currency would re- quire\ncrippling levels of storage and processing power. Adding more users also makes\nvirtual currencies more cumbersome to use. Already, Bitcoin mining has used as\nmuch electricity as all of Switzerland, with the report terming it an\nenvironmental disaster.<\/li><li><strong>Criminal\nactivity:<\/strong>\naccording to the report of Financial Action Task Force (FATF) it identifies\nthat virtual currencies can provide greater anonymity than mainstream non-cash\npayment methods, making them vulnerable to money laundering and use in\nterrorist financing activities.<\/li><li>For example, in 2014 the illegal website\nSilk Road was found to have been using Bitcoin to finance hacking, drug\ntrafficking, and illegal weapon sales.<\/li><\/ul>\n\n\n\n<p><strong>Regulation\nof crypto currencies:<\/strong>\nCrypto currencies have certain characteristics that make regulation necessary.\nSome of these characteristics are:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>They\nlack intrinsic value and are subject to fluctuations. <\/li><li>They\nare decentralized networks with no central authority.<\/li><li>The\ntransactions in crypto currencies are irreversible.<\/li><li>They\nprovide a degree of pseudonymity, although not complete anonymity, to participants\nin a transaction.<\/li><\/ul>\n\n\n\n<p><strong>Inter-ministerial\ncommittee recommendations with respect to crypto currencies:<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>There\nis no underlying intrinsic value of these private crypto currencies. Therefore,\nthe Committee is of clear view that the private crypto currencies should not be\nallowed. These crypto currencies cannot serve the purpose of a currency. <\/li><li>The\nprivate crypto currencies are inconsistent with the essential functions of money\/currency;\nhence private crypto currencies cannot replace fiat currencies.<\/li><li>A\nreview of global best practices also shows that private crypto currencies have\nnot been recognized as a LEGAL tenderin any jurisdiction. <\/li><li>The\nCommittee recommends that all private crypto currencies, except any crypto\ncurrency issued by the State, be banned in India.<\/li><li>Accordingly,\nthe Committee has recommended a law banning the crypto currencies in India and\ncriminalizing carrying on of any activities connected with crypto currencies in\nIndia.<\/li><\/ul>\n\n\n\n<p><strong>Way\nforward:<\/strong>\nGovernments and economic regulators across the world are wary\nof private crypto currencies. As they need neither a central issuing authority\nnor a central validating agency for transactions, these currencies can exist\nand thrive outside the realm of authority and regulation. They are even deemed\na threat to the official currency and monetary system. So government of India\nshould bring a law to control and regulate the private crypto currencies in the\ncountry.<\/p>\n\n\n\n<p>Source: <a href=\"https:\/\/www.thehindu.com\/opinion\/editorial\/ban-or%20regulate\/article28739549.ece\">https:\/\/www.thehindu.com\/opinion\/editorial\/ban-or\nregulate\/article28739549.ece<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Context: crypto currencies and its related issues Crypto currency is both digital and virtual currency that is created based on some cryptographic algorithm. No one &#8220;mints&#8221; this currency; they solve cryptographic algorithms using hardware and electricity to get the representation of one unit of value, typically called a &#8220;coin&#8221;. Bitcoin, Litecoin, and altcoins are all&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/7-pm-ban-or-regulate-29th-july-2019\/\">Continue reading <span class=\"screen-reader-text\">7 PM | Ban or regulate? | 29th July, 2019<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":49366,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[130,9],"tags":[],"class_list":["post-50704","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-7-pm","category-public","entry"],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/forumias.com\/blog\/wp-content\/uploads\/2019\/07\/10-pm.png?fit=1000%2C500&ssl=1","views":{"total":0,"cached_at":"","cached_date":1704759986},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/50704","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=50704"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/50704\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media\/49366"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=50704"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=50704"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=50704"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}