8th November, 2016 went down as a memorable day in India’s history. It was on this very day that India’s Prime Minister took over the Indian television screens while Indians were gearing up to have their dinner and announced that from 12 AM that night, 500 and 1000 rupees notes will stop being legal tender. During the announcement, PM Modi said that the move was a way to counter easily flowing black money in the country. While the jury is still out if the move had any impact on India’s black money, the Indian government is ready with its next mission. The next big thing on government’s agenda is a crackdown on bitcoin.
Post-demonetisation, bitcoin had really gained some popularity among the Indian masses as they turned to alternatives to counter the cash crunch. But, now it seems, the good days are over for the bitcoin industry.
Bitcoin was one of the only stores of value left to the people of India after their other safe haven assets like gold and silver were confiscated and seized by the Indian government. While the entire government has just one song on their lips, that the move would help counter black money, criminal groups and fraudsters. But, the real picture is, while there is no knowledge of the move having a concrete impact on criminals, but it is the common population that is facing the brunt even after 2 months of the surprise demonetisation announcement.
According to a Forbes report, since demonetisation, service oriented Zebpay saw a massive upsurge in interest. Within just 18 days into demonetisation, the price of one bitcoin on Zebpay increased from ₹51,600 to ₹69,500. Not only Zebpay, even Indian bitcoin startup Unocoin witnessed a price hike of about 20% while BTCXIndia saw an price increase of as much as 40%.
Modi and his government’s initial thought process behind the demonetisation process was, if criminals/terrorists weren’t provided with high denomination currency notes, moving cash from one place to another would become a highly daunting process for them. In fact, the government also went ahead and banned gold importation, possibly to restrict stores of value accessible by the criminals.
While the government thought of the criminals and their reliance on gold and cash, what they forgot to take into account was the common man’s reliance on cash and gold. Thus, these sudden regulations by the government, which were supposedly carved out to target criminals, ended up negatively impacting the innocent masses, businesses, and the economy.
According to some inside sources, after gold and cash crackdown, the government is now preparing to announce some tough regulations and restrictions on bitcoin trading as well. The argument here once again is that criminal are using their black money to purchase bitcoin, giving rise to “digital black economy.” Further, since bitcoin is a P2P network, criminals are provided with an option to directly trade with miners or bitcoin holders without having to go through an exchange, thus making transaction tracing and surveillance a very difficult task.
While there is no denying the fact that the government might be doing this to crackdown on fundings to the criminals/terrorists, but the government will have to come up with some other innovative ways to cut these people right from their sources because steps like demonetisation and bitcoin crackdown are only going temporarily affect them. It is a known fact that criminals have and always will be able to search for more sophisticated and innovative technologies to fund their complex projects. Hence, the common man shouldn’t been caught between this battle.
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