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Bitcoin booms globally, but goes bust in India?

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Sunil Rajguru
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These have been heady days for Bitcoin. Created in 2008 and launched in 2009, a developer paid 10,000 Bitcoins for two Papa John’s pizzas in 2010. (Today those Bitcoins would be worth cool half a billion dollars, talk about inflation!) Non-profit organization Electronic Frontier Foundation started accepting Bitcoin payments in 2011. In 2012, TV serial The Good Wife saw an episode titled: Bitcoin for Dummies.

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In 2013, a US government agency first seized Bitcoin in a drug case. In 2014, casinos and online games started accepting Bitcoins and in 2015, Coinbase raised $75 million. The Japanese government recognized cryptocurrency in 2016 and in 2017 it got the ₿ symbol. 2018 saw the cryptocurrency bubble while the number of Bitcoin ATMs crossed 5000 in 2019.

2020 was the Covid Year and saw a Great Reset. Stalwarts stumbled and newbies thrived. Rapid digitization and collaboration became running themes. So what would happen to Bitcoin? Would it go boom or bust? Surely it wouldn’t stay the same! In 2020 from February to March it crashed from a near 10K to an almost sub-5K. Many thought it was finished, but since then its rise has simply been stunning.

Bitcoin regained the 10K mark in May and smashed through the 25K ceiling by the end of 2020. 2021 would be even more momentous with it crossing the 50K mark and it breached the trillion dollar mark in terms of total worth. First we had trillion dollar economies. Then we had trillion dollar companies and now we have a trillion dollar cryptocurrency.

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Of course there have been many factors for its spectacular rise. For one, the post-Covid world seems totally digital and people seem ready for cryptocurrencies, not just a select few aficionados. Hedge funds have shown interest in it and banks are considering them as assets. Investors have made great returns on this investment in the last year or so.

Paypal said it would allow its platform to use Bitcoin. Of course the biggest news came when Tesla bought $1.5 billion worth of Bitcoin and it may be possible to buy one of their cars in the future with that cryptocurrency. Elon Musk has a Midas touch and he seems to have blessed a Bitcoin which was already on the rise. Musk called Dogecoin “the people’s crypto” and even that got a boost. While Twitter CEO Jack Dorsey jumped on board, there’s now talk that Apple may buy Bitcoin.

Curiously amidst this high, the Indian government is heading toward a complete ban on cryptocurrencies and may give a transition for Indians to get out of their holdings. The talk is that forget investing and trading, even mining would be banned. This at a time when thousands of cryptocurrencies are being traded all over the world. The Manmohan Singh Ministry had cautioned against its usage and in its first term, the Narendra Modi government had said that it would not be legal tender. The Supreme Court gave some respite.

But now we are looking at an outright ban. This is all part of the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021. The Reserve Bank of India is thinking of coming out with a digital currency, which is great. However the very purpose of blockchain, cryptocurrency and Bitcoin is to decentralize and empower the people. The RBI should come out with a digital currency but it should compete with Bitcoin and the latter being banned is retrograde. In fact after this news came to light, people tried to trend #IndiaWantsCrypto on Twitter.

All financial systems depend on an interdependence on countries, companies and currencies. Bitcoin has been accepted by almost all the world and India’s efforts to step out of it may prove counterproductive. If it goes ahead then it will join a very small club of countries like Nigeria which think along those lines.

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