By Akshita Angrish, a 4th-year B.A.LLB. student of Ideal Institute of Management, GGSIPU, New Delhi.
INTRODUCTION
It is evident that virtual currencies have gained immense popularity across the globe as more and more people are dealing with the same. It was felt necessary to sidestep the system of lengthy procedures of money-payments and indulge in an efficient alternative. It is no secret that countries across the globe are moving towards a digital platform in every aspect. Therefore, a digital platform for transactions and trading had to be introduced to the new world. This exactly was the notion behind building the virtual currencies. The free arcade will always look for a laissez-faire condition that has marginal interference from the administrative authorities of the state. Now, after the glorious development of virtual currencies, the question that arises is, ‘Can virtual currencies replace the fiat currency or will they be remembered as some long-lost invention in years to come?’
CRYPTO-CURRENCY IN UPCOMING YEARS
We are aware that many people trust digital currencies and invest in it for various beneficial reasons.[i] Crypto-currency has made headlines in the papers many times, showing the boom in its dealing across the globe. But the real question is that, will it sustain all the drawbacks that are pointed out by different authorities and countries? Does it have enough potential to replace the fiat currency?
Crypto-currencies have been highly unstable over the years but with the increasing popularity, people are not reluctant to invest or trade in them. The users predict that by 2024, almost 94% of different Bitcoins will be released.[ii]Jeremy Liew, the owner of Snapchat and Peter Smith, the Co-founder of Blockchain, have predicted that by 2030, the price of Bitcoins will reach $500,000.[iii]Due to the decentralized feature and the fact that it is safe and anonymous, the popularity of this currency can grow exponentially.
Deutsche Bank, in its report for the decade ahead, titled ‘Imagine 2030’, looks for huge potentials for crypto-currencies becoming the preferred payment method. It even anticipates that these currencies will substitute fiat money.[iv] The reason that they have stated for the crypto-currencies replacing fiat money is that the forces that hold the fiat money system together look fragile, particularly because of the low labour costs. Some of these forces may even instigate to loosen and the demand for alternative currencies could take off.[v]
Till now, crypto-currency has always been additions rather than substitutes to the global inventory of money. There is no doubt about various benefits like security, speed, minimal transaction fees, ease of storage, and relevance in the digital era, but it still has not managed to take off as a means of payment.
WHAT WILL BE THE ADVANTAGES OF CRYPTO SURPASSING FIAT CURRENCIES?
A report by futurism explains what will happen if the crypto-currencies become more popular than cash-
Crypto cannot be manipulated as easily as fiat money due to their decentralized and unregulated status.
The concept of Universal Basic Income would be best supported by crypto-currencies than fiat money.
It can also help to get rid of intermediaries in an everyday transaction which could cut costs for businesses and help out the customers.
It is a faster and secure mode of payment is also eye-catchy to many users.
THERE ARE SOME CONCEIVABLE APPREHENSIONS ALSO STATED BY THE REPORT-
Recognized financial institutions would likely have to scramble to change their ways.
As cash could become incompatible quickly, it may leave many people, who are not interested in trading with crypto-currencies, with lost assets.
The control of the government over central currencies is the key to regulations of many sectors. With crypto replacing the authorised money, the government may suffer.
Money laundering is another threat.
Therefore, there is a long way ahead and a lot has to be done in order to make crypto easy access to the general public keeping in mind the repercussions it may bring complimentarily.
Countries like the USA, Singapore, and Japan have already made rules regarding the virtual currencies and have permitted their citizens to trade in same. Whereas there are countries like India and China, that are reluctant in welcoming these virtual currencies in their economy.
FUTURE OF CRYPTO-CURRENCY IN INDIAN CONTEXT
In India, the history of crypto-currencies makes it clear that the government and the regulating authorities have not been very welcoming towards them. From 2013, the RBI has been issuing notices regarding the jeopardies in dealing in crypto-currencies and finally, with the ban on trading in any virtual currencies, the RBI made it evidentiary that they are not yet ready to accept the digital currencies.[vi]
But 4th March 2020 was a gleaming day for the users of crypto-currency in India as the Supreme Court finally uplifted the ban on the trading of crypto stating that the ban was unconstitutional.[vii]
It is predicted that the Indian government will be regulating Bitcoins in stages. While the Apex Court has given the judgment on virtual currencies in favour of the petitioners, it is not harmful to say that future of virtual currencies still looks bleak for the general populace dealing in them.[viii] With proper regulations, virtual currencies can still be banned by the authorities if there is proper data in their hands. Even the court has noted itself in its judgment that the RBI has wide powers and can still frame policies to tackle virtual currency’s effect on the economy. Technically, the SC has only reinstated banking services to pure virtual currencies exchange as it’s their fundamental right to trade and continue businesses and removing banking services, essentially paralyzes their entire system.[ix]
India has a tremendous scope and opportunity to regularize digital currencies and let them run through proper channels and monetize on the same. Technology is expanding at a pace that legislation cannot possibly keep up with. With proper regulations, India can introduce virtual currencies gloriously and with the authorities backing them, more users will invest in since they will be more secure.
CONCLUSION
Crypto-currency is only in its initial stage and assuming whether it will be the future of money is going to be very soon. With the support of government followed by appropriate regulation and, consumers designate their clear inclination for them, it will not be long before it goes ordinary. It can be advantageous to the business environment including merchants and consumers, who will then have a worldwide digital payment mechanism. In India, the question that whether crypto-currencies will sustain long enough till they replace fiat money can still not be answered at this given point of time. Even the authorities have not shown a clear vision as to how they are planning to regulate it.
REFERENCES
[i] ‘5 reasons why you should go for crypto-currency’ The Economic Times 25 Oct 2017 (available at: https://economictimes.indiatimes.com/industry/banking/finance/5-reasons-why-you-should-go-for-cryptocurrency/articleshow/61184608.cms) [ii] ‘Is bitcoin the future of money?’ Flat World Soultions(available at: https://www.flatworldsolutions.com/IT-services/articles/bitcoin-cryptocurrency-future-money.php) [iii] Jonathan Garber ‘The first investor in Snapchat thinks bitcoin could realistically be worth $500,000 by 2030’ Business Insider 08 April 2017 (Available at: https://www.businessinsider.in/tech/the-first-investor-in-snapchat-thinks-bitcoin-could-realistically-be-worth-500000-by-2030/articleshow/58080265.cms) [iv] ‘Deutsche bank ‘Imagine 2030’ report imagines crypto adoption’ Blockchain Beach 28 Feb 2020 (Available at: https://www.blockchainbeach.com/deutsche-bank-imagine-2030-report-imagines-crypto-adoption/) [v] Ibid [vi] ‘RBI ban on crypto-currencies’ The Economic Times 13 Aug 2020 (Available at: https://economictimes.indiatimes.com/topic/RBI-ban-on-cryptocurrency) [vii] Kevin Helms ‘Indian Supreme Court rules in favour of crypto-currency- RBI ban lifted’ bitcoin.com 12 July 2020 (Available at: https://news.bitcoin.com/indian-supreme-court-cryptocurrency-rbi-ban-lifted/) [viii]Internet and Mobile Association of India v RBI, W.P. No. 258 (2018) Supreme Court [ix] The Constitution of India 1950, Article 19(1)(g)
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