Why Bitcoins Are Bad For India?
The Prime Minister Narendra Modi, scrapped 500 and 1000 rupee notes on November 8th 2016. The 500 and 1000 rupee notes made up 86% of currency by value in India. These old notes were replaced by new 500 and 2000 rupee notes. For demonetization to succeed, it was very necessary that secrecy had to be maintained. It was not possible to print the new 500 and 2000 rupee notes in sufficient quantity, to replace the old notes. In the early days after demonetization, shortage of these new rupee notes, led to a cash crunch. There were long queues in front of banks and ATM’s, as you and other citizens struggled to get cash.
Today, there are sufficient new 500 and 2000 rupee notes at banks and ATM’s. Banks have still imposed, cash withdrawal limits of INR 24,000 a week. Demonetization has led to the growth of digital payments in India. You and all citizens have started using credit/debit cards, mobile wallets, BHIM App, UPI and Aadhaar enabled payments.
There is also a cryptocurrency called Bitcoin which is used in Western countries. This cryptocurrency Bitcoin, has been banned by the RBI. What is a bitcoin and why you should not be using it? Let’s find out. Want to learn more on investment planning? Just leave a missed call on IndianMoney.com financial education helpline 02261816111 or just post a request on IndianMoney.com website. IndianMoney.com offers Free, Unbiased and on-call financial advice on Insurance, Mutual Funds, Real Estate, Loans, Bank Accounts and capital markets.
What is a Bitcoin?
The Bitcoin network came into existence on January 2009. Its creator is Satoshi Nakamoto, believed to be an alias. Bitcoin is a virtual currency or a cryptocurrency. This is a currency which is not controlled by any Government in the World. It is not managed by any Bank or Organization. This currency works on digital platforms.
Bitcoins are generated through a computer program and can be converted to cash, after being deposited in a virtual wallet. Reserve Bank of India (RBI), has issued a warning against the use of Bitcoins calling them unsafe and says they promote money laundering.
How does Bitcoin Work?
Bitcoin is an open-source software program whose supply is controlled by a computer algorithm. A network of users called “peers” decide to buy and sell goods or services using Bitcoins. The value of a Bitcoin depends on the trust, placed in it by the Bitcoin community. Bitcoin runs on block chain technology, which is nothing but a shared public ledger. Every confirmed transaction is included in the block chain.
The value of the Bitcoin has surged from $757 to over $1200 in the last few months. Today 1 Bitcoin = INR 82,127.
Why Bitcoins are bad for India?
1. RBI is against the use of Bitcoins
RBI is against the use of bitcoins and has cautioned you and other users who hold bitcoins and those who trade in bitcoins, about the financial, legal and security related issues of using Bitcoins. RBI has also said that if you transact in Bitcoins, you do so at your own risk. RBI has not given any Company, the permission to trade in Bitcoins or for that matter, any cryptocurrency. The Deputy Governor of RBI, R Gandhi, has said that virtual currencies stored in the digital form are vulnerable to hacking and malware attacks. Virtual currencies have also been used for illegal activities and to promote money laundering.
2. RBI cautions you not to use Bitcoins
RBI has not given permission to any firm/business to create, trade or use virtual currencies. Bitcoins cannot be used as a medium of payment. The firms trading in Bitcoins have not obtained any registration, authorization or permission to trade in Bitcoins. If you trade in Bitcoins, you do so at your own risk.
3. Bitcoins promote illegal activities
Bitcoins are used for illicit and illegal activities. They promote money laundering in India. If you trade in Bitcoins, you would be breaking anti-money laundering laws. Bitcoins could be used to finance terrorism in India.
RBI has said that virtual currencies like Bitcoins are a financial, legal and security risk. Yes, Bitcoins promote money laundering and can finance terrorism in the Nation. You must never trade in Bitcoins. Be Wise, Get Rich.