The Great Indian Rupee Trick
Pardon the tongue in cheek headline. Rules of the game for modern content writing.
So, the Reserve Bank of India has finally bitten the bullet on introducing a CBDC in India. I have always argued before on Medium and elsewhere about the utter chaos that is the crypto Gold Rush. The mad dash is over. People are back on solid ground and now recognize the places where blockchains do indeed provide value — transparency and immutability. In my opinion, it is a sage move by the RBI which underscores the fact that blockchains cannot survive without mandates. Mandates of governments which are answerable to people directly or indirectly. Now, we can argue till we are blue in the face about how effective governments are, but, the bottomline is they are still better than random crypto bros springing up new coins on a whim and rug pulling without consequences.
This falls in line with Digital Yuan. Almost all sovereign countries now recognize that letting the crypto bulls run amok is hazardous to the economy. A country’s medium of transaction cannot be controlled by random power players — which is what almost all crypto infrastructures boil down to one way or another. With people already accusing governments playing appeasement politics for billionaires, the last thing these governments want is someone accusing them of handing over keys to the kingdom to unanswerable oligarchs. The only countries interested in wild wild west cryptos are the same countries where gold would do well, because the government has lost all legitimacy to safeguard the country’s economy. The BIS survey should drive this point home. 81% of governments around the world are thinking of rolling out CBDCs.
The only place for “free market” crypto then seems to be inter-country or interbank settlements akin to current SWIFT systems. But even these will never be given up to ownerless entities like the Bitcoin blockchain. A more likely outcome is that of different central banks coming together on an economic agreement and rolling out a blockchain of their own for controllable international settlements. In short, none of the “free market” crypto are going to the moon. We will have crypto and blockchain adoption going forward — yes — but all of it sanctioned by governments and international agreements. It was good while it lasted though. Some shrewd people made a lot of dough, but I’m afraid this hard libertarian wet dream is about to come to an end. Now, I’m aware I am only the seven hundred millionth person calling for the demise of sanction less crypto but at least I am consistent in the possible path that crypto is going to chart in spite of being an early adopter. Such game changing technology needs to be deployed step by step and with extreme caution and oversight. This simply is not the domain of fly by seat of pants speculators. Indeed, most governments that have given serious thought to this technology have taken cautious steps with varying degrees of acceptance of DLT (Distributed Ledger Technology).
In my opinion, a proof of stake chain with rigorous formally proven methods of financial operation is the most suited for these use cases. This is the main reason I am a big fan of the Cardano project and Charles Hoskinson. He correctly judged the magnitude of change blockchains can bring and thus, the demand for utmost mathematical rigor in establishing and operating a blockchain platform. Now, I am not asking people to hodl ADA but, the level of seriousness, thoroughness and deliberation with which ADA is being developed, it is bound to be most long term successful crypto technology, either on its own, or through adoption in a country’s CBDC, with the main staking being done by largest banks in the country along with the central bank controlling the biggest stake.
So in short, Crypto — yes. Blockchain — yes. Non-regulated random coin rug pulls — Big fat NO.
UPDATE: This was initially published just days before the spectacular FTX collapse. I am going to have a tiny little moment of self appreciation here.
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