India is missing out on the Blockchain revolution
The Reserve Bank of India (RBI) has issued a notice to all regulated bodies instructing them to stay away from companies dealing in cryptocurrencies, setting a negative tone to deter Indian exchanges and startups, while internationally it is seen as a hostile move by the central banker. This will lead to India missing out on the blockchain revolution and the benefits it entails.
Additionally, RBI recently replied to an RTI stating they did not do any research before taking this decision.
Blockchain and Cryptocurrencies are hailed as the biggest revolution since the internet and they are here to stay, because it is not possible to “ban” or block these currencies. They employ a distributed ledger which runs on nodes that can be run by anyone and are usually spread across the globe much like the peer-to-peer Torrent protocol. Practically speaking, it is impossible for a government to ban them. It is likely the governments that provide a friendly environment to companies developing Blockchain / Cryptocurrencies will have a huge benefit from this radical new technology.
Certain countries like Malta, Estonia and Singapore are already seeing the benefits from this revolution. While these countries may have started off well, there is still a long way to go and if the Indian government and Reserve Bank decide to make this country a Blockchain hub, a treasure of benefits are to be harnessed.
Let us look at how the Indian economy can benefit from this revolution.
Recently an Indian cryptocurrency company Enkidu is reportedly shifting their base to Estonia because Indian regulation is not favourable to ICOs, a popular way for crypto companies to raise capital. New Generation exchanges are moving out of hostile countries like China & Japan and into countries like Malta and Estonia. Indian Blockchain and Cryptocurrency startups are likely to follow suit. This is very similar to the brain drain that occurred in India during the Internet revolution, but there is time to stop these companies from migrating while also attracting new international companies to come and set up shop in India.
As veteran financial players including Goldman Sachs, MasterCard and NASDAQ declare that they are entering the space, and some of the biggest banks in India team up with ICICI to power their transfers using a Blockchain, it is inevitable that there will be crypto exchanges and startups, and they will trade in a regulated environment while following guidelines. This presents a huge opportunity for any economy, especially like India, where technology talent is abundant.
A friendly regulation will attract all these companies and their investment will only contribute to the growth of our economy.
Reports say that demand for Blockchain developers has increased as much as 6000% since last year. It is one of the hottest jobs in tech right now with freelancer salaries as high as $250 per hour. As more industries and governments adopt the use of Blockchain, the amount of tech talent required for this industry is only going to increase exponentially. With Indian government’s focus on job creation, training and encouraging youth to learn, this technology can provide quality employment.
With RBI planning to ban trading and exchanges, most exchanges will move out of India and Indian investors will start trading on international exchanges. This means a loss of taxable trade profits for the Indian economy. Binance, the world’s largest cryptocurrency exchange, recently posted a profit of USD 200 million, more profit than that of many Indian banks.
Attracting large international exchanges and Blockchain companies to set up shop here will see a huge in-flow of tax income for the country.
Cryptocurrencies enable transparency and reduction in transaction costs. Even RBI Circulars highlight that there are benefits to this technology. India could benefit by using it to reduce corruption, increase digital transactions, help secure sensitive government and public data including Aadhaar data, and increase the reach of banking through micro-payments and peer-to-peer lending. As the technology penetrates, the use cases will continue to grow.