Future of Cryptocurrency in India 

Future of Cryptocurrency in India

The generations living in 2020, have witnessed the rapid growth and development of information & technology and communication. They are the part of an era where everything around us is digitalized, where everything is being developed in reference to IT. In such time, it is very obvious for the medium of exchange also to step up in the world of digitalization. Therefore, as a result, cryptocurrency is developed, which is being used for trade transactions and has the capability to change as per the needs of the market. “Cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. It is a new form of digital asset based on a network that is distributed across a large number of computers.” The cryptocurrency is formed on a design that focuses on working as a medium of exchange. It has become so popular that there are more than 1600 cryptocurrencies available and is still growing.

As per market capitalization, the largest blockchain technology network is currently used by the BITCOIN. Bitcoin is considered as an original cryptocurrency and created in 2009. It allows users to make the peer to peer transactions transparent as they use blockchain technology on open-source software. Unlikely normal bank transactions, there is no central authority to control or regulate the transactions in Bitcoin; instead, it is controlled by users themselves. The Bitcoin allows users to maintain anonymity and at the same time, it makes transactions transparent. It works on a peer-to-peer cryptocurrency network as there is no master or head to regulate or control the same. It also allows users to do an unlimited number of transactions and operates on low operation costs.

With such numerous benefits, on one hand, the Bitcoin is not devoid of lacunas (Disadvantage of use of BITCOINs):

• The major drawback of using Bitcoin is that the transactions done by way of Bitcoin are irreversible in nature whereas in a normal transaction when done through the bank, it can be reserved as they are insured by to the involvement of the bank in the transactions process.
• Secondly, there is no policy of audit or freezing the Bitcoin wallet. So once, you lose your wallet credentials, it’s impossible to retrieve the currency stored in it.
• The other setback faced by Bitcoin cryptocurrency is that it is not an easy process to be used by the commons. If one is not aware of the technicalities of the computers, it becomes really difficult for the users to do a simple transaction.
• The other reason which draws back the usage of Bitcoin is the delay in the time of confirmation for a transaction done. Since Bitcoin works on peer-to-peer (P2P), it takes few seconds to confirm the same, therefore these few seconds act as a window for the fraudsters or cheaters to hop up in, resulting in double- spending of the same Bitcoin.

The validity of Bitcoin In India:

Bitcoin in India is not illegal but is banned by the Indian banking system. Due to the absence of an ombudsman, the security threats possessed by the use of virtual currency, and its negative impact on the Indian monetary system, the regulator of Indian banks, i.e. Reserve Bank of India banned the use of virtual currencies vide a notification dated 06 April 2018. The RBI issued this notification while exercising its power conferred by section 35A read with section 36(1)(a) of Banking Regulation Act, 1949, section 35A read with section 36(1)(a) and section 56 of the Banking Regulation Act, 1949, section 45JA and 45L of the Reserve Bank of India Act, 1934 and Section 10(2) read with Section 18 of Payment and Settlement Systems Act, 2007.

This was later challenged in the Supreme Court in the matter of Internet and Mobile Association of India vs. Reserve Bank of India (2020 SCC Online SC 275), where the court on 4th March 2020, lifted the ban on cryptocurrency imposed by the RBI. The circular passed by the RBI was majorly challenged on two grounds; first, that the RBI does not possess the adequate power to regulate the ambit of virtual currency as it is not a legal tender rather is only a tradable commodity. Secondly, even if the RBI possesses such power, the circular issued by them has disproportionately infringed the petitioners’ rights.

So the Supreme Court held that, even though virtual currency cannot be equated to fiat money or legal tender, but functions the same as of money, and therefore under such circumstances, the RBI had the power to deal with it. On answering the second ground, the apex court held that the circular was used in a disproportionate manner, as no such authority regulated by RBI has suffered any damages, loss, or adverse effect, either directly or indirectly. So as a result, the complete ban on the use of virtual currency was inappropriate and at the same time, virtual currency falls under the remittances of RBI. Therefore, the judgment passed by SC has paved the future for the crypto currency in India.