Thursday July 19, 2018
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From paper to plastic to Bitcoins: Changing money with time

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By NewsGram Staff Writer

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With the internet revolution gaining ground in India at a fast pace, and many initiatives on the part of the government to digitize India and take everything online, the days when money (currency) will also be completely digitized don’t seem far.

Bitcoin is one such example. For those who aren’t aware what it is, it can simply be defined as “digital money.” The advantages of bitcoin extend from zero transaction charges and to mobile platforms offering easy buy and sell options, high security and anti-wallet theft options. Handling bitcoins is extremely hassle-free. With one click on your Smartphone, you can do transactions anytime, anywhere.

Bitcoin came into existence around 2009, and is believed to be created by Satoshi Nakamoto, which can be a person or a group of persons. It once gained value steadily, peaking at about $1,100 per bitcoin in November 2013, then its value slid and is approximately $227 per bitcoin now. Also, no government regulates bitcoins yet.

Bitcoins are earned by churning data on the computer, which is also called “mining.” This is done in order to verify transactions.

“I find it (bitcoin app) extremely useful because I can buy online discount coupons and gift vouchers in exchange for my bitcoins,” said Harin Pandya, who works with an event management company in Hyderabad. “I can redeem these from Amazon, Ola and a host of other e-commerce websites.”

Despite all the shiny positives, RBI governor Raghuram Rajan doesn’t seem so convinced about the positive aspects of bitcoin. The main reason being that bitcoins fall outside the purview of regulated financial environment.

Calling them “Crypto currencies”, RBI Deputy Governor, R Gandhi, emphasized that these can be involved in money laundering, tax evasion and terror funding.”

Despite the red flag given by RBI, bitcoin’s popularity continues to rise. Banks and other financial middle-men-organizations are completely out of the picture.

“I have family in New Zealand and I can send money immediately to them using my bitcoin wallet, which they can encash there, making the transaction hassle free,” says Himanshu Sisodia, chief operating officer at Greenleaves Management.

“Though it has depreciated significantly, the value of bitcoins are bound to climb up by next January, because virtual currency is the future and the world will only get more digitised from now on,” said Pandya, adding that he is expecting to get almost 100% return on his investment in bitcoins by this year-end.

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Despite the concerns raised regarding usage of bitcoins, experts believe that with the steady pace of digitization, money is bound to become online sooner or later, and that the world cannot escape bitcoins when such a thing happens to the completion. Since digitizing India means an enhanced push into the direction of cashless transactions, bitcoins will climb up.

Citing the example of Greece, experts have also pointed out that for volatile economies undergoing crisis, bitcoins offer a good alternative.

 

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Indian Rupee: One Of The Worst Performing Currencies

The rupee is still overvalued, according to the 36-country Real Effective Exchange Rate calculation after adjusting for inflation

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Indian Rupee: One Of The Worst Performing Currencies. flickr

The Indian rupee’s plunge to an all-time low of 69.09 against the US dollar, compared to the previous low of Rs 68.865 in November 2016 reflects the ill-effects of US President Donald Trump’s disastrous economic policies on the world at large. Indeed, American protectionism through higher import duties coupled with the consequences of renewed US sanctions against Iran is indeed playing havoc with economies across the world. That the rupee has fallen by more than eight per cent over the last one year is not good news for India, though, there is a silver lining in terms of the possibility of higher exports. The hard reality is that the rupee is one of the worst performing currencies in the world and the consequences of American policies could make things worse.

Not only have foreign institutional investors been pulling out funds from the Indian market, having withdrawn a whopping Rs 46,197 crore in three years, the spectre of higher crude prices due to the sanctions against Iran could disturb the applecart further considering that India depends heavily on crude imports to meet its oil needs. If there is any consolation at all for the rupee’s plunge, it is that most emerging market currencies are crashing.

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Indian currency notes. Pixabay

Also read: Crores of rupees being spent on defunct websites of Municipal Corporation of Delhi

The Reserve Bank’s prop by selling US$400 to 500 million in one-month futures contracts has saved the day for India. Almost an equal amount has been sold through Mint Street. Mercifully, a weak rupee need not be necessarily bad for the Indian economy. The rupee is still overvalued, according to the 36-country Real Effective Exchange Rate calculation after adjusting for inflation. As of May, the over-valuation was 14.67 per cent. This could give exports a boost which is a silver lining. There is also a Moody’s report which says that India is one of the five countries that are least vulnerable to currency pressures amid strengthening of the US dollar due to low dependence on external capital. But the downside is that as US interest rates go up, investors who borrowed at a cheaper rate would find returns from investing in India not worth the risk. On balance, major economic challenges lie ahead of India meeting with would be no mean task. (IANS)