| Verichannel has recently entered into an agreement with Coinapult, a Bitcoin (BTC) payment processing company, to bring a broad range of Bitcoin services to retail jewellers in the US. It has been reported that American consumers are eagerly welcoming the virtual currency. The use of on-line currency may be fast increasing in some European countries like the US and Canada but the Reserve Bank of India (RBI) has dampened the enthusiasm of Indian service providers and consumers by issuing a caution notice highlighting the security, financial and legal risks associated with the use of BTCs. |
| BTC, earlier introduced by a developer named Satoshi Nakamoto (his real name or names is still unknown), in 2009 is an online currency created by users (also called miners) by solving complicated math problems on the internet. BTC is designed in such a way that would produce 21 million coins which can be used for buying things. Bitcoin trading was gaining some momentum in India before its regulatory authority the RBI’s advisory compelled some Indian bitcoin traders to suspend their operations on December 24, 2013 when the Bank asked clarifications on digital BTCs and ways to regulate them. The RBI’s apprehensions included taxation, security risks, losses due to the volatility and above all money laundering. Although Indian regulations do not consider virtual currencies illegal per se, the country’s Enforcement Directorate raided the offices of some companies operating BTC trading websites. |
| The RBI sources have clarified that this is not an attack on BTCs but the Bank wants to prevent money laundering. The Bank’s intention is to stop people from using it in an illegal fashion. While the operators on one hand feel that the RBI’s step could slow the adoption of BTCs as a method of exchange, some people feel that this is a necessary step in the currency’s evolution. The global regulatory authorities are wary of the virtual currency. While on one hand China has instructed its banks not to clear transactions done in bitcoins, Switzerland, on the other hand has said it would treat BTCs as a foreign currency. Only the US and Canada have supported the coin openly. |
| So as far as the usage of BTCs is concerned, India is lagging far behind from other countries like the US, where people are said to have bought Teslas and Lamborghinis with the virtual currency. Sources from research firm The Genesis Block reveal that bitcoin software downloads in India have increased by 17.2% during third quarter of 2013. The percentage is likely to increase with leap and bound in future. A Jaipur based company is developing Indian version of the BTC titled Laxmicoin (named after the Indian goddess of wealth). But a study conducted by the Company in Jaipur and Bangalore revealed that businessmen and consumers were unhappy with the high transaction fees and delays in receiving payment after transactions done via card machines. The Company is also keen on developing a system to enable Laxmicoin payments through SMSs and e-mails. |
| A group of traders have founded a group named ‘Bitcoin Alliance of India’ to spread awareness about the BTCs and mediate with regulatory authorities. But internet giant Google’s Chief Economist Mr. Hal Varian is not optimistic about the future of BTCs since they suffer from being the first in that space. He expressed his views during his speech on ‘The Information Economy in an Internet Age: New Paradigms for Competitiveness and Economic Growth’ in New Delhi recently. Operators in India feel that the RBI would find it difficult to provide a clear framework for BTCs unless it decides to modify several laws. In spite of this, many entrepreneurs here are confident about future of the currency.Posted by Suresh Chotai |
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