A Look at India’s (non) Love Affair with Cryptocurrencies
History will tell the full story of cryptocurrencies: the good and the bad; the foolish versus the wise. Cries to ban everything from Bitcoin to Dogecoin, with arguments implicating serious flaws in permissionless systems and the ease with which cryptos help criminals, are often less loud than the cries denouncing poverty, tent cities, the unbanked and India’s caste system which perpetuates a ginormous wealth gap.
According to The Hindu, “India’s richest 10 per cent have been getting steadily richer since 2000, and now hold nearly three-quarters of total wealth.”
India’s caste system is more than 3,000 years old. It successfully stratifies Hindus, placing generation after generation at birth into hierarchical groups — Brahmins, Kshatriyas, Vaishyas and the Shudras, with the street-sweeping untouchables on an even lower rung. Upper mobility is less based on dreams, ideas, ICOs and Silicon Valley-type accelerators. For many, one’s caste informs a lifelong trajectory.
As the BBC reports, “Despite the obstacles, however, some Dalits and other low-caste Indians, such as BR Ambedkar who authored the Indian constitution, and KR Narayanan who became the nation’s first Dalit president, have risen to hold prestigious positions in the country.” But these outliers have not rewritten a system that has granted favorable terms, careers and economic opportunity to certain groups. Caste identities remain.
And along came cryptos. Because cryptocurrencies are inherently decentralized, un-governed and devoid of gatekeeping organizations that are prone to bias and social stratification, effectively acting like a beefy 6’5 bouncer at an New York night club that draws the velvet rope on any loser they decide needs to stay out, digital currencies shimmer with the kind of inclusivity that is at odds with India’s caste identities.
Speaking on February 1 during India’s 2018-2019 budget speech, Minister of Finance and Corporate Affairs Arun Jaitley stated, “The Government does not consider crypto-currencies legal tender or coin and will take all measures to eliminate use of these crypto-assets in financing illegitimate activities or as part of the payment system. The Government will explore use of block chain technology proactively for ushering in digital economy.”
While moving toward a digital economy is in step with the growing digital world, spurred by the internet, government-controlled blockchains are not cryptocurrencies, and they belie the very principles that make blockchain technology revolutionary and massively disruptive.
Speaking to Quartz in an interview, Shaktikanta Das, India’s former secretary of economic affairs said, “This (virtual money) is a parallel currency system developing and it is not legal. There is no legal provision which backs up these transactions.” He added, “There is the danger of cryptocurrencies leading to money laundering, terror financing, and unaccounted transactions. It will pose a serious threat to the financial stability not only of India, and in fact more, in the case of the developed world.”
What has and continues to destabilize the world is the legality of poverty, food insecurity and the growing numbers who are losing access to healthcare, jobs and basic education. Illiteracy is legal and it’s everywhere, with 757 million illiterate adults worldwide. What has and continues to undermine stability is wealth inequality, uneducated citizens and centralized resources that are managed and manipulated for profit.
The cryptocurrency dream is a huge one. It may be tinged with an excessive dose of teenage idealism and the Millennial fever sweeping 20-somethings away from traditional investments, and away from the usual marriage-baby-home-ownership cycle, but it holds the promise of rectifying entrenched and systemic ills that plague and destabilize countries and families.
Meanwhile, India’s Subhash Garg panel, established in December 2017, is studying the impact of cryptocurrencies. Guidelines and regulations are expected in April, and aim to clarify the legalities of trading, mining and using cryptocurrencies.