Digital Currency - Why Enthusiasts Are Wrong

Bharat stands at the threshold of a remarkable digital transformation, a country that has entered the digital age with e-commerce, mobile payments, and a rapidly growing tech sector. Amid this digital progress, Voices that proponent digital currencies as the solution to Bharat's economic challenges are growing louder.?

It is high time we looked at digital currency differently. It is nothing but an illusion of attraction at best. And Bharat, more than any other emerging economy should be very careful about jumping blind into this ocean full of bubbles of speculation.

The Empty Promises of Financial Inclusion

Bharat, with its sizable unbanked population and complex financial infrastructure, is an easy target for those advocating digital currency as a solution. The claim, digital currencies could provide banking services to unbanked masses, bypassing middlemen and allowing peer-to-peer transactions, sounds ideal, right?

Wrong! First, Digital currencies are still largely used by tech-savvy individuals with financial knowledge to navigate exchanges and wallets. The idea that a rural farmer in Chhattisgarh, with limited digital literacy, could be introduced to the world of block chain-based transactions is absurd. Even with the intense spread of mobile phones and the internet, Bharatiya remains vulnerable to financial fraud and exploitation. Digital currencies would only increase these risks rather than mitigate them.

Secondly, Digital currencies aren’t tied to any government or legal framework. While that’s a feature very much liked by libertarian enthusiasts, it’s a nightmare for a developing economy like ours. The country already struggles with a shadow economy, where black money and corruption undermine economic growth. Introducing a system of untraceable, anonymous digital currency will only add fuel to the fire.

A Threat to Economic Stability

Bharat’s economy relies on stable financial systems backed by the government and supported and regulated by institutions like The Reserve Bank of India (RBI).

Digital currencies like Bitcoin, Ethereum, etc. are naturally volatile. They are grounded in speculative demand rather than any intrinsic value, which is a serious risk. Imagine a significant portion of the population holds wealth in digital currencies. A sudden crash like 50 to 80% downturns Bitcoin has already experienced, could wipe out billions in wealth overnight. This kind of speculative instability is not what Bharat, or any country for that matter, can afford.

Importantly, the decentralized nature of digital currencies would make it difficult for the Bharatiya government to control its monetary policy like adjusting the money supply, by printing money, adjusting interest rates, etc. “How does one regulate something that is specifically designed to resist regulation?” is a question to ponder upon.

Digital Currency and Bharat's Black Economy

Bharat has long struggled with the black economy. Digital Currencies, with their power of invisibility, would turbocharge this parallel economy. Tax evasion, money laundering, and terrorist financing would find a unique, easy-to-use, untraceable channel.

With decentralized, unregulated digital currencies, black money could flow invisibly, completely bypassing the formal economy and undermining government’s tax collection and anti-corruption measures.

The Crypto Bubble Will Burst, Let’s save ourselves.

Even in global markets, the digital currency frenzy is looking increasingly unsustainable. It’s a bubble, pure and simple. Bitcoin, Ethereum, and the hundreds of other currency coins that have arisen are not backed by any real-world assets or governments. Such bubbles always burst, whether it’s the dot-com bust, the housing market collapse, or any other speculative manias in the past.

And the stakes are even higher in Bharat where crores have already lost their savings in ponzi schemes. tens of millions) have already lost their savings in ponzi schemes. The crash of digital currencies if they were to become a popular instrument would be catastrophic. The wealth of middle (and upper-middle) class savers, young professionals or investors could vanish in nanoseconds, placing great strain on an economy already suffering from unemployment and inequality.

What Bharat Really Needs: Regulated Digital Finance

Bharat should focus on advancing digital finance in a way that benefits the masses.

Unified Payments Interface (UPI) system is a great example of how technology can enhance financial inclusion. It’s fast, efficient, and, most importantly, regulated. UPI ensures transparency, traceability, and accountability - all things digital currencies lack.

Bharat’s future lies in digital finance, but not in chasing the volatile promise of crypto. We need to strengthen existing financial frameworks, enhance cybersecurity, and improve financial literacy, without exposing the economy to unnecessary risks like digital currency.?

The mirage of digital currency is seductive, but Bharat should not fall for the hype.

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