Cryptocurrencies should not be seen as a currency. The name cryptocurrency is a misnomer.
They do not serve as an alternative to the Rupee or other fiat currency. They really are an
asset/software that is used to write on the blockchain and for incentivising the nodes – if
at all they serve as an instrument for payments, this use case is limited to within the
blockchain
ecosystem to incentivise the nodes.
The users are individuals or companies that submit transactions into the blockchain network
to be validated
and processed. The banking equivalent would be you logging in to your banking account and
submitting a
transaction to send money to another account.
Cryptocurrency has bloomed since 2009. Some commercial banks, including some investment
banks, introduce
their own cryptocurrencies for the purposes of settlements and transactions with certain
financial institutions and corporations. At the moment, Central banking is not interested
in cryptocurrencies, but this may change in the future.
The government is concerned about:
- The use of cryptocurrencies for illicit activities.
- Tax evasion.
- Money laundering.
- Loss of control over monetary policy and flight of capital overseas.
Yes. However, all new technologies pose risks. There were concerns around the
use of the printing press (jobs), automobiles and aeroplanes (safety), internet
(surveillance-free communication) as well, as with many new technologies such as
artificial intelligence, drones and robotics. A ban is usually not a good answer
to regulating new technologies.
