That is the only logical explanation to ban Bitcoin
RBI has placed a bill in parliament that wants to ban possession of private cryptocurrencies like Bitcoin and Ethereum.
Last time around, they passed circular asking banks to stop serving clients investing in Bitcoin. This was struck down by the supreme court, calling it unconstitutional.
RBI now wants to bring about a law being passed in parliament, to get possession of Bitcoin illegal. They say investing in Bitcoin has a huge risk for customers as there are a lot of hacks, etc.
Now one would wonder if investing in 10,000 odd penny stocks in the Indian stock market is less risky, which govt still allows?
Every day there are numerous stories about people losing money through credit cards/debit cards, yet RBI is constantly promoting digital banking.
If RBI was indeed worried about consumer protection and hacking risks, they could create strong custody solutions for Bitcoin like in the USA / Europe, but they haven’t.
In fact, in the last 4 years of RBI being aware of Bitcoin, they haven’t passed a single regulation or law for consumer protection.
This clearly shows that they don’t care about consumer protection but have an ulterior motive.
Now, why is RBI so worried about Bitcoin and other cryptocurrencies, and why do they want govt to ban Bitcoin?
Not to mention banning Bitcoin is simply practically impossible and 100% unconstitutional and will be stopped by the supreme court, still, doesn’t want to give up easily.
Read this to understand fully why banning bitcoin is impossible and illegal or click this https://bit.ly/3j11Cb1
What is Bitcoin, how it works?
The simplest way to understand Bitcoin is this:
Bitcoin is just like a typical bank account, your bitcoin account can be accessed by a login and password (in the case of bitcoin there will a long 72 letter password that you need to store safely), however unlike traditional bank accounts, which are controlled by your bank and your govt, Bitcoin is not controlled by anyone nor can anyone STOP it.
Bitcoin is run by a swarm of computer servers as it’s decentralized i.e., no single party controls it, and it’s run by 1000s of servers run by a software called blockchain.
Now the beauty of Bitcoin is, there is very limited issuance of the Bitcoin currency just like Gold or precious art, so for this reason, the RICH have been going gaga about Bitcoin and pushing its price to new heights every year.
click this to learn , why are the RICH going gaga about BITCOIN ??
As you can see, the price of Bitcoin is constantly going up. You must have listened to many stories of people investing in Bitcoin and people making a lot more money than in the stock market, etc.
Three main reasons are this
Bitcoin has extremely scarce issuance compared to STOCKS, CURRENCIES or Bonds, REAL Estate, or even GOLD. So by simply holding BITCOIN, you will be making more money than any other asset. Apart from this, Bitcoin offers a unique property that other assets don’t offer.
Bitcoin exists only online as a digital bank account and is not controlled by any bank, for this reason, anyone in any country can invest in Bitcoin.
People in countries with hyper-inflation like Venezuela, Nigeria especially LOVE Bitcoin (their govts obviously don’t like Bitcoin, no govt does).
People in rich countries like the USA/Europe love bitcoin as they can preserve their wealth for a generation without fear of confiscation, for this reason, Bitcoin is often called Digital GOLD.
What is the real reason why RBI is so scared of Bitcoin?
You see, all the governments in the world run budget deficits, and they borrow money from central banks to fill the gap. Central banks give this by printing money.
Money printing by central banks is what creates inflation, that is the real reason why prices constantly keep growing
Ever since all countries got off the gold standard, this is what has been happening, and govt deficits and debt have been growing larger and larger and, as a result, currency circulation has been growing larger and larger as central banks print more and more currency.
As explained before, when currency circulation grows, it creates more inflation, i.e., everything starting from your Coffee and breakfast and your HOUSE price keep growing up.
So what, because of inflation, HOUSE Prices going up, so that’s a good thing, right?
Unfortunately no, when the price of your HOUSE goes up, everything else goes up too, so you are not getting richer in real terms. However, should you decide to sell your House, the tax you have pay is much higher coz tax slabs are changed only every 10–15 years and that too very slowly.
This is the reason why Govts love inflation, and it keeps pushing for it across the world
Govts and banks have created a massive Real estate bubble for this reason, so they can not only benefit from printing more money and spending it but also earn more taxes when you sell your house.
Bitcoin — The NEW WORLD order
Now, as you can expect, inflation also causes a rise in the prices of Bitcoin, but here’s the real kicker.
Unlike Bitcoin, more houses can be easily built, in fact, house building costs less and less as technology improves, so building more gets easier and easier.
But unlike houses, MORE BITCOIN cannot be created no matter how much we try as its SUPPLY is restricted by SOFTWARE and MATHS.
So what happens when a constantly inflating supply of currency (like all FIAT currencies) meets a scarce asset like Bitcoin, year on year, the price of Bitcoin keeps going up, and it’s really unstoppable, coz again, Bitcoin has limited supply, unlike Houses/Stocks.
If the price rise of Bitcoin continues, more and more people will be attracted into investing into Bitcoin as more and more people invest into Bitcoin, the price keeps going up more, and the cycle continues.
This is the exact reason why RBI is scared of Bitcoin
a) Bitcoin is not controlled by them.
b) new Bitcoin supply is very low.
If the whole world realizes this and starts buying into Bitcoin, every other asset like REAL estate / STOCKs will start imploding.
If prices of HOUSE start going down, everyone will start selling their houses too. This will create further panic and push the prices of houses lower and the prices of Bitcoin Higher.
Now, why can’t govt simply print more money, so the prices of houses keep going higher?
In theory, yes, if govts print more money, the house prices will keep going up, but so will the price of Bitcoin, in fact, the price of Bitcoin goes up much much higher than the price of Houses, coz the supply of Housing is not limited, and real estate developers are constantly building more and more houses.
( Apart from this, With near-universal Internet access and ‘CORONA EFFECT,’ more and more people will shelve their plans to buy real estate in expensive cities and simply opting to rent out).
Can’t govt simply not shut down Bitcoin Network?
No, they can’t, you see, Bitcoin runs on a decentralized network of 1000s of servers that run in multiple places across the world. If govt needs to shut down Bitcoin, they need to shut down all the servers at once in different places. This is simply impractical and impossible to stop.
Not to mention, illegal, unconstitutional, and again “Practically Impossible.”
So what? What’s the issue RBI has if Bitcoin keeps growing higher and higher?
The issue is this, if the whole country starts investing in Bitcoin instead of investing In Real estate ( and simply rents out ), GOVT loses a lot of TAX Revenue.
- Govt makes a lot of tax money when you buy a house ( in fact the highest of all investments compared to Stocks etc., and that’s why they promote real estate heavily).
- Govt also makes taxes on your Rental income every month/ year.
In fact, in many countries, capital gains tax makes up 20–30% of a nation’s income, including India.
Now how do you think a govt can fill this tax shortfall?
Govt’s can raise income taxes or other taxes like GST / VAT easily as raising Incomes taxes, or GST affects the Economy and slows down the economic activity and reduces the govt’s ability to collect more taxes.
So, the only way governments can fill up the budget deficit is by simply printing more money.
However, as explained before, printing more money creates inflation and pushes up the price of Bitcoin a lot more than real-estate or stocks (which don’t have a supply limit like Bitcoin).
If the price of Bitcoins keeps going up, more and more people will stop buying real estate/stocks and buy more Bitcoin instead, which further reduces the tax revenues of Govt.
THIS IS EXACTLY WHY NO GOVT LIKES BITCOIN
Why is RBI especially worried about Bitcoin and the fall of the rupee so much?
India is especially in a bad situation compared to the rest of the world
you see, India has the highest NPAs in the world
India has the second worst NPA ratio among large economies
For the last 50 years, bad banks have been simply rescued by Govt by printing new money without any worry.
With the advent of Bitcoin and decentralized scarce money, govts can longer print money like there’s no tomorrow.
There is a PRICE TO PAY now, Now it’s their “Karma is a bitch” time.
Can govt’s really Not Ban or stop Bitcoin?
First things first, cryptocurrencies are not like radioactive substances that emit radiation so that the govt can easily sniff them and catch the holders, they are lying on your phone, computer, and even paper, so catching offenders is nearly impossible this way, which is what they do with GOLD if govt finds large holders of Gold (like 5 kilos or more) they will simply seize it or put some arbitrary tax of 50%-80% and sell the gold for Rupee ( this is why rich people don’t invest in gold anymore)
Having said that, there are over 2000 cryptocurrencies on Coinmarketcap.com and 1000s more invented every day,
So the question is govt imposing a blanket on all these new coins ??
If so, will govt imprison a 5-year-old kid who accidentally holds crypto as he earned some crypto when he played a game??
Will Govt imprison millions of people who earn BAT through the Brave browser?
Now some of you might think, well govt will not ban individual citizens but only traders? On what basis, I ask. Even traders are citizens of a country, and they have a fundamental right to life and liberty.
If you can’t arrest someone for possession of crypto, you can’t arrest a trader for holding the same, this is the fundamental law of equality.
Now let’s say govt comes up with a rule saying they will arrest folks who hold more than $10,000, there is one tiny issue here, first things first… cryptocurrencies have this annoying ‘anonymity’ feature, which makes it nearly impossible to establish strong identity connection, so courts can never put anyone in jail for holding any amount of cryptocurrency.
In the worst case, users can simply transfer the cryptocurrencies to other wallets (which happens by default in HD wallets) and stay within the legal limit of $10,000 or whatever.
Unless citizens disclose their holdings voluntarily, govt has no way of knowing how much anyone owns precisely. This, dear reader, is not a good way to implement strong laws.
Here’s where the ban really really backfires.
Imagine govt does manage to arrest someone for holding some amount of crypto ( not 5-year-old kids, in which case there will be riots on the streets ). This news will spread like wildfire, with most media shilling 24/7 about what cryptocurrencies are and the best ways to avoid holding them. This fear psychosis will create the most powerful PR that cryptocurrencies can ever get as everyone wants to avoid jail time no matter how remote it is.
As days progress, the media houses will start discussing the justifications for the ban and the arguments will start falling one another and slowly govt will lose trust in the eyes of people. This democracy is a nightmare for any politician with the hope of re-election. Not to mention by this time, crypto-friendly entities will be lobbying hard to stop harassing cryptocurrencies ( DAO like Dash or EOS worker proposals can be really helpful in these scenarios, which theoretically can even bribe politicians without impunity 🙂 ).
People in the street don’t care /understand money laundering, KYC, Anti-terrorism, inflation, and gazillion other financial laws and will never agree to be jailed for these silly reasons.
Read it in full click this https://bit.ly/3j11Cb1
With Bitcoin, RBI doesn’t have a real game plan, unfortunately, and that’s why they absolutely hate Bitcoin.
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Is RBI worried about Rupee collapse? was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.