Another great disruption in the monetary world.
Crypto currency is very common word for the last few years and Bitcoin has been the most famous brand in this sector. While writing this article news popped up that Amazon was going to accept Bitcoin as payment for its e commerce transactions. This announcement is going to be the game changer for the Bitcoin as Amazon platform is selling almost everything which a common man needs. It means alone Amazon etc E Commerce companies can give lot of sustainability to the Bitcoin which in turn will nudge people to have faith and confidence in using Bitcoin etc as transactional currency instead of keeping them merely an investment instruments due to increase in their exchange rates vis a vis to Dollar. Now Govt must intervene so that Amazon cannot declare such parallel currency to become common man’s obsession or possession.
The crypto currencies do not have any regulators and guarantors for their values in denominations. This is the biggest drawback and insecurity for their holders and investors. Despite this, crypto currencies are getting public support because of their universal acceptability and escape opportunities from the currency conversion charges to be paid by buyers of different currencies. Since crypto currencies can straightway be stored in digital wallets and paid globally without carrying them physically, they have been very convenient and less costly currencies to visitors going abroad.
The biggest danger emerging from the crypto currencies is that enforcement agencies do not have any control whether Bitcoin etc. have been earned legally or paid legally for the valid transactions, globally. That is the reason crypto currencies are the favourites of underworld to do all kinds of transactions and storing the money digitally. Since crypto currencies are based on block chain technology, there is nil possibility of tinkering them from inside at software level but they are vulnerable to be stolen if the security passwords of wallets are stolen are cracked etc.
There is hardly any mechanism to trace and track those (Crypto currencies) or seize them as per the norms of criminal jurisprudence along with jurisdictional boundaries as they can be globally shifted without any checks and balances. The crypto currencies may be very easy to use but they have lots of national security and safety of public money concerns as they cannot be considered to be equivalent to the legal tenders which national currencies are mandated to have.
To respond to the growing demand of crypto currencies, India too has planned its own digital currency. Digital currency is the digital version of actual currency that can be stored in digital wallets as cash and can be spent like normal rupees etc. The national digital currency is different from digital transaction and crypto currency. The benefit of this is that the cost printing notes is nil but there is a requirement of robust technology with back end monitoring of the trails of digital currency. Besides, the digital currency can be monitored from the back end on the basis it’s digital footprints and trails to keep a watch on the illegal transactions and other criminal issues. Thus tracking of digital currency is easier than paper currency which make it more secure than paper currency if taken or stolen illegally. Besides, this can be easily loaded in wallets either through virtual ATMs or through various banking apps etc.
Once we have uploaded the digital cash, we can use it for any valid transaction more securely than cash, cheques or drafts. The instant transferability etc. are its super virtues. It is safer to carry and no fakers can fake it also. So the problem of counterfeit currency is also solved with the inception of digital currency. Of course, the digital currency will definitely be based on the block chain technology to give it the best cyber safety features. I think that except for low denomination notes, all big notes can be digitised. The Reserve Bank of India may issue digital currency using the block chain technology with unique codes and denominations, transferable to anywhere, maintaining the nuances of collaterals as it does with regard to legal tender.
The issue of cheque books and drafts etc can become irrelevant as these digital currencies will be more safe and user friendly with regard to banks, payers and payees. In the back end, these digital currencies will have complete movement trails from origin to exact locations, bringing more precision in the banking processes and law enforcement agencies, tracking the routes of illegal or criminally taken away money. So the cost cuts in the printing of currencies, clear trails for money tracking, with no possibility of counterfeits and customer and bank friendly digital currencies are the future. Here I would like to point out that digital currency should not be confused with digital transactions we do. Even today we do digital transactions but they are co terminus to paper money. Digital currency itself is an asset and currency both. It can be digitally transacted in much safer way as its back end trail of denominations and mobilities are far more traceable in real time or on post facto basis.
Once state actors come with their digital currencies, I am sure that crypto currencies will not be required and its illegality must be declared. It can further be enacted that transacting with crypto currencies are illegal as they are neither backed by legal tender nor guaranteed by the sovereign. This will finish these crypto currencies being a hot cake for the underworld or tax evaders.
The digital currency should start initially in higher denominations in parallel to the paper currency. Once people become educated and user friendly, it can replace the large segment of paper currency with digital currency. The uploading and down loading of digital currencies can be designed in way without compromising the safety features. I think that it will disrupt the business of ATMs drastically, perhaps they may not be required at all. This will save huge costs for banks from running and maintaining ATMs. Besides, banks may save lot of money with regard to staff etc. for counting and transporting the paper currencies, printing cheque books and drafts including their clearances which may be instant with the digital currency, being verified simultaneously.
(The writer is M N Tiwari, IPS)