If you don’t believe it or don’t get it, I don’t have the time to try to convince you, sorry”[1]

—– Satoshi Nakamoto

Abstract

Talking about the new technology and related development, Cryptocurrency is perhaps the result we could see. The world’s digitalization and the emergence of such evolutions have brought up a great change that needs analysis and overview that our article certainly aims for.

Bitcoin is the most famous cryptocurrency till the date which is a Virtual Digital Currency that works on a technology i.e. Blockchain. Now, to understand these terms and related incongruity in a better way we need to analyze them briefly.

Introduction

Blockchain as a term can be divided into two words i.e. block (a digital piece of information) and chain (number of information add-ups), which cannot be more than 1MB. It aims to provide Digital information that can be stored uniquely and cannot be edited further. While talking about Bitcoin and Cryptocurrencies these are some popular examples of Blockchain. Bitcoin is digital currencies that work on blockchain technology and are the best version of cryptocurrency. These currencies have unique complex code attached to it that is decoded by a program known as “hash”. And computers, which acknowledge such codes, are rewarded with special secret currencies (cryptocurrency) the process of which is known as “mining”.

Golden cryptocurrency service sign button on white computer keyboard

Bitcoin: An ultimate version of Cryptocurrency

Bitcoins and various other cryptocurrencies as technology have provided an exhaustive and radical introduction to the revolution of digital currency yet it still doesn’t fit from the perspective of a legal point and is often misunderstood as a digital outbreak that cannot exhibit more pros and cons. Bitcoin is a form of virtual currency and a combination of different digital encryption (computational puzzles and codes).

As it is a combined form of Cryptographic and digital encryption the bitcoin relies on and works as per the Cryptographic and different network of users for any type of digital transaction. Bitcoin works on two broader aspects one is that it tries to use computational puzzles so that it can regulate a different version of digital currency units  to secure timestamping to record a ledger of the transaction and prevent the extra money that could be possibly spent.

Is Bitcoin the only form of Cryptocurrency?

As mentioned above Cryptocurrency is the vast technology that paves for a different digital currency, which is not restricted to one of its kind but many exits in the frame mentioned below.

  • Litecoin: It is one of the fastest and affordable cryptocurrencies. It is considered a good competition for Bitcoin and Ethereum.
  • Ripple: It is again a good currency and is ranked second in ranking talking about market capitalization. It is one of the most promising investments in the list.
  • Ethereum: – It has been known to be the most influential one and the reason for it is that it enables thousands of projects to develop on top of it has a great network establishment, which is the greatest of its strength.

The exhaustive list doesn’t end here but the above-mentioned are definitely the best products of cryptocurrency.

Now, the epoch-making issue i.e. How bitcoin and its entirely different characteristics makes it the ‘face’ of cryptocurrency needs to be discussed. The main factors that define the value of cryptocurrency are as follows: –

  • Utility: This defines the inborn traits of the coin that derives more and more people to execute the transactions, and this high demand pushes the price and growth of the currency same happened with Bitcoin it has both great storage and exchange value that derives various people to become its customer.
  • Scarcity: Also because of its ultimate finite nature it leaves all the cryptocurrency behind and emerges as the best of the crypto coin.

Bitcoin has been a dominant player in its market dominion since 2009, but hundreds of others have joined the fray as well.

As of May 2020, Bitcoins market cap has just crossed $128 billion, while their coins are still struggling to achieve a number close to the value.[2] All the above factors separately when taken into consideration make it’s possible for Bitcoin to emerge as the most popular one among all. Now one of the major questions that arise is: –

What effect will China and the US’s cold war will have on Cryptocurrencies (Bitcoin)?

Yes, seeing from a birds-eye view the negative impacts of such currencies, one might take a foot back while thinking of them as a medium of exchange for any stock or material.

But what makes it possible is the devastating condition presented because of the pandemic, US and China will try to patch up relations with their close counterparts; this will start affecting the free trade competition across the board.  These situations will tighten the monetary policy that will have inflationary effects, as various countries will try to grow at a steady rate at any cost possible.

Due to these conditions’ cryptocurrencies will drastically experience change cause more and more countries have shifted completely on an online platform and this exchange of platform at such a large level will firstly, empower these digital currencies to come into the picture and also because at a very large scale employers and employees both are looking for all the best possible ways to cross the barrier made due to the pandemic outbreak and cross these border payment systems because these geopolitical rivals can become fierce any time.

Supreme Court Judgment: An Overview with case analysis

In the Year 2018, Reserve Bank of India (RBI) imposed a ban on the dealings of Virtual Currencies through the medium of the financial institution. After many years of analytical observation on how Cryptocurrencies deal with different aspects, it seems crystal clear that it is not secured from the economic as well as a defensive point of view.

The main contention for banning financial institutions dealing with Cryptocurrencies is that it has no authorized form of virtual currency to which they passed a circular to ban this digital currency (Cryptocurrency).

Just after the infliction of the ban on working of Cryptocurrency, the Internet and Mobile Association of India challenged this decision of RBI by mentioning its rights to do so. When this decision of RBI has held the industry of cryptocurrency got crippled and to ease this complicated situation the Supreme Court addressed this petition of the Internet and Mobile Association of India.

In the Case of Internet and Mobile Association vs. Reserve Bank of India[3], Internet and Mobile Association filed the petition and pleaded that dealing and trading in Cryptocurrency was a legitimate and authorized business activity and RBI has no control over this as it is considered as a commodity, not as a currency of the nation. The Supreme Court held that the ban imposed by RBI on financial institutions from dealing in various forms of Cryptocurrency is not within the ambit of RBI’s power and struck down a ban by the Reserve Bank of India on banks and financial institutions from dealing with cryptocurrency holders and exchanges.

The Supreme Court also stated that till the date RBI has not proved that any of the entities that are regulated by it, face any type of loss due to its dealing with cryptocurrency.[4] So, there lies no question of banning the dealings and exchange of Virtual currencies (Cryptocurrency).

Conclusion

Taking into consideration the malicious activities related to virtual currencies, the government perhaps got a way to ban it, instead of retrospectively trying to analyze them they unreasonably tried to ban the fintech technological industry.  A way to curb the ill and promote the positives are always present and the same applies in this case scenario i.e. the government should try to promote the new technology keeping the legality and industrial revolution in their mind.

The Government should come up with a sound regulatory body that builds up a striking balance between users’ privacy and market growth. Though there are greater risks involved in the initial process if it enters the market but a greater risk if handled carefully can bring huge success, and that is what we should aim for.

———————–

[1] Thefinanceclubimi, Cryptocurrency Ban Lifted in India, THE EDGE (March 22, 2020) https://thefinanceclubimi.wordpress.com/2020/03/22/cryptocurrency-ban-lifted-in-india/.

[2] Paul Muir, Bitcoin will ‘surpass the market cap of gold’, ASIA TIMES (November 11, 2019) https://asiatimes.com/2019/11/bitcoin-will-surpass-market-cap-of-gold.

[3] Internet and Mobile Association of India vs. Reserve Bank of India Writ Petition (Civil) No.528 of 2018.

[4] Ashima Obhan and Bambi Bhalla, India: Supreme Court Of India Reverses Ban On Cryptocurrencies, mondaq (March 19, 2020) https://www.mondaq.com/india/fin-tech/905136/supreme-court-of-india-reverses-ban-on-cryptocurrencies.

Author’s Details

Asma Khan and Rohit Raj, B.A.LLB , 1st Year, Lloyd Law College, CCS University

officialrohitraj01@gmail.com (Rohit Raj), officialasma02@gmail.com (Asma khan)

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