India Planning To Ban Bitcoin & Other Cryptocurrencies - FUD Or A Sign Of Things To Come?

India Planning To Ban Bitcoin & Other Cryptocurrencies - FUD Or A Sign Of Things To Come?

By LocoSocioCrypto | LocoSocioCrypto | 24 Nov 2021


India recently announced plans to potentially ban Bitcoin and other cryptocurrencies within its borders. While we have seen this story before with China, I'm left wondering if this is the same sort of thing, or different?

Why, India, Why?

In my opinion, one main reason for India's decision to ban crypto stems from their plans to introduce a Central Bank Digital Currency (CBDC). CBDCs function basically the same as FIAT currencies in that a government can produce or cut production of them as they see fit - however they are built using crypto technology. 

This means that even though India's new currency might be run on crypto technology (making it much more efficient and safe), the government of India will still maintain a high level of control over the network and its participants. This can include doing things such as freezing accounts, setting up arbitrary transaction limits, and having a stronger level of scrutiny of clients.

I don't actually oppose CBDCs from a theoretical perspective. Unlike some crypto enthusiasts, I do not hope for anarchy and zero government regulation. Government regulation can offer consumers and citizens protections, help to stabilize currencies, and reduce the chances of fraud or scams. I believe CBDCs can improve a nation's economy, however free market ability needs to remain intact.

My problem with India's decision is they are basically saying to their citizens "our CBDC is the only way you can have exposure to crypto". By banning citizens from using Bitcoin (which can easily be sent internationally, and is independent of government forces), India is placing way too much restrictions upon its citizens and their individual autonomy.

Potential Concerns?

While we have not yet seen a decision like this in the United States or Canada, India's decision does show a potential roadblock to Bitcoin adoption and its ability to continue growing. If a government were to ban its citizens from using Bitcoin (and enforce heavy authority and repercussions for doing so), demand for it could be incredibly affected. While some might argue this will make it scarcer and thus more expensive, the opposite could just as likely come true. With virtually no demand, prices could plummet as no one would be interested in buying an 'illegal' asset.

Transitioning to solely CBDCs also erodes one of the greatest strengths of cryptocurrencies - their decentralized nature. As mentioned earlier, I believe a world is possible where centralized and decentralized cryptos can exist in peace. However, moving to a strictly centralized version of cryptocurrency really doesn't change anything - with citizens completely reliant on government policy and (presumably) inflated currencies.

Final Thoughts

Ultimately, I hope that most Western governments will decide NOT to outright ban Bitcoin and cryptocurrencies.  I am curious to hear what you think India's decision means for Bitcoin and society in general. Please leave a comment with your thoughts!

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LocoSocioCrypto
LocoSocioCrypto

I am interested in the inter-connection between cryptocurrencies, society, and psychology.


LocoSocioCrypto
LocoSocioCrypto

Examining the inter-connection between cryptocurrency, society and psychology.

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