Bitcoin is a cryptocurrency that came into existence in 2009 as a digital medium of exchange. Flash forward 8 years, and Bollywood celebrities are tweeting about investing in Bitcoin! Many of the technologies we now take for granted were quiet revolutions in their time. Smartphones that came into existence about 15 years ago are now powering entire businesses. In less than a decade since its introduction, the value of 1 Bitcoin has surpassed many important milestones just as it breezed past the value of an ounce of gold in March 2017. While Rs. 10,000 invested in Gold in 2010 would have essentially stayed the same by today, the same amount invested in Bitcoin would have grown to over Rs. 20 Crores. Bitcoin itself has been one of the greatest investments in the history of mankind but the technology behind it – the Blockchain, is about to quietly change money, business and the world as we know it. In this post, we will try to give you a quick brief on what does all of this mean and what are some of the developments taking shape towards blockchain adoption in India.
Quite simply, blockchain is a technology that enables automation by eliminating middlemen & transferring their role over to computers. Bitcoin uses the blockchain to eliminate Banks and financial middlemen. In 2015, another cryptocurrency named Ethereum came into existence which is now dominating the headlines. Built on top of Bitcoin, Ethereum is using the blockchain to power an entire world without middlemen! Banking is only the beginning; other industries such as insurance, forecasting, stock trading, real estate, ride sharing, cloud storage, online music and several others are being disrupted with the rise of Ethereum. You could think of Ethereum as a world super computer that consumes Ether (the fuel) for operations on this computer.
Although Ethereum is built on top of Bitcoin, it holds greater potential than its predecessor. Most likely, Bitcoin will only be used as a digital store of value (Gold 2.0), while Ethereum continues to find new real world applications every day. Apart from technological superiority, another thing that sets ethereum apart is the adoption by big corporations such as JP Morgan, Microsoft and other members that make up the Enterprise Ethereum Alliance (EEA). EEA is a consortium of established companies, startups and non-profits, that are working together to enhance Ethereum and the systems that surround it to increase real world applications of ethereum. In what is being called a milestone in India’s blockchain sector, the Government of Andhra Padesh recently entered as one of newest members in the EEA. Here is what Special Chief Secretary & IT Advisor to the Government of Andhra Pradesh, J A Chowdary had to say “As Fintech Valley Vizag in Andhra Pradesh aims to become a vital financial technology hub, it is working on adopting more robust systems that are cost-effective. With security issues all over the world, there is no doubt that blockchain technology is set to be the biggest disruptor not only in the financial world, but also a number of online and offline sectors. We are keen on integrating blockchain technology into governance and look forward to our collaboration with Enterprise Ethereum Alliance and provide market access to the community”.
One of the immediate benefit for India seems to be the potential savings on fund transfers. India continues to retain the #1 spot as the top destination for inward remittances attracting over US$60 billion every year. Using cryptocurrencies for these remittances, there is a potential to save US$ 7 billion which is a direct wealth transfer from various global companies (charging hefty fees) to the pockets of families who need it the most. Several other benefits like this makes this technology a really promising one. The Reserve Bank of India (RBI) believes that Bitcoin should be classified as a commodity rather than a currency while Securities & Exchange Board of India (SEBI) disagrees. While the RBI & SEBI are currently fighting over who will regulate the digital currency, the Indian Bitcoin economy is making moves towards self regulation. The Digital Assets and Blockchain Foundation India (Dabfi) is an association of people interested in Advocacy of use of Digital Assets like Bitcoin, Ether, etc within India. Essentially, a Self Regulatory Organization (SRO) similar to the Mutual Fund Association of India, Internet & Mobile Association of India, or the Payment Council of India can help shoulder the responsibility of regulation instead of burdening regulators like SEBI.
As almost every major institution in the world is heading towards exploring various blockchain applications, now is the time for you to invest in Ethereum – the blockchain platform of choice.