In a most unsurprising turn of events, RBI took a big dump on the crypto movement in India. This was done in the form of a keynote delivered by the Deputy Governor of RBI on Valentine’s day. I guess RBI love to hate on everything crypto.
Apart from bringing up the usual criticism on how it fails as a currency at the basic level and the inability to mark it as an asset, the note goes on to equate it to the tulip mania. Brutal!
What I found most interesting however was this line:
Notwithstanding their current valuations, if a threshold number of people decide to opt out, the entire values can easily collapse to nothing.Link
This right here is what all companies in the crypto space are currently aiming for. Be so omnipresent before they can be banned. Be so big that there is no option to opt out. Unfortunately, I don’t think such a threshold has been reached as yet. While the speculativeness makes it very attractive for a lot of people, it is a big turn off for an even more significant chunk of people.
Most people are risk-averse and would prefer to have centralised control in return for convenience. Secondly, people love the simplicity that technology brings, but hate the technobabble that is shoved down their throats. Now expecting people to understand code and understand codified contracts on a blockchain is just non-sensical. It feels like companies pushing for crypto did not read the room or rather choosing not to.
But why ban it?
Government entities work in predictable ways. Tax where they see money being multiplied. Ban what it cannot control. Do both to squeeze it till it loses all steam. The reasons used will be the same as the ones in the keynote. Maintaining soverienty and financial stability of the country, along with consumer protection from fraud.
The only difference is that this ban will not be straightforward and will happen over a meandering channel with different departments offering partial point of views and even conflicting ones, half baked laws that seem to change every year and confused enforcement.
For now, I’m staying off.