Benson's Blog

27/12/2013

The recent events surrounding Bitcoin in India, stemming from a circular issued by the Reserve Bank of India have seen a flurry of confusion across the Bitcoin India Community.

The circular clearly outlines opportunities for Bitcoin in India and sets a firm set of rules to be followed in order for it to gain acceptance outside the community. In no place are there indications of Bitcoin being banned or made illegal. Here are the opportunities to be targetted for Bitcoin to succeed and push forward. Click this link to view the circular issued by the Reserve Bank of India.

• Keep your software wallets secure. Keep paper wallet backups and follow best pactices. If you do not know how. Ask, there are several forums that help with even the minutest of queries. That being said. Bitcoin is not for zero-knowledge users.
• Use an arbitrator between transactions. Have a clear cut contract before doing any Bitcoin transaction. There is no central authority that will take ownership of your loss with Bitcoin or the loss arising out of it.
• Bitcoin is highly Volatile. There are mechanisms in place to bridge that gap as well.
  • Processors: Use a processor if you need to accept Bitcoin for your business. The processor should be able to convert BTC to INR and cover any risk for your business.
  • If you need to send Bitcoin to someone, Buy it and send it within a timespan of 15 – 20 minutes. Avoid holding Bitcoin for too long if you are using it to transfer value.
• Talk to a lawyer, if you think that is expensive or out of reach, do not start a business to trade Bitcoins. Research and understand the scope of the regulations and take advice when needed.
• Maintain and share records when requested by the authorities if you run a Bitcoin based business. Pay taxes on gains and check with a CA if needed. Asking the RBI for a statement and acceptance of Bitcoin must be reciprocated with a community effort of keeping an eye out for their interests as well.

The past few years have seen Bitcoin attract attention from outcast markets and in order to stem the usage of Bitcoin in those markets, the community decided to maintain records, abide by regulatory requirements and keep Bitcoin accessible to everyone.

We are now at the threshold of a point where we either see Bitcoin surface in a controlled, well established manner. Or it may be classified to the cash only markets that India is heavy on.

Bitcoin is not an investment or an asset as yet. It is a high risk experiment on a technology and social level. It requires greater centralization in order to be recognized by the current regulatory regime in India. Crypto-currencies need a new legal framework in order to maintain parity with this technology.

They key here is for us to start talking about the technology behind Bitcoin rather than the ideaology behind it. It does hold a lot of conversational material, but needs to grow beyond that into the technical mammoth that it is.

Bitcoin is not just a store of value and a transfer mechansim, it is also a bountiful library of secure well tested code, that has numerous applications outside of its financial spectre.

Although shaken by the recent events, the core of the community and several intelligent people around the Legal and Intellectual communities are aware of Bitcoins potential. India has the potential to rocket past the rest of the world due to the variety of uses of Cryptocurrencies across our diverse nation.

The RBI are currently going down the correct path of investigating end points rather than stopping Bitcoin itself. This is a futuristic market and any country undergoing a modernization routine cannot afford to stand back or impede growth.

Crypto-currencies that are decentralized and open source, cannot really be shut down. The recent Bitcoin Conference in Bangalore, which had over 200 delegates saw this technology in action as people discussed it and disceted it and still did not have a clear understanding of how to stop it.

The Bitcoin community, now has to ‘wait and watch’ and aid in any way possible to bring about this positive movement for Crypto currencies.