back to article India's central bank calls for cryptocurrency ban

India's Reserve Bank (RBI) wants cryptocurrency banned, according to a statement made in parliament on Monday. The Bank's position emerged in an answer to a question on notice, delivered on Monday by finance minister Nirmala Sitharaman. "In view of the concerns expressed by RBI on the destabilizing effect of cryptocurrencies …

  1. Anonymous Coward
    Anonymous Coward

    Turn your Rupees into magic numbers.The seller will spend some of the Rupees buying GPUs to generate some more magic numbers, and some he'll spend on holidays and parties and property.

    Underpinning crypto is *that* transaction. Behind all the swaps and coins and NFT pass throughs, that is what is happening.

    There is no money there. The claimed value it has, is the value you were dumb enough to pay for it, and that money is now in luxury goods in some conman's new villa.

    To cash out, you need to convince some sucker to pay more for the magic numbers than you did. You need to join the con and be a better conman than the people who convinced you to pay money for magic numbers. You need to pump and dump too, and be a smarter pump and dump-er than the conman who sold you that crap. But of course, it's *their* market, they can dump earlier than you, and your pump just helps them dump.

    https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3267041

    1. Anonymous Coward
      Anonymous Coward

      "There is no money there. The claimed value it has, is the value you were dumb enough to pay for it, and that money is now in luxury goods in some conman's new villa."

      How is that different from the fiat currencies used the world over? There is no gold standard anymore. Currencies are pegged to fresh air and good will. Not all that dissimilar to crypto...

      1. veti Silver badge

        Look up "legal tender".

        If I owe you $1000, and I give you 10 (genuine, central bank issue) $100 notes, my debt to you is paid. You can't demand some other form of payment and get a court to enforce it. If you can't handle the cash, that's entirely your problem.

        (There is a grey area around contracts that stipulate a specific method of payment, but that's contract law, which is always stupid.)

        The bank takes cash. Your utility providers take it. The tax office takes it. You want to clear a debt, cash works. Always.

        Crypto - doesn't.

        1. Anonymous Coward
          Anonymous Coward

          That's a simplified way of looking at it.

          What happens when the UK doesn't accept that the US's $1000 is worth $1000? Back during the days of the gold standard, the value of the dollar was pegged to the value of Gold. That's since been abandoned, so it's all on trust.

          Which again, is no different to crypto. At least with crypto you can see the working out.

          1. iron Silver badge

            Try to pay me in crypto and you will soon find I take payment in only two ways - cash or blood. Your choice.

            1. This post has been deleted by its author

            2. Anonymous Coward
              Anonymous Coward

              Your ideas are intriguing to me, and I wish to subscribe to your newsletter.

          2. vtcodger Silver badge

            Fiat vs Crypto

            Two differences at least:

            1. Governments will always take your fiat money to pay debts like taxes or to purchase government products or services. They may not (probably won't in practice) accept money you've "printed" in your basement. Narrow minded of them. But it's the way things are.

            2. In the US at least Federal Reserve Notes (all US paper money nowadays) contain in small print the phrase "legal tender for all debts public and private." That presumably means that if Elon Musk decides to pay Twitter $1B to get out of his purchase contract using a long line of semi-trailers containing 1500 or so pallets of $1 bills (are there that many $1 bills in circulation?), Twitter has been paid. Twitter (I believe) isn't legally required to even think about accepting the same payment in crypto.

            1. katrinab Silver badge

              Re: Fiat vs Crypto

              There's $5.8tn US of notes and coins in circulation. While they are not all $1 bills, the answer to your question is probably yes.

          3. VoiceOfTruth

            The down voters do not understand. I do not trust crypto. At the same time £ and $ are indeed not tied to anything. £1 today does not have the same value as £1 10 years ago.

            We have seen how much trust people actually have in fiat currency, when those people wake up. In Germany, Germans were a few years ago looking for Euros issued in Germany. Would you want a Greek drachma when the economy collapsed? So why would you want a Greek euro, so went the thinking.

            Money today is not a store of wealth, it is an indicator of debt. You don't believe me? Go and borrow £1000 from a bank, that bank will create £1000 of debt which you now owe. This scheme is just about OK when the going is good, but sooner or later the party will come to an end.

        2. Fred Daggy Bronze badge
          Devil

          Actually, many countries now place limits on the amount of cash in a single transaction. And contractual terms can override the presumption that cash can be used to settle debts. (Depending upon where you are, of course). If the contract is silent on the matter, then, cash is king.

  2. Anonymous Coward
    Anonymous Coward

    straight to the point

    "India's enormous population means a crypto ban would deprive blockheads of a colossal market, and also dent the nation's cherished startup and fintech communities."

    Yep, and also deprive said market of the most colossal of scams since Madoff's ...

    Which is, I think, the whole point ...

  3. wolfetone Silver badge

    Crypto is fine if you treat it as a method of payment.

    It's when people start thinking it's an investment, that's when it becomes problematic.

    1. Pascal Monett Silver badge

      Crypto is not fine.

      Exchanges are regularly folding and "clients" lose everything, while somebody makes off with the money.

      The only way crypto will be fine is if it is handled by companies that have banking charters and the obligation to support the accounts of their clients - in which case, I ask : what's the point ?

      Every country already has its currency that people use credit/debit cards/smartphones for without practically touching any coin (except the USA, but they obviously have a very shitty banking system, on top of their very shitty Internet network and their even more shitty telephone system).

      Crypto is useless. Improve your banking system and the problem is solved.

      1. Gob Smacked

        "Crypto is not fine. Exchanges are regularly folding and "clients" lose everything, while somebody makes off with the money."

        That's just dumb asses sending their good money to some unregulated party hoping to get rich quick.

        Can't have sympathy for that.

        It's about regulation trailing far behind the new fangled money and needs to get itself up to date. There are always fools that just have dollar signs in their eyes and need some protection.

      2. katrinab Silver badge

        I don't think Americans get this, but I can use my bank's mobile app to send money to anyone in the UK. It costs me nothing to do it, and they get the money in about 3 seconds.

  4. DenTheMan

    It is no use as a payment if you have to invest to pay.

    If there were no banks then crypto would be a godsend.

    However, as is, it is as dangerous as global warming.

    And, ignoring the hard right on the make, the science on that was settled 30++++ years ago.

    1. LybsterRoy Bronze badge

      Re: It is no use as a payment if you have to invest to pay.

      If its science it isn't settled.

      That tends to be one of sciences defining attributes.

      Science also tends not to make predictions several hundred years into the future so it can't be tested. That's called fortune telling.

      Is it really 30 years since the hockey stick lies?

  5. Mad Dave

    >"The value of fiat currencies is anchored by monetary policy and their status as legal tender"

    So, nothing?

    >"the value of cryptocurrencies rests solely on the speculations and expectations of high returns"

    Really? So who is giving away all these free cryptocurrencies? Last time I chekced, the cost of the hardware and of the electricity required to produce them wasn't free, and it is from this that their cost, and value, derives.

    1. katrinab Silver badge
      Megaphone

      You may look at Boris Johnson, or Donald Trump, or Joe Biden, or whoever and think they are totally useless. I get that. But a government guarantee, even from an extremely untrustworthy political leader is actually worth a lot.

      1. Mad Dave

        Thing is, the government makes no guarantee of the value of it's own currency either.

        The value of my BTC is backed by the fact that if someone else wants to get some, they can either spend thousands of pounds on mining equipment, or they can buy BTC from someone else. i.e the financial barrier, which derives from the scarcity of BTC, provides security for the value of BTC.

        Unlike GBP, there is a limit to the number of BTC which can ever be in existence. The government wants more GBP? Just print some! Oh dear! What do you mean my currency has been devalued?

        Can't happen to BTC.

        What's that? The governments new digital cryptocurrency wallet has refused your transaction because you hold the wrong political opinion?

        Can't happen to BTC.

        Now what's this? Millions of people have realise that their fiat currency is worthless and are trying to withdraw their own money from their own bank account at the same time, but the bank won't let them?

        Guess what makes that scenario irrelevant? Tht's spot on, it's good ol' BTC once more.

        As far as I can see, there's zero incentive, or benefit to be gained from, the use of fiat currency. In terms of utility, your local HMRC office will be as amenable to accepting £20 notes to pay your tax bill than they would be at accepting BTC to pay it.

        1. katrinab Silver badge
          Megaphone

          You can create an infinite number of different crypto coins though, and there is no particular reason why you should prefer bitcoin over those other coins.

          Also, and this is very important, if the only thing underpinning the value is that someone else might want to buy it off you, that is not a genuine value, it is a speculative bubble.

          1. Mad Dave

            >You can create an infinite number of different crypto coins though

            Much like how there is no limit to the number of fiat currencies, yes.

            >there is no particular reason why you should prefer bitcoin over those other coins

            Okay man, I hope your MoonHotButtDogCoin works out well for you, good luck.

            >if the only thing underpinning the value is that someone else might want to buy it off you, that is not a genuine value

            If anyone wants some, they don't have to buy it from anyone, they can simply pay thousands of pounds for hardware, electricity, rent of a nice temperature controlled environment etc. The value, from either mining it, or purchasing, is determined by the cost to produce it in the first place, as it is with everything from houses to chocolate bars.

            1. katrinab Silver badge
              Megaphone

              No, the value of a house comes from being able to live in it. The value of a chocolate bar comes from being able to eat it.

              If I come up with a more expensive way of making a chocolate bar that tastes exactly the same, people are not going to pay more for it, just because the production cost is higher.

              1. Mad Dave

                And the utility value of BTC comes in the form of the freedom to make mostly anonymous financial transactions.

                Despite what you may tell yourself, the Jive bar from Aldi isn't really the same as a Twix, much in the same way that a mug coin such as Doge isn't the same as BTC. If you don't want to pay for a Twix, or a BTC, there are lots of other options, or buy none.

                No-one is forcing you to buy anything. If you don't believe that the cost of acquiring BTC represents good value, then don't buy any. There's no shortage of other folks buying, just as my choice to buy a Twix instead of a Jive bar is unlikely to have much effect upon Aldis quarterly profits.

                That said, costs are rising, and people are paying more, exactly because the production cost is now higher. Just a few years ago a bottle of Sunflower oil was about 65p in Tescos. It's £2.10 today. (Although that might just be a consequence of living with a weakened fiat currency) To say that people won't pay a higher price for BTC because of the higher production cost is just plain silly. It's by design of the coin that as scarcity increases, production costs increase, causing increase in value. Unless somone starts giving away free electricty and free RTX 3090s, there's no reason to believe that this trend will not continue, much the same as the lack of new houses being built in the UK, with an increasing population, means a major downturn in the housing market is also unlikely.

                1. LybsterRoy Bronze badge

                  -- And the utility value of BTC comes in the form of the freedom to make mostly anonymous financial transactions. --

                  Anonymous? Did I hear someone say blockchain?

                  1. Gob Smacked

                    It can completely be anonymous now yes, development did not stop since the birth in 2009. You lose anonimity if you want to sell into fiat again, where the BTC address is tied to a named recipient. But most BTC holders don't sell if they *really* looked into the protocol and only sell if there's a need for it. And even then, you can use the Lightning network to anonimize the necessary amount to a new wallet, then sell. Never to use that "tainted" wallet again then. No ties to the original wallet, makes it pretty anonymous.

                    Yes, the blockchain layer is completely public and traceable, but the Lightning layer on top can completely hide all transactions (and has no scaling limitations either, does millions per second if necessary).

  6. vincent himpe

    I'll trade 1kg of fishes (head and tail removed) for 1kg of bread.

    anything else is not worth the paper it is printed on or the flipflops that store the bits...

  7. druck Silver badge
    Thumb Up

    Good

    Lets hope the India government follows their central bank's recommendation and bans these wasteful crime tokens.

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