Not the Expected Revolution

THAT INDIA IS now banning cryptocurrency for everyone except the Government itself shouldn’t come as a surprise to anyone except those who were riding the last uptick in the bubble, hoping to make the same fortune that the earlier ones on this train reaped. It is a near perfect example of that famous saying by the billionaire George Soros on how to make money—you ride a false trend and get out just before it gets discredited. This is possible only if you are exactly aware of the vehicle you are travelling in. Unfortunately, most people aren’t.

Think of all the reasons given for cryptocurrency being the future of money—that it is brilliant technology that does away with the state altogether and it makes all kinds of safe and new transactions possible, which in turn unleashes economic forces that will then lead to more prosperity. Plus there is the great liberty from the shackles of the state which has a monopoly over currency. It is echoing the same arguments once given for the power of internet and its freedom. Except that while the internet did come to pass and it did bring in a revolution, it didn’t sidestep the state at all; instead, governments kept pace regulating, monitoring and occasionally even bottling it up—just ask any Kashmiri. Or wait for that manual Xi Jinping will never write—how I turned social media into an instrument of the state. Only a handful of those early movers of the internet managed to sustain their success. Cryptocurrencies will be no different.

The Indian Government’s Bill, which is going to be tabled in Parliament in the Winter Session, according to Moneycontrol, says: “No person shall mine, buy, generate, hold, sell, deal in, issue, transfer, dispose of or use cryptocurrency, the bill proposes, according to the sources…The Bill has also decided a definition of cryptocurrency. Any information such as code, number taken that promises a price will be considered Cryptocurrency, the sources said.” Instead, the replacement will be the cryptocurrency to be introduced by the Reserve Bank of India. Prices of Bitcoin, the most popular in the category, immediately tanked.

The modern state does not like free spirits transcending borders, and cryptocurrency was that and more. You could use it for all the things that ordinary money couldn’t do without leaving a trace behind. That is why cryptocurrencies are a favourite of drug dealers and scamsters. But so long as it was underground currency, there was nothing about it that threatened the state. But the last few years, cryptocurrency wanted legitimacy. But to make it legitimate is to cede one of the powerful tools in a government’s hands—the ability to follow the money trail. This is used not just against criminals, but also political adversaries. That is why the Enforcement Directorate, which oversees economic crimes across state borders, becomes such a useful agency. No government, especially in dictatorships and immature democracies where power is the ability to stay in power, was going to give it up.

About The Author

Madhavankutty Pillai

•