While the world is raging over cryptocurrency, RBI hinted to launch its own Cryptocurrency Lakshmi. Let us try to figure out about digital currencies.
What is Cryptocurrency Lakshmi?
Virtual Currencies which are also known as Digital currencies or Crypto currencies is currently a cause of concern for Indian government. Reserve Bank of India had also cautioned the users, holders and traders of Virtual currencies (VCs), including Bitcoins, about the potential financial, operational, legal, customer protection and security related risks that they are exposing themselves to time and again. Just like Bitocin, RBI is thinking to launch its own Cryptocurrency Lakshmi
In order to examine the existing framework of digital currency, Department of Economic Affairs, Ministry of Finance has constituted an Inter- Disciplinary Committee to look into the matter. The Committee has been tasked to
1. Globally understand the complexity of digital currencies in India and around the world.
2. Examine the regulatory and legal structures being adopted by various countries and their Central Bank.
3. Provide guidelines for protecting consumer interest, check money laundering, any technological flaws, complexity of overall processing, etc.
By market capitalization, Bitcoin is currently (22nd September 2017) the largest network, followed by Ethereum, Bitcoin Cash, Ripple and Litecoin. With virtual currencies (example Bitcoin) gaining hype in India, our government might launch the country’s own digital currency called “LAKSHMI” or Cryptocurrency lakshmi. Reserve Bank’s executive chairman Sudarshan Sen had said the central bank is not comfortable with non-fiat cryptocurrencies like the Bitcoin.
Disadvantage of cryptocurrencies or virtual currencies
- No Valuation is guaranteed as there is no central authority. No one can guarantee the valuation as we see in Rupee. If rich merchants dump cryptocurrencies in one go then other users will lose hugely due to devaluation.
- No physical form of these non-fiat currencies makes it mandatory to be converted to other currencies before used in physical stores.
- Rapid fluctuation and unpredictable currency. Also have potential to build in Deflation.
- Digital currency like Bitcoin might have unexploited flaw in its system which only time will tell us. That’s why our government is worried.
- Although many countries are slowly adopting digital currency these are not widely accepted. Some government might force merchants to not use such digital currencies. China is latest example.
Advantages of digital currencies or crypto currencies
- Cannot be counterfeited or reversed arbitrarily,
- Immediate settlement
- Lower transaction fee, especially when done in other countries
- Access to everyone
Although a lot can be written and discussed about advantages and disadvantages but it sounds sensible to avoid new things when you usually don’t understand the business. If you understand the block chain the means which Cryptocurrencies work, then you are welcome to the world of Digital Currencies. But first let the dust settle down as we at top10stockbroker.com want your hard-earned money to be safe with you and also grow with time.