Reserve Bank of India Predicting the Future of Bitcoin

Reserve Bank of India Predicting the Future of Bitcoin

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The Deputy Governor of the Reserve Bank of India (RBI), R. Gandhi, gave a keynote address last week at a fintech conference stating that Bitcoin has value and is eliminating currency. However, he also gave several reasons why digital currencies that are not backed by the government will fail to achieve mass adoption.

Also read: Bitcoin Startups Form Association After India’s Virtual Currency Warning 

Fintech players, leading bankers, technology experts, and policymakers gathered last Wednesday in Mumbai at the conference called Picup (Platform for Innovation and Collaboration with Upcoming and Promising) Fintech 2017. The event was organized by a collaborative effort of IT industry body Nasscom, industry chamber Ficci, Indian Banks’ Association (IBA), and the Boston Consulting Group (BCG).

Bitcoin is Eliminating Currency

The Deputy Governor opened the event with a 20-minute inaugural address. He discussed fintech, crowdfunding, blockchain technology and Bitcoin, with the general subject of digital currency taking up the latter half of his speech.

Gandhi introduced Bitcoin by giving a short history of its origins, explaining that the digital currency is rooted in “anarchist philosophy”. He then outlined a few previous attempts at a stateless digital currency from the Cypherpunks movement mentioning May, Back, Dai, and Szabo by name before noting that:

Bitcoins have acquired value. They are being used for settling varieties of economic transactions. People are using them as investment also. And a store of value. So currency is being eliminated.

The Mainstream Won’t Adopt Bitcoin

Reserve Bank of India Predicting the Future of Bitcoin
R. Gandhi, Deputy Governor, Reserve Bank of India

After highlighting Bitcoin’s accomplishments to date, Gandhi gave many reasons why “the masses” will not prefer it, claiming that Bitcoin has only flourished among its “initial rounds and circles”. He also alleged that the confidence in Bitcoin, or any other digital currencies based on a blockchain, is limited to its early adopters and those who are more comfortable with risk.

“The initial round is always filled with adventurists and risk seekers”, he conveyed. “The moment the masses get in, the risk avoiders get in, they will need greater confidence for its acceptance and continuance, and that can come only if an authority endorses it”, he said.

The broader public, he described, will be unlikely to embrace Bitcoin because the authorities have not done so. For instance, “No established framework for recourse to customer problems, disputes and grievances, and chargebacks etc. is feasible with this kind of framework”, he said.

Claiming that the mainstream will not have confidence in digital currencies as a replacement for state-issued currency, he noted:

My arguments against these virtual currencies stem from two key elements, they are the concept of confidence and anonymity. The currency should be able to sustain these two elements forever. It will impair its exalted status once either of these elements gets affected.

Bitcoin, a Pipe Dream?

Reserve Bank of India Predicting the Future of Bitcoin“We can see that in these types of virtual currencies, there is no central bank or monetary authority”, he expressed. “They pose potential financial, operational, legal, customer protection and security-related risks”. The anonymous nature of Bitcoin will also frighten them, he claimed.

Despite admitting that bitcoin has eliminated some amount of currency, the central bank governor said: “It may remain a pipe dream that blockchain will eliminate currency by ushering in virtual currency. It is unlikely”.

What do you think of the RBI’s view on Bitcoin? Let us know in the comments section below.


Images courtesy of Shutterstock, Picup, and RBI


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  • milmacrs

    Mr. Gandhi doesn’seem to know what he is saying. Once you give a bitcoin adress a person’s name or an ID number, it it not anonymous anymore.

    Moreover, how can he speak about trust in government authorities, considering the latest fiasco with currency bills in India?

    It’s just the other way around. People will eventually understand that central authorities are not reliable at all. The most rekuable currency in tge world reads “In God We Trust” in its bills, not in the FED we trust. Whereas “In Cryptography We Trust”.

  • The man sounds like an idiot by “admitting that bitcoin has eliminated some amount of currency”. I’ve been using Bitcoin for five years and my Bitcoin has never, not even once, tried to eat or devour my cash! In order for something to be “eliminated” it must first be consumed (and it usually stinks when it is). Bitcoin can be exchanged for cash or digital fiat or anything else that a seller and buyer agree on but it in no way destroys or eliminates the thing traded for the Bitcoin. The idea is so idiotic it is shameful but considering the shameful behavior of the Indian Central Bank already (when it eliminated the cash they already had in circulation) then, well, we’ll consider this lunacy as par for the course.

  • Jidotonii Amzat

    Same goes for Nigeria. The financial authorities of (Nigeria & India) are only afraid of loosing control over money belonging to the masses. This has led them to cook up facts to scare the crypto-currency illiterates even further away from being aware.

    • Hennessy Hemp

      Apparently the black market in Nigeria is trading $1.00 worth of Bitcoin for more Naira than for the same dollar in American greenback notes…I find this to be one of the most important metrics for bitcoin…if it represents more than a dollar for a dollar’s worth, we’re going up.

  • Paul Bond

    Brought a smile to my face. This is one of the most disconnected claims I’ve heard in a long time. I did actually have to check that I wasn’t looking at content from Onion or similar. I guess he’s not walked the streets with the common people in a while.

    Slightly off topic: I was in a Microsoft office in UK many years ago and the person I spoke to proudly claimed “Microsoft has no competitors other than piracy”. I asked what he thought of the Linux movement, to which he laughed “they’re much less than 1% of the market”. – it may only be a little more than 2% now, but there is the small matter of Linux Kernel known as Android. Yeah, can’t wait to upgrade my phone to windows.

  • Ghosty

    I’ve got one thing to say to Mr. Gandhi…. https://www.youtube.com/watch?v=b2pD0B9Rfps

  • Robert

    All bankers are by their very nature liars. Next topic…

  • justin

    I trust Bitcoin more than Ghandi. In Bitcoin I trust…

  • VITTHAL K GADE

    Any innovative ideas are rejected by the old age people. Mr Gandhi deputy governor is one among them.
    It is called India’s Bad luck.
    Living in fear won’t give you success. Living in fear will give you only Graveyard.
    Live Courageously , Live Bold

  • Hennessy Hemp

    So the best thing for a decentralized peer to peer currency is for a government to regulate and centralize it? That’s like saying lets take this beautiful piece of art and fix it by lighting it on fire.