Topic: Why Bitcoin Is Good For India [NEW POST] (Read 821 times)

The original post can be found here: http://bit.ly/1hSccgZ

India has an unhealthy love affair with gold. The more the country buys the weaker its currency gets. The Reserve Bank of India fights a good fight to try and curb imports through higher import taxes and other not so ordinary measures, but none of these could have the same impact as bitcoin.

Indians love gold so much, the country had to import roughly $53 billion worth of it last year. It’s putting so much pressure on the rupee that Raghuram Rajan (Governor of the Reserve Bank of India) recently had to extend the 10% tax increase on imports until March of this year.

In August of last year the rupee was so weak, The RBI seriously approached two of the richest temples in India, Tirupati and Padmanabhaswamy to sell some of their gold in an effort to bring down imports.

Hats off to the RBI for an innovative approach, but I don’t think the temples sold you any gold. I am pretty sure they held on to it.

Indians buy it for cultural reasons like weddings and festivals, but it is also central to their savings. In 1965 an ounce of gold was selling for 170 rupees, that same ounce now costs 75,000 rupees.

Since the RBI can’t fight centuries old urges to buy gold, and can’t make their own gold, they should embrace Bitcoins on terms that make sense for the economy and on a framework that can be closely monitored.

Bitcoin strengthens the rupee, increases exports, reaffirms India’s place in the global IT industry  as well as contributes taxes to the treasury.

What I am about to suggest goes against a lot of the global bitcoin communities’ beliefs, but I justify this approach as a first of many steps to increasing bitcoin awareness on the sub-continent.

The RBI should immediately give out mining licenses to individuals or companies who wish to participate in bitcoin mining.

Have all miners register their public keys with the RBI for transparency. Anytime any of the miners, sell a bitcoin, spend it or export it for sale abroad they will need to pay the required amount of tax.

All transactions can be verified off the Block chain, if the system is set up right, there is no way the miners can cheat the RBI.

If the miners sell any bitcoin to a local Indian, that individual’s public key will need to be registered as well. Since all transactions are monitored and need to be justified to the tax department, it won’t be an easy way to get black money out of the country. 

India is legendary when it comes to the amount of “black money” it has abroad. Some estimates have over $1.4 trillion stashed away in Switzerland.

I am glad to see the Indian Government has not made bitcoin illegal, but that is not enough. I want to see the Reserve Bank of India actively encourage Bitcoin businesses.

The bitcoin tide is rising and it is only a matter of years until Goldman Sachs or some other major institution starts using the bitcoin protocol to settle some of the tens of millions of trades that happen globally every day.

India is already the operations hub for many financial institutions, without proper guidance or even a friendly atmosphere, many of these banks may send their bitcoin development work to other shores, depriving India of revenue.

Mining bitcoins requires a lot of technical skill and know how. India’s high tech chip sector will benefit directly from mining activities.

The biticoin mining network is already over 256 times faster than the top 500 supercomputers combined. Mining bitcoins is an environmentally low impact business with historically high margins. By jumpstarting this industry, India would be guaranteed to have millions (crores) in bitcoin exports, which means more dollars being sold for rupees.

Yes, this is complicated, and yes I glossed over lots of issues, but in the end bitcoin is the right thing for India and can even help solve a lot of other problems the country faces, such as corruption, having a large unbanked population and not being able sell products or services globally with ease.

I hope this adds to the conversation.