Would it be digital black economy post demonetization?
If money laundering and cash crunch weren’t enough of a trouble the demonetized India was facing, it is about time India gets ready to face digital black money laundering soon enough. Forbes report suggests that the likes of Bitcoin trading has already seen a huge plunge after Rs 500 and Rs 1000 notes were pulled back from circulation.
With the use of digital currency like Bitcoin, it is seemingly possible to turn black money into digital black money, the tracing of which is nearly impossible for the greatest of tech savvy. While common people might struggle to even understand how this works, the criminals and black money traders are already into with, if reports by Forbes is to be believed.
Yes1. Ease of hiding: Bitcoin does work like physical currency. They are digital crypto currency, generated by computer instead of being physically printed or minted. It is stacked digitally in a decentralized system which no individual, bank or authority can have control over. It is globally traded and is one of the surest forms of currency which can be used all over the world in the most concealed of ways.
2. Anonymity: These bitcoin and darknet accounts are completely anonymous. There is absolutely no link to your physical address or name or any other details that can be used to track a person. The whole process is so decentralized and widespread that it is absolutely impossible to trace the person linked to the accounts that are usually very transparent.
3. Surge in price: Zebpay, which has more than 130,000 users have affirmed that only a few days after the demonetization was announced, the price of one bitcoin surged from Rs 51,600 to Rs 69,500. It is clear that the demands increased and people are lured to it. It is also very clear that black money holder have already discovered the loophole where they could still stack their money.
4. Surge in interest: It is also being suggested that Indians have shown a lot of interest currently in crypto currency. There are about 20 bitcoin startups, out of which three are funded – Zebpay, Unocoin and Coinsecure. They have reported heavy rise in people’s interest to invest in Bitcoins despite the surge in price. There has been threefold increase in new users in all these bitcoin ventures after November 8 when demonetization was announced.
5. Seeking for alternative: With the sudden ban on currency notes of higher denomination, people with stacks of black money would have definitely sought after the next best alternative. Gold and property investment were also announced to be the next big target of the government and hence bitcoin came into play. The government definitely overlooked this big alternative that is almost impossible to raid through unlike property and gold.
6. Unprepared: In an era where technology offer a solution to the most crooked of problems, government overlooked the possibility of turning the black money market into digital black money market. They were clearly unprepared and in a haste to hatch the plan that they were not ready for. Now while common people suffer from cash crunch and their livelihood gets affected in the worst of ways, criminals, terrorists, corrupt politicians and industrialists have found their loophole to plunge into and stay safe.
No1. New policies: The issue has already been put forth for consideration by the Indian government. The government has promised to work on bitcoin and blockchain framework soon enough and close the loopholes through which black money laundering are being done on the digital networks. New regulations will be framed to ensure that flow of black money through these platforms is kept in check.
2. Worldwide: The chain of bitcoin trading is a worldwide network that has been flourishing since 8 years. The startups in India are also not new. Some of them have been operating since 3 years or more. The wide flow of new users into bitcoin exchange could be the result of demonetization but it cannot be said that it is only reason that opened the gates. They existed before and will continue to exits. Blaming the government’s move to curb black money is unreasonable.
3. Fewer merchants: Very few merchants in India accept bitcoins. It will take some time for people to get acquainted to the idea of crypto currency and trust their investment with them. Since RBI is already looking into the prospects and designing solutions for it, it can be safety assumed that regulations will soon prevent digital black economy from flourishing.
Reports suggest serious hike in bitcoin investments, higher than what people trusted gold investments with, which is a clear sign for the government to take the situation seriously now rather than being caught off guards later.
