Bitcoin - The Changing face of Currency

From barter system to gold coins, from currency notes to plastic money; the transformation of the currency has always worked on the theory of change. As the world is turning towards cloud-based computing, the latest transition of denomination is virtual or crypto-currency, the Bitcoin. The Bitcoin, a new digital sensation, which is a giant leap in the online payment system with its easy and quick payment features. 

Image Courtesy: Google Images.

             Image Courtesy: Google Images.

It is a unique currency of the internet just as every country has its own. Bitcoin is basically a fund used to make online payments to individuals/companies and purchase online products. Just as a wallet is where we keep money, Bitcoins are stored in a digital wallet called a coinbase, which is also used to send and receive payments secured by a password. Its main feature is that it is a secured transaction as every payment is recorded in the publicly shared ledger called the block chain and all these transactions are confirmed and verified through miners. The most prolific safety feature is that a Bitcoin cannot be reproduced or spent more than once. The processing fees and charges for Bitcoin are almost negligible.

The debatable part is that it has no bank or other such organisation to keep a tab on transactions. But this has helped in payments as fast as around ten minutes. The payments are irreversible, once made cannot be revoked. This has resulted in banning of Bitcoin from some of the major countries.

In such a small time Bitcoin has also became a gamblers bet. From its value of $13 to over $1000 in a time span of just one year is what has heated its popularity. But this currency does have its other side. The new creation has given an edge to illegal activities like illegal gambling and purchase of illegal substances like drugs. As our wallets are vulnerable to theft, Bitcoin wallets too are at risk as well from hackers.Earlier this year, an operator of a US Bitcoin exchange was arrested for money laundering.

The best way to avoid the negatives of Bitcoin is to exchange the same for a national currency as Bitcoin values are highly volatile. Bitcoin must always be purchased only as much as necessary and quickly disposed off unless inclined otherwise.

Indian Economy – The Decline

India is the eleventh largest economy in the world - the economy with the potential of being the largest in the world, by 2050. India’s poverty line has dipped to 29.8% and the literacy rate has peaked at 74.4%. India has an important role in emerging markets and developing nations. It boosts entrepreneurship and innovation. It is one of the biggest pioneers in the IT industry. With youth power bordering on 500 million in the age group of 18-25, India plays a very important role in BRICS (Brazil-Russia-India-China-South Africa). Comprising of all the elements and conditions that exist in a super economy, India’s growth engine still seems like it’s running out of fuel.

In 2008, the Prime Minister, Dr. Manmohan Singh declared that the country would grow at the rate of 8-9%. He predicted the extinction of “chronic poverty, ignorance and disease which has been the fate of millions of our countrymen for centuries.” But contrary to Dr. Singh’s predictions, the growth rate has descended to 5.5%, soaring inflation peaked at 10% and the rupee tumbled unexpectedly, going below 65 per dollar. With the alarming food inflation rate and slack in industrial growth to 2.7%; from June to August, the FII (Foreign Institutional Investors) unloaded $4 billion from the Indian market. There have been rumours abound (denied by government) that India might eventually need an IMF (International Monetary Fund) loan. Last year, a Hong Kong based a political and economic risk consultancy firm rated India’s bureaucracy as the worst in Asia. The Chief Executive Officer of Vodafone even went as far as to state that the bureaucracy was “clearly damaging” the nation.  

The new hope of the Indian economy, in my belief, is Raghuram Govinda Rajan, the twenty third Governor of The Reserve Bank of India and the former Chief Executive Economist of the International Monetary Fund from 2003 to 2007. Huge expectations rest on this man’s shoulders to support the Indian economy and also for the filtration of policies to gain back the confidence of foreign investors. India must go down the ‘stress test’ as Federal Reserve puts it, to help out the sinking PSUs and government banks. It examined the projected income, expenses, credit and capital market loses of 19 banks and provided them with necessary funds. Such measures must be taken for the private institutions as well and also other government bodies.

Looking at the base level of everything even remotely related to the Indian economic scenario, the government must strive to control the inflation rather than the currency rate at the moment as it would not affect the government’s solvency directly.