Will the Bitcoin boom continue?

K. ARAVIND

The past week has seen extraordinary progress in Bitcoin. As Bitcoin approaches its all-time high, market analysts are anxious to explain why.

Bitcoin prices have doubled in one year. In December 2017, the price of Bitcoin reached an all-time high. Within a year, the price had dropped to $ 3,136. Observers point out that Bitcoin prices may move to new heights.

At the same time, investors in India who want to invest in Bitcoin need to be extra careful. The Central Government is moving to ban cryptocurrencies, including Bitcoin, in India. The move is to bring in legislation to overturn the Supreme Court ruling that lifted the ban imposed by the Reserve Bank of India on cryptocurrencies. Concerns about the potential for the use of cryptocurrencies for counterfeiting and crime are pushing the government to bring in legislation.

The trading of cryptocurrencies such as Bitcoin in the country continued even after the ban by the RBI. The Reserve Bank of India (RBI) has banned cryptocurrency transactions using banking channels. Transactions between cryptocurrencies also continued. At the same time, the Supreme Court ruling led to the resumption of consideration for cryptocurrencies, including Bitcoin, as an asset sector.

Prior to the RBI’s ban in 2018, there had been significant investment in cryptocurrencies. At the beginning of 2018, the revenue of the ten largest cryptocurrency exchanges in India was Rs.40,000 crore. The exchanges generated revenue through the premiums charged for buying and selling bitcoins.

Bitcoin transactions have grown significantly in India since the ban on banknotes. Later, however, the volume of trade declined significantly. Cryptocurrencies are not regulated by any agency, as the stock market, mutual funds, SEBI and insurance products are regulated by the IRDA and banks by the RBI. Therefore, there is no room for Bitcoin investors to complain about any kind of fraud.

The Reserve Bank of India says cryptocurrencies, including Bitcoin, are an unsafe investment. Cryptocurrencies have no asset backing. Only trade takes place in these. These are imaginary currencies that are not recognized by any central bank in the world. The Central Government has already made it clear that this is not a legal investment.

Apart from the Reserve Bank of India, other central banks have also warned of the dangers of speculation in cryptocurrencies. Fluctuations in the price of cryptocurrencies are not based on economic criteria.

Those who want to invest in Bitcoin after seeing the current boom should keep all these factors in mind. If the central government enacts a law to ban it, it will be a severe setback for Bitcoin investors.