Professional Documents
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SUBMITTED
MBA (Finance)
MBA(Finance)
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ACKNOWLEDGEMENT
Apart from the efforts of me, the success of this project depends largely on the
encouragement and guidelines of many others. I take this opportunity to express my
gratitude to the people who have been instrumental in the successful completion of this
project.
First of all, I would like to show my greatest appreciation to Dr Geeta Singh. Without the
guidance of whom this project would not have been materialized.
I would also like to express my greatest gratitude to the entire Faculty of Department of
Business Management, who have provided me a cordial environment in the Institute.
Last but not the least, my loving family contribution of whom can never be explained in
words, it’s beyond explanation.
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TABLE OF CONTENTS
Sr. TITLE
No.
1 Summary
2 Objectives
3 Introduction
9 Entrance of RBI
11 Future of Cryptocurrency
13 Cryptocurrency in India
14 Conclusion
15 References
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Summary: Imagine a country which has a large economy and a despotic regime. This place
is prosperous despite having complex and arbitrary rules and regulations designed to keep
non-oligarchs perpetually nervous. Everybody has to carry an internal passport. Censorship
and surveillance are all-pervasive. Bank accounts can be frozen at will. Property is
confiscated on a whim. Nothing is denied to the oligarchs and their little princes and
princesses. But non-oligarchs must ask permission even for simple things like getting
married, having children, running businesses, et cetera. Those who have become rich, never
mind how, want to store nest eggs abroad in case the regime suddenly goes after them. But of
course, it’s a criminal offense to walk into the bank and convert local currency. Calling
bitcoins, the “next big thing since the internet and computing” themselves are major
statements to make. Bitcoin and other cryptocurrencies may not be much of a threat fiat
currency today in India. Cryptocurrencies are a type of digital money that rely on distributed
networks and shared transaction ledgers to combine the core ideas of cryptography with a
monetary system to create an anonymous, traceable, secure and potentially stable virtual
currency and it will be effective in India. Bitcoin and Ethereum are two highly disruptive
cryptocurrencies looking to leverage blockchain technologies to drive innovation across
numerous industries in India. With regards to the Blockchain, India can’t be overlooked. It is
an incredible country with more than a billion people who recently experienced
demonetization. The objectives of this paper are to understand the future of cryptocurrency in
India, to evaluate the perception of bitcoin as the future currency and to analyze the
probability of legalization of bitcoins in India.
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OBJECTIVES:
To study the concept of cryptocurrency, also understanding the bitcoins and its scope
To study the legalization of bitcoins in India, its comparison with other
cryptocurrencies and the government’s stand towards it
To study the future of cryptocurrency in India, and the views of experts for investing
in the same
INTRODUCTION: That is the time that numerous Indians started capitalizing their cash
in Bitcoin and proceed to owe them now. This spike drove some tech-savvy citizens of the
India to purchase Bitcoins as well as accomplish something with the blockchain protocol
itself in India. One can argue that while Satoshi Nakamoto invented Bitcoin, it is India that
may well be the first country to entrench its credibility as an alternate monetary system.
Every year, we have seen the crypto network growing at a rapid pace. Apart from that, there
is no one who understands Indian consumers better than native companies. In a country like
India, where we value everything by its monetary worth, the sure-shot way to beat cash is to
make currency that is more valuable than cash. A crypto exchange and a wallet that would
allow hundreds of millions of citizens of the India to become part of the crypto economy will
be a great leap for the entire blockchain community. Currently, the crypto-currency is neither
illegal nor legal in India. The government is considering the introduction of a regulatory
regime for virtual or crypto-currencies, such as Bitcoin, that would enable the levy of the
Goods and Services Tax on their sale. The new regime may possibly bring their trading under
the oversight of the stock market regulator, Securities and Exchange Board of India (SEBI).
The idea is to treat such currency in a manner similar to gold sold digitally, so that it can be
traded on registered exchanges in a bid to “promote” a formal tax base, while keeping a tab
on their use for illegal activities such as money laundering, terror funding and drug
trafficking. Crypto-currency is a digital currency that allows transacting parties to remain
anonymous while confirming the transaction is valid. It is not owned or controlled by any
institution – governments or private. There are multiple such currencies — Bitcoin, Ethereum
and Ripple are some of the popular ones. Currently, they are neither illegal nor legal in India.
“One bitcoin today is worth as much as 60 grams of gold. The market cap for all crypto-
currencies has just crossed $100 billion, with most of the increase coming in the past few
months. On April 1, 2017, the total market cap was just over $25 billion, representing a 300%
rise in just over 60 days,” said a senior government official.
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“The discussion on whether crypto-currencies should be banned or regulated has been on for
some time. The pros and cons for both aspects were put forth in the meeting chaired by
Finance Minister Arun Jaitley last month,” the official told The Hindu. A proposal to ban
such currency altogether was also considered at the meeting, but found few takers among top
officials from the Ministries of Finance, Home Affairs and IT as well as SEBI, the Reserve
Bank of India, the State Bank of India and NITI Aayog. Bitcoins were in the news recently
when during the two global cyber ransom ware attacks Want to Cry and Petya attackers
sought about $300 in bitcoin as ransom. Crypto-currency can also be used for a lot of legal
activities depending of which retailers accept such currency. Even as economies like Japan
and Russia move to legalize the use of Bitcoins, India, despite being at the cusp of a digital
revolution is yet to officially recognize the cryptocurrency. India's central bank, the Reserve
bank of India or the RBI, which regulates Indian rupee, had earlier cautioned users, holders
and traders of Virtual currencies (VCs), including Bitcoins. "The creation, trading or usage of
VCs including Bitcoins, as a medium for payment are not authorised by any central bank or
monetary authority. No regulatory approvals, registration or authorisation is stated to have
been obtained by the entities concerned for carrying on such activities," the central bank had
said In March, RBI Deputy Governor R Gandhi warned against crypto-currencies such as
Bitcoin. "They pose potential financial, legal, customer protection and security-related risks,"
Gandhi said. "Payments by such currencies are on a peer-to- peer basis and there is no
established framework for recourse to customer problems, disputes, etc. Legal status is
definitely not there," he added.
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What is Bitcoin?
Bitcoin is a cryptocurrency and worldwide payment system. Bitcoin is a digital currency
created in 2009 by Satoshi Nakamoto. It based on the ideas set out in a white paper by the
mysterious Satoshi Nakamoto whose true identify has yet to be verified. Bitcoin regulate and
generate units of currency using the rules of cryptography. It is also called as decentralized
digital currency. The transaction fees of traditional online payment mechanisms are more
than the transaction fees of bitcoin transaction. These transactions operated by a decentralized
authority unlike government-issued currencies. Bitcoins are completely virtual coins designed
to be self-contained for their value. There is no need for bank to move and store money.
Bitcoins are not physically present, so that only balances are kept on a public wallet in the
cloud. All bitcoin transaction is verified by a massive amount of computing power. A
personal database that you can store on your computer drive, on your smart phone, on your
tablet or somewhere in the cloud is called wallet. Bitcoins are transferred from one personal
wallet to another.
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Bitcoin, it`ll become easy to send a small remittance back home and save a fee up to billions
paid to third parties for a country, like India - known as the largest remittance market in the
world at over $60 Bn annually. In a country, like India, the time is perfect to leverage the
Bitcoin revolution, especially through the roof, when Bitcoin prices are surging. Few months
ago, all previous records have been Bitcoin broken out - as the new milestone is achieved.
For the very first time in history, the rise in the value of Bitcoin - reaching $2,000 per coin.
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literal truth) or as digital curios (cities). Japan is one of the few exceptions – the Bank of
Japan imposes stringent restrictions on use but Japan does recognise bitcoin as legal tender.
South Korea also has rules for bitcoin-denominated payments and transfers. Whatever
governments may say, bitcoins are a currency simply because people accept them as a
medium of exchange for goods and services. Apart from being accepted for normal
transactions, crypto-currencies like bitcoins are also used for cross-border money transfers,
for money-laundering and ransomware payments, and for drug deals and targeted
assassinations on the Dark Web. Initial coin offerings, commonly known as ICOs, have
become popular as well, since these bypasses the usual regulations about raising “cash” for a
new business. Bitcoin prices went through the roof last year as trading volumes zoomed. In
January 2016, bitcoin was trading at $429 per coin – it peaked out at $4,969 this month, just
before China came down like a ton of bricks on coin-trading. Ethereum, another crypto-
currency, did even better than the bigger bitcoin. Ethereum was trading at $2.84 in January
2016 and it hit a recent high of $394.
In India, the Mumbai film industry seems to love bitcoin, given the number of celebrities who
have burbled about it. But the Chinese crackdown and fears that India might see a similar
crackdown have led to wild swings in rupee-values of bitcoin. The bitcoin was trading at Rs
3.01 lakh on September 1, it dropped to Rs 1.95 lakh on September 15 as panic took hold,
and it is back to Rs 2.58 lakh on September 20. The Reserve Bank of India (RBI) has been
consistent in warning citizens of the risk associated with cryptocurrencies and traders of its
perils, Indian Prime minister, Sri Narendra Modi, indirectly promoted Bitcoin, on July, 2,
2015, with his ambitious Digital India. Plans included digitizing government data, improving
India’s digital infrastructure, and optimizing its online connectivity. The Finance Minister in
the country has labelled cryptocurrencies are not being legal tender. In recent time a debate
has emerged within the country as to whether profits from crypto transaction should be taxed
or not. Last week, India’s Department of Economic Affairs in its Ministry of Finance met to
discuss how Bitcoin could be regulated. The committee suggested the following, that
cryptocurrencies should be governed by the Reserve Bank of India Act of 1934, that Bitcoin
investors should be taxed, that guidelines for buying and investing in cryptocurrencies should
be drafted. As per business standard report the Indian government is going to introduce its
own Cryptocurrency similar to bitcoin. They also added that the government might its
cryptocurrency “Lakshmi”. In a move to regulate the cryptocurrency market in India, Finance
Minister Arun Jaitley today cleared that it is not legal tender and it will discourage its use.
However, he mentioned that the government will look at the utilization of blockchain
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technology. During the run-up to the budget, there have been talks that the government could
come out with a roadmap to regulate the cryptocurrency market. There has been rising craze
among investors to put in their hard-earned money into the highly volatile cryptocurrency
market setting off alarm bells in the government. Even before the budget Jaitley had already
said that the Cryptocurrency is not legal tender in India. The recent action of conducting
survey by the IT department over all the major exchanges has also triggered issuance of
income tax demand notice by the department to the users of these exchanges. There have
been reports that several banks have frozen account cryptocurrency exchanges in India, while
the registrar of companies (ROC) has stopped registering companies intending to act as such
exchanges.
ENTRANCE OF RBI:
Will the Reserve Bank of India try to regulate bitcoins and other crypto-currencies? Almost
certainly. No government that imposes capital account currency controls can afford to ignore
non-fiat currencies. Will the Indian government mess up attempts at regulation? Almost
certainly. The RBI doesn’t have a shining track record in terms of its recent actions and it
could fumble this task, for sure. In fact, the RBI is supposedly considering setting up its own
crypto-currency, which is a step in the wrong direction. Crypto-currencies work for people
who want anonymity and who are seeking alternative stores of value. No fiat currency, crypto
or not, can reasonably offer this combination. What’s more, crypto-currencies have features
(and bugs) that fiat currencies don’t and that’s precisely why users love them. The blockchain
system of generating an exact increase in money supply gives comfort to speculators. This
eliminates worries about inflation caused by a sudden expansion of money supply by the
central bank since there is no central bank and the money supply is governed by pure maths.
This also makes fractional reserve banking cumbersome since currency swaps or exchanges
are always required for such actions.
Also, while bitcoin, ethereum, and other crypto-currencies can be banned by government
decree, these cannot be withdrawn from circulation except by peer-to-peer consent. A fiat
crypto-currency – well, that could be deleted in a minute at the whim of an oligarch. Indians
started trading in bitcoins and other crypto-currencies enthusiastically after Nov 08, 2016,
precisely because they became wary about such possibilities. It’s hard to see a fiat crypto-
currency catching on.
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Indian companies using Bitcoin
According to CEO and the co-founder Sathvik Vishwanath many merchants in the Bangalore
area accept bitcoin through the Bangalore-based Unocoin which is one of the largest bitcoin
exchanges in the country and also provides merchant services. Five of India’s largest
companies including Dell accepted the cryptocurrency as payment. The number grows day by
day. In India Bitcoin is far from popular and most Indians prefer fiat money but a recent
Forbes article reports Bitcoin's craze is catching on and that, to date, there are more than
600,000 users in the country. Recently two Indian companies jumped into Bitcoins business,
they came up with Wallet-Exchange concept and they accept Indian Rupee.
Zebpay
Unocoin
Bitcoin vs gold
Since ancient times, gold is usually the most popular choice of people for investing. Many
people invest in gold as most of the time it gives profit to the investor.
Though gold is the first choice of investors, bitcoin is much better than gold. As bitcoin can
easily carry no matter in how much quantity it is, on the other hand, to carry gold from one
place to other place is difficult and not at all safe.
User can easily access their bitcoin wallet from anywhere by using a computer, laptop or a
Smartphone this is not possible with gold.
Chances of forgery are possible in gold, whereas it cannot be possible with bitcoins.
The government can confiscate gold but can never confiscate bitcoins.
When you think about Bitcoin Vs Gold as Investment then it’s better to consider Bitcoin.
Bitcoins vs bonds
A bond is where the investor lends some money to a corporation for a certain time period at a
fixed interest rate. This option for investing is not safe as it depends upon a third party,
whereas bitcoin is independent where a user doesn’t depend on a third party. Bitcoin allows
the user to be powerful on their own.
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Bitcoin seems to give you better when you talk about Bitcoin Vs Bonds.
FUTURE OF CRYPTOCURRENCY
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Cryptocurrencies like bitcoins are rapidly mutating into real money that will give a healthy
competition to the different currencies issued by the centralised governing bodies. Bitcoin’s
current price hike could reflect a bright future therefore, it can be clearly seen that Bitcoins
has a very bright future ahead. Cryptocurrency is also called as digital money in any payment
system such as the points we get in some random stores can be called as digital money or
cryptocurrency because it can be used instead of physical money for payment. The genuine
cryptocurrency is the decentralised. Cryptocurrency will be grown in future and will have a
huge scope ahead, however this new form of currency does not benefit all systems of power
and control that are currently in place. It’s hard to tell what fight will be put up in order to
control cryptocurrency and the obstacles that will need to be overcome to solidify its presence
in everyday life.
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Bitcoin and other Cryptocurrencies: A comparison
The analysis of the price movement of 10 largest cryptocurrencies in the past two and half
months throws up interesting patterns. Although Bitcoin has got the highest attention in the
world, there are other currencies that actually fetch far higher returns for investments. If you
had bought Rs 1 lakh worth of these crypto currencies in October, how much your investment
would be worth in Dec?
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CRYPTOCURRENCY IN INDIA
In India bitcoins has been available since 2012.And at present in India there are 11 trading
platforms and around 1 million users of bitcoin. At the movement RBI has banned the
transaction of bitcoins in India. So, one cannot use the cryptocurrency for the payments of
goods and services. Recently in 2018 during the union budget declaration the Indian
government declared that cryptocurrencies such as bitcoins were not a legal tender. There is
no protection available to those using and trading them or dealing in them. In recent days
finance minister Arun Jaitely said when asked by the media the Government views on
cryptocurreny he said the government was aware that the cryptocurrency is being used for the
illegal activities such as terrorism, cryptocurrencies function within the community and they
enjoy the trust of that.
According to the Indian government people using these types of currencies should take
certain caution because there is no lawful protection for these currencies. And no help can be
gained by the people from the government side if some fraud is faced by the people.
Regarding the future of cryptocurrencies in India an expert committee also constituted to
measure the risk involved in it. This committee will examine the action of cryptocurrencies
and release the report in few months. Some countries are accepting the cryptocurrencies
while some are not, some of them are yet to make their decision. Cryptocurrencies has its
own set of complications.
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One method is to deal in art objects. Buy a curio in local currency. Then sell that curio abroad
in a foreign currency. Even if they do not make a profit, they at least would own some foreign
exchange, having bypassed exchange regulations. Suppose the curio in question is just a few
lines of computer code? So, buy some lines of computer code in local currency, and sell those
lines for foreign currency. Even better, if they can do this transaction anonymously, for that
would ensure that their stash of foreign exchange would not even come to the knowledge of
the snoopy authorities. Welcome to China (did you think I was referring to someplace else?),
a large prosperous nation with currency controls and a one-party government. Welcome to
bitcoin, Ethereum, Litecoin, et al, - computer codes that are curios and crypto-currencies.
CONCLUSION:
Observers predict that India’s government will regulate Bitcoin in stages. India’s Bitcoin
industry welcomes these changes knowing that government acceptance will give the
cryptocurrency the backing it needs. In fact, India’s Bitcoin industry has long tried to
popularize Bitcoin with strategies that include conducting security checks, requesting
identification from users, such as government-verified address documents, Permanent
Account Numbers (PAN) or Aadhaar IDs, and sometimes even checking bank details. Private
Bitcoin companies have also launched an association, called the Digital Assets and
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Blockchain Foundation India (BFI), to educate lay people on Bitcoin benefits and usage.
Government intervention credits their efforts. In terms of creation, Bitcoins are definitely one
of the greatest innovations of man. Most banks these days are trying to use the block chain
technology and since the government has not authorized Bitcoins, it has decided to introduce
its own cryptocurrency named “Lakshmi”. This information was revealed by RBI‟s executive
chairman Sudarshan Sen who also mentioned that the committee that proposed this idea is in
its process of research. On the other hand, experts wonder whether some of these intended
regulations will harm Bitcoin in that government interference contradicts Bitcoin’s allure,
while other rules may hamper the blockchain innovation and development
REFRENCES:
http://www.iamwire.com/2017/12/the-future-of-cryptocurrencies-in-india/169365
https://www.compareremit.com/money-transfer-guide/the-future-of-cryptocurrencies-
in-india/
http://www.iosrjournals.org/iosr-jbm/papers/Conf.17037-2017/Volume-7/2.%2005-
09.pdf
https://www.economist.com/sites/default/files/the_future_of_cryptocurrency.pdf
http://www.ijcta.com/documents/volumes/vol5issue5/ijcta2014050521.pdf
https://timesofindia.indiatimes.com/world/bitcoin-and-other-cryptocurrencies-a-
comparison/articleshow/62248502.cms
https://www.cnbc.com/2017/12/14/bitcoin-ether-litecoin-ripple-differences-between-
cryptocurrencies.html
https://en.bitcoin.it/wiki/Comparison_of_cryptocurrencies
https://maccablo.com/bitcoin-vs-gold-bonds-stock-shares/
https://groww.in/blog/bitcoin-mutual-fund-which-to-invest/
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