Bitcoin no longer top crypto currency
Even as government reiterates its stand that Bitcoin will not be accepted as legal tender, the price of Bitcoin zoomed on international exchanges on Wednesday. The prices went up on reports of huge institutional buying. The surge in Bitcoin prices which helped it retrace US$15,000 again followed media reports of an investment of around US$15 million in Bitcoins by the ace global investor, Peter Thiel's Founders Fund. Thiel funded Facebook and Paypal in their early days. Also reacting to the reports were second in line cryptos like Ethereum and Ripple.
To get an idea of the growth in value of cryptocurrency consider Ripple, the second-largest cryptocurrency by value, hit $2.51 on Wednesday, which is a more than 39,600 per cent rally in a year. Experts believe that more and more lesser known cryptocurrencies will more than double in value in the short term, that is if they do not disappear completely from the exchanges. According to CryptoCompare, at 18:29 Indian Time, Bitcoin was quoting US$14,671.13, Ethereum was US$857.05, while Litecoin was US$244.09, Ripple was US$2.39.
The uncertainty, volatility and the lack of regulation by government authorities are at the heart of the debate on whether to accept virtual currencies as legal tender. The government of India has repeatedly expressed its concerns on investments in bitcoins. The finance ministry has said virtual currencies or VCs are not currencies. The FinMin awaits the recommendations of an expert panel formed to decide on the way forward on VCs.
Expert cites fears of value erosion in the economy as the prime reason for not allowing VCs as legal tender. They are of the opinion that government should focus on creating public awareness about the need for regulated currencies and why the power bestowed upon the Reserve Bank of India is essential for the stability of the economy.
Indian government needs to decide upon the digital currency exchanges that have sprung up in India and stop them from trading in bitcoins or VCs. Legal provisions against the use of bitcoin are also required to restrain the use of VCs. Action needs to come in sooner otherwise it would be too late, as the investment of many small and marginal investors might get locked or lost in the virtual world.