If the rumours are true, Indians will soon be banned from doing what investors in China as well as those in fellow democracies like the US and UK are safely doing: investing in crypto assets or building and backing companies that are using blockchain technology to innovate.
Could we allow blockchain companies, but ban crypto assets? No. All but a few blockchains require a cryptographic token to validate information or power the process. It’s like banning a car company from using petrol or a bakery from using flour.
Banning ‘cryptocurrencies’, better termed crypto assets, would also stop investment in companies that use crypto tokens to power their technology. ‘Cryptocurrency’ is a misnomer for crypto assets. If a ban is intended to protect the rupee, it is not necessary. The term ‘cryptocurrency’ is just a word. Bitcoin is not meant to be a legal tender.
The better term is crypto assets. Bitcoin is like digital gold, and can be regulated like gold. If the aim is to protect Indian crypto investors (the current 7 million plus investors who are interested) from any harm, we should be clear about what investors and the country will lose to gain such a protection.
Indian investors would miss out on generational opportunities, and how!
First, the assets themselves. Bitcoin introduced decentralised, triple-entry accounting and a value transfer system that reduces rent-seeking, fights corruption and resists inflation. Ethereum is a global, decentralised development platform for applications that improve supply chains, energy management, insurance, healthcare, and caters to other areas of life.
If they did not have ‘crypto’ in their name, most investors would call them breakthrough technologies worth investing in. Many already do.
What about price volatility and bubbles? New sectors and asset classes are often volatile, but you can reduce risk with a simple, SIP-like cost-averaging strategy: the same long-term value investing that early adopters did in Google, PayPal and Tesla when they were the volatile, bubbly new kids.
A ban could also ban investing in Indian blockchain startups. VCs like Draper, Ayon and Sequoia, known for backing such billion-dollar unicorns, are now investing in Indian blockchain startups. A ban would force them to shut down or move overseas. It could also block Indian investors from opportunities available to their foreign counterparts.
Indian blockchain startups employ thousands and are already making breakthroughs. My company, ZebPay, recently launched ZebLab, with R&D projects in solar energy and other areas. We’re part of a thriving ecosystem eager to tackle social and economic problems.
The need for democratic dialogue
Blockchain is the new Internet, but what flows through blockchain networks is not bytes of information, but tokens of trust and value, using cryptography to prove they are valid. That’s where the word ‘crypto’ comes from. It’s an anti-fraud technology. New terminology can make innovations hard to understand and trust, but with dialogue, we can learn and decide together.
To promote this dialogue, India’s blockchain companies have launched a website, IndiaWantsBitcoin.org, to let citizens send messages to their Members of Parliament and call for positive regulation to protect consumers and promote innovation.
It is every investor’s right to dismiss blockchain or crypto as risky or mystical nonsense, but in a democracy like India, should not investors — and not the government — have the right to make that choice for themselves?
(Rahul Pagidipati is the CEO of ZebPay. Views are his own)