क्रीपटो करन्सी, सध्य स्थित आणि विचार विनिमय

 क्रीपटो करन्सी, सध्य स्थित आणि विचार विनिमय

जे लोक सध्या बिटकोईन, इथेरियम सारख्या क्रीपटो करन्सी वर गुंतवणूक करण्याचा विचार करत आहेत त्यांचे साठी हा लेख आहे. 

भारतात, रुपया अजूनही पूर्णपणे परिवर्तनिय (convertable ) झालेला नाही म्हणजेच, भारतीय चलनावावर फेमा या कायध्याचे आधीराज्य आहे आणि नियंत्रित प्रमाणात इतर करन्सी मध्ये परिवर्तन करण्यास रुपया  उपलब्ध आहे. या नियंत्रांणाचे कारण भारताच्या पूर्ण अर्थव्यवस्थेशी निगडित आहे. 

रिझर्व्ह बँकेने अजूनही  crypto करन्सीला चलन म्हणून मान्यता दिलेली नाही. सुप्रसिद्ध वकील निशीत देसाई आणि असोसिएट हे काही crypto करन्सी आशिलांतर्फे तिला मान्यता मिळावी म्हणून हा लढा रिझर्व्ह बँकेबरोबर लढत आहेत. पण त्याच बरोबर crypto करन्सीवर बंदी आणणार नाही असे रिझर्व्ह बँकेने सुप्रीम कोर्टात जाहीर केले आहे. याचे कारण निशीत देसाई यांचे म्हणणे आहे की क्रीपटो करन्सी ही करन्सी न मानता ती पूर्वीच्या बार्टर सिस्टीम मधील एक मालमत्ता मानावी. नाहितरी करन्सी चा उगमच बार्टर सिस्टीम मधून झाला जो देवाण घेवाण करण्यासाठी झाला आहे, मग ही अजून एक मालमत्ता म्हणून स्वकरायला काय हरकत आहे. 

परंतु ती स्थावर मालमत्ता नसून ती वरचुल ( आभासी) मालमत्ता आहे. ती फक्त कागदावर ( किंवा कॉम्प्युटर वर म्हणा) आहे. त्याचा भाव बदलणे, त्यात ट्रेडिंग होणे हे सर्व व्यवहाराचे( कॉमर्स ) चे भाग झाले पण मुळात ती मालमत्ता अस्तित्वात आहे का? जसे की एखादी कम्पनी आपण काढली आणि त्याचे शेयर बाजारात विकले आणि त्याचा वायदेबाजार, किंवा सर्व प्रकारचे देवाण घेवाणाचे व्यवहार आपण केले. ज्या कम्पनी चा मालक नाही, ज्याचे उत्पादन नाही, ज्याची मालमत्ता नाही अशा कम्पनिमध्ये आपण आपले पैसे गुंतवावे का? जर काही मूठभर लोक त्यात व्यवहार करण्यात मजा मानतात तर तो त्यांचा आपसातील व्यवहार होऊ शकतो. अर्थात अशा क्रीपटो करन्सी चे वापरकर्ते वाढत आहेत, त्याचे चलनवलन होत आहे ते सुद्धा जगभरात, अनेक देशात, ही जरी आसचऱ्याची बाब असली तरी ती सत्य परिस्थिती आहे.

रहाता राहीला प्रश्न या मागील विचारधारेचा. 

आज जगाची अर्थव्यवस्था जी चालली आह तीे त्या मध्ये चलन, सर्व प्रकारच्या मालमत्ता, सोने, नाणे, जमीन जुमला, सर्व प्रकारचे live stock, सर्व प्रकारची उत्पन्न वगैरे वर अवलंबून आहे. प्रत्येक देशाची आर्थिक स्थिती या सर्व गोष्टींचा एकत्रित परिणामांवर अवलंबून असते आणि त्याचे अंशात्मक प्रतीक म्हणून आपण आपला रुपया, किंवा डॉलर, किंवा आणखी काही करन्सी चे मूल्य म्हणून समजतो. आपण या सर्वाला एका मोठ्या खेळाचा भाग मानुया. जगाच्या या खेळाचे काही सर्व मान्य नियम आहेत आणि ते मान्य करून सर्व देश एकमेकाशी व्यवहार करत आहेत त्यामुळे ही जागतिक अर्थव्यवस्था अस्तित्वात आहे. 

आता या अर्थव्यवस्थेबरोबर दुसरी एक वरचुल ( आभासी) व्यवस्था सुरू झाली आहे ती म्हणजे 

क्रीपटो करन्सी. त्या खेळाचे सुद्धा काही नियम आहेत. त्या मध्ये त्याचा कोटा प्रत्येक क्रीपटो करन्सीने फिक्स ठेवला आह त्यामुळे त्याचे मूल्य  त्याच्या मागणी आणि पुरवठादार वर अवलंबून आहे. पण अशा अनेक क्रीपटो करन्सी काढायला कोणतीही बंदी नाही. ज्याचा जास्त वापर किंवा मागणी, ती क्रीपटो करन्सी जास्त भाव घेते. या करन्सी ला कोणतेही मूळ मूल्य ( intrinsic value) नाही.

थोडक्यात हा एक नवीन समांतर खेळ आहे जो आपल्या सध्याच्या जागतिक खेळात घुसायला बघत आहे आणि त्याने काही प्रमाणात शिरकाव सुद्धा केला आहे आणि तो म्हणतो मला पण यात सामील करून घ्या. आता त्याच्याबरोबर आपण खेळायचे की नाही, थोडक्यात आपण क्रीपटो करन्सी मध्ये व्यवहार करायचा का नाही या बद्दल रिझर्व्ह बँकेने अजून कोणतेही स्पष्ट निर्देश दिलेले नाहीत. 

पण खरोखरच हा खेळाडू आपले नियम वापरून बाकीच्या जागतिक खेळाडूंबरोबर आपला खेळ सुरू ठेवू शकेल का हे बघण्यालायक आहे. कारण कोणतेही मूळ मूल्य ( intrinsic value) नसताना फक्त आणि फक्त तांत्रिक ज्ञान, वैचारिक विविधता, आणि नियमांची कठोर अंमलबजावणी करत असलेला हा खेळाडू काय करामत करू शकतो हे 21 व्या शतकातील मोठे आव्हान आहे. जुन्या जमान्यांचे  जागतिक अर्थ तज्ज्ञांनी या खेळाडू पुढे गुढघे टेकले असून अनेक ठिकाणी त्याला स्वेच्छेने किंवा नाईलाजाने आपल्यात समाविष्ट करून घेतला आहे हे सत्य आहे.

हा लेख आपल्याला कसा वाटला ते जरूर कळवा.

माधव भोळे

Bitcoin Further thoughts

 Bitcoin comments on article number 3.of shri Uday Pingale sir.

I read article number 3 on Bitcoin of shri Uday Pingale sir. I would like to clarify here about two statements mentioned in his article.
1. His claim that Bitcoin is reliable. When the founder or generator of the Bitcoin is not known or hiding and do not want to disclose his identity right from creation, why the word "Reliable" is used. Reliability comes from its history, past or reputation. When there is no existence and no past or known reputation how can you say about its reliability?

2. The second statement that "The creator Satoshi Nakamoto does not have any role in management of Bitcoin".   This is incorrect, because total number of Bitcoins available in the market is 21 miliion of which there is assumption that Satoshi Nakamoto holds around 980,000 Bitcoins (around 4.666% of total Bitcoin supplies) and remaining quota is available for sale and purchase or mining ( an award for running the system using own sources but using strict methodology defined by Bitcoin creator). As soon as these 21 million bitcoins exausts or held by holders, the new Bitcoins can not be generated (minted). Offcourse they say that this protocall ( supply of bitcoin ) can be changed at eventual time. That means when you do not know the rule of the game in future, you are playing blind. The protocall can only be changed by economical majority of holders. If that change is going to do more harm than benefits ( I dont know, to whom?)  then such protocall can not be changed. That means marginal bitcoin holders are at the mercy of mighty bitcoin holders. ( like any other economy).

3. The main concern of Bitcoin is not having any intrinsic value. Let us consider a Diamond or Gold. The supply of these assets is quite limited. Both Diamond and Gold have their own characteristics recognised over ages and hence command an intrinsic value. You may say that these assests were also worthless when they were discovered but when they got patronage from wealthy men including kings and kingdoms, they become valuable assets and command value as per their characteristics.

What is that in Bitcoin or any other crypto currency which command so much valuations other than reasons of technological advantages of blockchain or limitted supply of the asset?. All are similar in nature except some minor changes in which they are processed.

You are aware that technologies change very fast. The search engine yahoo lost its shine once google is prefered by people because of its technological advances. Nokia mobile which was dominating market for 25 years lost its shine once 4G came and so on and forth. So please understand that these assets are highly volatile. More the intrinsinc value, more the longitivity of worth of an asset.  Advocates of Bitcoins paint a picture that more the risk, more the reward, which is a laughfing statement. Taking a blind risk is susuidal attempt. The risk should be calculated. You should take a risk but should also have plan B to cover the risk.

The Mr Uday Pingale has also added advantages of blockchain while explaining crypto currencies. Readers should understand that though blockchain is sound technological innovation its all applications need not be based on sound principals.

Myself do not consider Bitcoin as an asset but a medium to transact and a means of speculation or  money laundering created by wealthy people. You can go through the following article in financial express and gain more insight on same.

https://www.google.com/amp/s/www.financialexpress.com/money/investing-in-cryptocurrency-risks-safety-legal-status-future-in-india-all-you-need-to-know/2195319/lite/

Madhav Bhole

Crypto currency, current status in India and discussion.

 Crypto currency, current status in India and discussion.

Indian rupee is still not fully convertible. It is governed under FEMA and is exchangable in a controlled manner. Reserve bank of India has still not accepted crypto currency as a valid currency. Famous Indian lawyer shri Nishit Desai and associates is fighting with RBI and Finance ministry on behalf of some crypto currencies for same. RBI has mentioned in the supreme court that it is not going to ban crypto currencies. 

Nishit Desai says that don't consider crypto currency as currency but treat it as a new type of  asset which can be bartered. Any way the concept of currency is also coming from barter system. So what is wrong with crypto currency? 

Crypto currency is not like any other fixed or liquid asset, but it is a virtual asset on internet. Its rate changes frequently.  Trading or any other type of exchange is only its commercial aspect, but it is totally virtual. The question is whether such virtual asset exists?

Suppose somebody creates a virtual company and starts selling its shares virtually on capital markets, are we going to invest in a company which does not have any real plant and machinery, no production or services, no real assets either fixed or liquid? If some small number of people invests in that equity or asset and enjoy themselves then it is their choice.

Offcourse, number of such crypto currencies is increasing. Its usage and exchange is also increasing day by day accross continents. Though it is surprising, it is truth.

 

Now let us think on this thouroughly.

The present world economy is based on old school of thoughts which is based on consideration of all kinds of real assets, gold, commodities, land, real estate, live stock, GDP etc. of a country. The economy of every country is measured on these aspects and is reflected proportionately on its currency value such as rupee, dolar etc.

Let us consider this as a big world game to evaluate value of each existing currencies. Its rules and regulations are accepted by allmost all nations and is also loosely monitored by world currency markets. Countries trade with each other based on these rules and regulations.

Now an alternative system of currencies ( you can say another new game) has come up called crypto currencies. It is not idenentical to old system but is parralel to old system.

That is called crypto currency. It also has its own rules, regulations and processes to create, exchange or distribute among its holders. There is a fixed quota of such currency available in market. Its valuation depends on demand, supply or spread.

There are more than 4000 crypto currencies available in market and its combined market cap is 2.3 trilion dollars as of January 2021. There is no ban on creating a new crypto currency. One whose demand and spread is more commands more value. There is no intrensic value of any crypto currency.

So this game is parallel to present world economical game mentioned above and is trying to enter into this system. Whether to accept this new player in our old game is our choice. RBI has not given clear direction in this regard.  It will be interesting to see how this new player adjust itself with old players without having any intrinsic value. Yes, we accept that it is following its own rules and regulations strictly, transparently and with high level of technology innovation called bitcoin where chances of frauds and abrupt interuptions are almost nil.

Economists with old school of thoughts have surrender themselves against the invasion of this player due to its demand world over.

 

Madhav Bhole

Letter to PM bout Crypto currency Ban

 02.07.2021

To The prime minister,

Shri Narendra Modiji.

Sub: Crypto currency menance.

Dear sir, 

Namaskar,

Let me first congratulate you and  your government for strictly implementing PMLA law 2002  ( Anti money laundering act), FEMA law  and all other money acts in effort to curb black money. Your government has been conciosuly taking efforts to promote digital transactions and digital India to curb black money stashed in notes. 

You must be aware that now a days, with technological advancement, international community has developed a currency called crypto currency such as Bitcoin, Etherium etc. There are more than 4000 crypto currencies available in market as of january 2021 with total market cap of 2.3 trillion dollars. 

Indian Reserv Bank has neither accepted nor banned such kind of currencies in India. Advocates of these currencies in India promote such currencies as an asset instead of currency and therefore they do not expect any control of reserv bank, which controls  currencies in India. 

Advocates also wants promotion of same in comodity market and future and options market, being commodity according to them.

.

The fact is crypto currency is neither currency or commodity, nor an asset or  an equity of any company which is real. 

The whole concept of crypto currency is virtual, without single known owner who is responsible for its distribution, without any intrinsic value, without any geographical boundaries, without any real assets underlying same. It is only a conceptual thing whose value changes as per demand, supply and distribution.  It has an artificial quota limit decided by its creater who is unknown or hiding, who holds unrealistic, limitless power to operate same. These currencies are working on a technology known as blockchain which is more transperent, real time, working simultaneously across geographies.

In india, there are stricter laws from income tax, wealth tax, Anti money laundering, fema etc. which requires every investment backed by stricter KYC norms ( know your customer) and source of income proof. 

Every company going public, needs strict corporate governance and relevant disclousers. Every transaction either in currency, comodity, equity, bond or any other financial market is under strict supervision of relevant authorities under various laws. Every income generated from or transactions of asset such as land, real estate, live stocks, agriculture produce are also covered under relevant laws. These crypto currencies are not covered under any law of India. 

Presently we find lots of advertisements and its discussions on all kind Indian media which creates awareness, benefits and drawbacks etc  of crypto currencies to create suitable  atmosphere for its prospective progress. 

As a common citizen, we do not understand why there are  two types of  treatments for two types of citizens of India? One who invest in crypto currencies and the remaining once.

In such case why and how the so called crypto currencies is working without any control of law? The governnent of India under its relevant ministries should take holistic approach to this issue without delay before menance of such virtual currencies spread. 

I request you lookinto the matter.

Madhav Bhole

Block Chain & Bitcoins part 1 in 2017

 Block Chain & Bitcoins

Some time back, I came across an interview of Shri Chandrababu Naidu, CM of Andhra Pradesh.  He was asked a question that he was instrumental in turning Hyderabad to Cyberabad and placed Andhra Pradesh on world Map , so how is he going to develop new  Andhra Pradesh?.    He said he is not going to use same model of IT development in new AP, he wants AP to shift from Labour oriented model to innovation model. He said they will work in latest areas such as digital excellence, block chain, cyber security and Internet of things.  

Later in December 2016, his government inked MoUs with top five companies — PayTM, Blocktrust, GMS Soluti-ons, Transaction Analysts and Knolskape for starting companies in IT-SEZ at Rushkonda near Vishakhapatnam.  At that time he said “This is the first-ever tower in the world that will help fintech companies to develop latest technologies related to digital payment applications, block chain, cyber security and Internet Of Things. The world is moving towards digital economy and transactions. Especially in India, it has become necessary after demonetization”.  I was really delighted to note, how abreast he is about current developments in IT and Finance.

So what is Block chain?

Block chain is a distributed digital ledger which records any transaction with a time stamp and maintains a link with its just previous transaction. It becomes a chain of transaction of any asset. Each record is called block. When a new block is added, it tries to check whether all old records and currently added record are in order. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks and a collusion of the network majority. Functionally, a block chain can serve as "an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way. The ledger itself can also be programmed to trigger transactions automatically”.  The concept of distributed computing and parallel processing is used here.

The first block chain was conceptualized and used by Satoshi Nakamoto from Japan in 2008 for creating of BitCoin Ledger.  Bitcoin is a digital virtual currency also called crypto currency. Since it is a virtual currency and with users all around world, it was possible that somebody can falsify digital token used by digital currency or duplicate the same and use elsewhere thereby spending it twice (Called double spend problem).  Satoshi Nakamato used the Block chain to create a Bitcoin ledger where every digital currency transaction is recorded on server so that if any counterfeit currency is created, then system will throw out the same since it will not have parent transaction.

Though Block chain at present is used for Bitcoin or similar money transactions it can well be used for any other transactions such as land records etc.  Though Block chain is being used world over for some time, On Oct 12, 2016 ICICI  bank announced that it has successfully completed first Block chain transaction with Emirates NBD, Dubai’s largest bank. Also Axis bank and Kotak Mahindra Bank are testing Block chain transactions as of now.

Now what is Bitcoin?

The currency came as a replacement for barter system in earlier stages. First came gold and then physical currency.  People and countries have been using different methods to value their physical currency. In earlier time each country was printing currency with keeping equivalent gold reserve.  But on June 5, 1933, US president F.D. Roosevelt stopped that practice and allowed US to print any amount of currency without backing of gold.  Then people started valuing their currency by creating basket of currency concept. Now a days each currency’s valuation depends on balance of payment, economic conditions, GDP etc of that country..  However they may be, they are artificial in nature. There is no fix formula to derive the currency valuation. It also depends on Demand and supply like Company Shares.   All currencies are owned and controlled by the respective central banks.  

To avoid lacunas of these systems mentioned above, some genius created a virtual currency also called Crypto currency which does not recognize any central issuing authority, its valuation does not depend on economic conditions of any particular country, nor it requires any backing of any asset like gold. It is smoothly used for digital transactions.

One such Crypto currency is Bitcoin (BTC) , others being Litecoin (LTC), Ethereum (ETH), Ripple (XRP), Monero (XMR) etc.  As of 11, July 2017, there are more than 900 such Crypto currencies. A new crypto currency can be created any time.  At present Bitcoin is the largest used crypto currency by market capitalization. It is uses Block chain ledger to take advantage of its features such as  security, Privacy, tamper proof, peer to peer transactions etc.  As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment.  According to research produced by Cambridge University in 2017, there are 2.9 to 5.8 million unique users using a crypto currency wallet, most of them using bitcoin.

There is a control over total number of Bitcoins available in the system (Called Monitory policy of bitcoin's inventor Satoshi Nakamoto whose Identity is unknown.) of  21 million bitcoins based on artificial scarcity concept.  Bitcoin software is an open source software developed by Satoshi and anybody can download and start using the same. 

The unit of account of the bitcoin system is bitcoin. As of 2014,  Small amounts (sub parts) of bitcoin used as alternative units are millibitcoin (mBTC,  a  millibitcoin equals to 0.001 bitcoin, one thousandth of a bitcoin).  microbitcoin (µBTC, sometimes referred to as bit. One microbitcoin equals to 0.000001 bitcoin or  one millionth of a bitcoin ), and satoshi named after creater is the smallest amount within bitcoin representing 0.00000001 bitcoin, one hundred millionth of a bitcoin).  A transaction can be in any or combination of above Bitcoin forms.

A valid transaction must have one or more inputs.  Every input must be an unspent output of a previous transaction. That means any coin in circulation must come of transaction and it must be unused. The transaction must carry the digital signature of every input owner. The use of multiple inputs corresponds to the use of multiple coins in a cash transaction. A transaction can also have multiple outputs, allowing one to make multiple payments in one go. Bitcoin is pseudonymous, meaning that funds are not tied to real-world entities but rather bitcoin addresses. Owners of bitcoin addresses are not explicitly identified, but all transactions on the Block chain are public.

A wallet stores the information necessary to transact bitcoins. While wallets are often described as a place to hold or store bitcoins, due to the nature of the system, bitcoins are inseparable from the Block chain transaction ledger. A wallet is something that "stores the digital credentials for your bitcoin holdings" and allows one to access (and spend) them.  Bitcoin uses most secured public-key cryptography. You can create a wallet and store Bitcoins which are bought from other bitcoin holder.

There are people called Bitcoin miners who maintain records of transactions in Bitcoins. Miners keep the Block chain consistent records, complete, and unalterable by repeatedly verifying and collecting newly broadcast transactions into a new group of transactions. These people can charge for any transaction as a transaction fee however it is optional for person who initiates transaction. Miner gets a bonus of 12.5 bitcoins for adding a record (also called Block) per transaction. Miner is responsible for all transactions under his records which work on peer to peer basis in decentralized network environment.  The bitcoin protocol specifies that the reward for adding a block will be halved every 210,000 blocks (approximately every four years). Eventually, the reward will decrease to zero, and the limit of 21 million bitcoins will be reached in c. 2140; the record keeping will then be rewarded by transaction fees solely.

The first transaction was done in January 2009 by Satoshi by mining first block of Bitcoin and got reward of 50 bitcoin. It is said that Satoshi has mined over one million Bitcoins before disappearing from the scene and handing over the reins to developer Gavin Andresen, who then became the bitcoin lead developer at the Bitcoin Foundation.

Price of Bitcoin has raised from USD 4.92 per  Bitcoin on 9 april 2012 to  2013.60 US Dollar (1, 29,563.88 Indian Rupee) per bitcoin as of 17.07.2017. This demonstrates interest of investors in crypto currency. Amount of Bitcoin traded is a fraction of available supply. Most is kept as investment.

Reserve Bank of India has not permitted investment and Transactions in Bitcoin as of now and is against FEMA.  One of the reason why RBI may not allowing is that it can be used for money laundering as it does not identify owners and hence it can be used for unforeseen uses such as Drug trade, Terror financing etc.

In my opinion, the main concern about this or similar currency is that it does not reflect any intrinsic value and the price is based completely on demand and supply principal and number of users holding same, even though it has all other very good features.  If you consider shares of a company which are of predefined numbers and their Market value depends on performance of the company, Financial position, future plans, demand of the products or services, Assets and machinery, Sales and Sales forecast etc. But that thing is missing here in crypto currency.

So before investing in Crypto currency, please do consider this side also.

Madhav Bhole

(madhavbhole99@gmail.com)