Bitcoin has been in discussion for some time. In India the response for Bitcoin has been mixed. While initially it attracted the attention of entrepreneurs setting up echange services, the RBI frowned upon the system and ED moved in to conduct raids on some of the exchanges because it was felt that there was violation of foreign exchange regulations involved in the exchange transactions. This dented the enthusiasm and more or less killed the initiatives.
One of the main reasons for the RBI responding to the system with an unapproving look was that Bitcoin had been earlier associated with criminal activities and continue to be the preferred currency of the underworld. Coupled with this the claim of the Bitcoin operators that it is an “Alternate to legacy currency” threatened the regulators that the economy could be adversely affected if Bitcoin popularity grows.
Naavi has held that Bitcoin as a category of “Virtual Currency” is an “Electronic Document” and is recognized as such under ITA 2000/8. Whether it is a currency alternative or a virtual commodity or just a “pointer” to which a closed community ascribes a value is a matter of how the community would like to use the concept. Naavi has also highlighted that the system of “Virtual Currency” is a technology which has a great potential to be used by the regulators themselves. In fact Naavi’s old patent applied system of “Digital Value Imprinted Instrument System” itself did place faith on a server based authentication of a transaction and conversion of legacy currency to customized currency by the user himself. Presently some form of such limited currencies are in use both in the form of prepaid virtual cards as well as closed payment systems.
Now, today’s report in news papers state that IBM is working on a “Bitcoin-like” system (Refer this article). This system is supposed to use the “Block Chain Technology” and will eliminate the need for Banks and Financial institutions to authenticate a transaction and use the Block chain type of authentication. From the reports it appears that the system will convert legacy currency into some form of virtual currency which the spokes person refers to as “Token”. It is not clear however how the availability of back end fund is being authenticated without involving the financial institution.
In contrast, what I would like to suggest is for the regulator like RBI to start a new Virtual Currency on its own or convert the current stock of notes into virtual notes gradually by withdrawing the paper currency in parts and replacing them with virtual currencies. What can be done in this system is to enable RBI to track every transaction. In such a system the availability of stock is authenticated against the base block authenticated by RBI and further authentication of transactions can be done by others who can be rewarded with appropriate commissions.
If RBI sheds it’s reservation on virtual currency, we can discuss the alternate possibilities which will satisfy the RBI as well as the Government and yet will make the technology work for revolutionalizing the nation’s currency system. This would be far more economical than printing new One rupee plastic notes which RBI seems to be thinking. The virtual currency system has not only the prospect of better economy but could be a better security against organized counterfeiting by enemy countries.
Naavi
We in India are developing an “Identified Digital Currency” – GreenCoinX.
GreenCoinX.com
It is identified over email and phone. To use greencoin, every user has to get registered and verify their wallets.
GreenCoinX – Government:
GreenCoinX Inc is ready, willing and able to co-operate with all government entities in any jurisdiction worldwide to smoothly facilitate the collections of taxes related to transactions that use GreenCoinX.
GreenCoinX is flexible and modifiable such that each government can decide what identification rules they require for a GreenCoinX transaction and what country specific taxes should be attached to each transaction. Additional parameters can be added on an as needed basis depending on the requirements of each country.
KYC:
Account for all the identified users on XGC within your nation. Formulate economic plans, account for businesses and individuals, un-thought of analytical possibilities for financial departments.
Set financial guidelines:
Enable automated financial sanctions. Design specific guidelines for your nations financial planning that our developers can integrate for your country.
Tax:
Set taxation levels for individuals and businesses. Allow your department (if authorized) to collect automated financial taxes. All tax collection can be viewed via the public XGC block chain for verification by individuals, businesses or government.
Track:
Identified recipients are easy to trace via email, phone, or IP address. The ability to easily track financial crime through the XGC network will assist your law enforcement like nothing before.
Additional functions have been added to facilitate sending directly to email or phone:
* sendtoemail: Sends XGC directly to the phone number
* sendtophone: Sends XGC directly to the email address
Verification process can also be done with new functions:
* startverification: Starts the verification process
* getemailcode: Get email verification code
* getemailverify: Verify email address
* getphonecode: Get phone verification code
* getphoneverify: Verify phone
* setidentification: Get fully identified
Overall, Governments will have specific templates that are exclusive to their country jurisdiction with different rules and rates. These templates will create tax deductions at the source of the XGC transaction, which taxes will be transferred to the governments GreenCoinX server. These templates will be created with the agreement of the government concerned, and will cover all transactions such as “Internal to Internal” and “Country to External” and “External to Country”.
It is good to know that an operational model of the virtual coin for the regulator is already available. Wish RBI gives a serious thought on the Green Coin suggested by Mr Nilam Doctor