Can we replace Bitcoin argument with a “Law Compliant Crypto currency of India” acceptable to all?

Naavi.org has a history of raising issues that are necessary to create a “Responsible Cyber Society”. Towards this end we have been critical on many aspects of Law and Governance of Cyber Society, but always tried to provide a positive suggestion of how things have to change. It is not our claim that our suggestion is always the only best solution but it is always one school of thought to be considered. Even if this is not accepted, the  debate generated by it should bring in some benefit to the society.

It is with the same spirit that I would like to supplement my criticism of Bitcoins with a suggestion that we should be able to find a solution to the Crypto Currency Conundrum.

Before I start, I would like to point out to those die hard Crypto Currency supporters who must be wondering who on earth is this person who is opposing what several Governments like Japan have already approved and 10 million people in perhaps 90-100  countries are using. If they have the patience to research through the website naavi.org, they will find that I was also a supporter of Bitcoin as a concept and technology some time back and advocated “Self Regulation”. I even tried to push RBI into abandoning its “observation stance” which creates uncertainty. I even opposed the raids conducted by ED some time back on Bitcoin exchanges in India.

All this time however, we have been saying that Bitcoin as an “Electronic Document” is already legal in India but should not be promoted as a “Currency”. But the Bitcoin community considers that being perceived as a “Currency” is the USP of Bitcoin and it is unthinkable that the positioning of Bitcoin as a “Currency” can be diluted. Similarly, “Anonymity” is considered an inseparable attribute of Bitcoin and is non negotiable, while Naavi is the champion for the concept of “Regulated Anonymity”. This was the concept of 2012 and when Bitcoins were being promoted in India after 2013, I continued to maintain the need for some kind of regulation on Bitcoins to make it’s anonymity attribute changed into a “Regulated Anonymity” attribute.

However the Bitcoin community was too intoxicated with its success in other countries and did not have an open mind to come out of its fix on “Anonymity”. As a result, the Bitcoin today has come under the firm grip of Criminals whose main support to Bitcoin is that they can remain anonymous, launch ransomware attacks and collect money from honest citizens and grow rich. Even honest persons have tasted the success of holding black wealth in the form of Bitcoins and have come to experience a sense of tax freedom from which they are finding it difficult to come out. Even now, I am sure that many technology savvy persons are willing to take a risk with Bitcoins. I only want people who misunderstand the nature of Bitcons and support its legalization to be warned.

I am reminded of a funny incident some time around 2002 or so when Police in Chennai approached me with a complaint which they could not decipher. The complaint was from a doctor and stated that he had purchased 5 Sites at the instance of a particular company. Some time back whenever he checked in his computer, it was showing him as an owner of the site. But suddenly, now the site is no longer there. He presumed that his “Sites” were stolen.

Technology persons may have a good laugh that the doctor was actually talking of a website which he had purchased with the hope that it would appreciate in value over time like the physical sites but did not know that it needs to be renewed from time to time without which it would vanish into thin air.

I feel that amongst many persons who are supporting Bitcoins on the My Gov website, there are such people who think that Bitcoin is like any other mobile wallet and it should be part of Mr Modi’s vision to legalize it. Perhaps they think that I am opposing the Modi’s vision of Digital India.

Let me remind them that “Bitcoin is Anti Modi”as it is a perfect instrument for various political parties  to park their black money if they posses.  I would be surprised if they are not doing it already. Bitcoin as it exists today is a boon for Black Money owners and far, far better than holding Swiss Bank accounts. Any intelligent Black money owner should be already aware of this and I am not revealing any state secret.

I donot want this to be taken as a promotion of Bitcoins but a warning to the Government. I want to say that the Government now has no option but to curb the spread of this Black Money tool if they are serious about preserving the integrity of the Indian financial system. If they continue to keep “Observing”, they will see a deterioration of the system to a level when we will soon reach a point of no return.

However, I am more worried about the possibility of Bitcoins being used by ISI to fund the Kashmir unrest operations and the Maoists to use it to fund their operations to buy advanced weapons from the international markets. The drug mafia in India may also use it effectively besides the Cyber Criminals. That is the reason that I consider banning of Bitcoins as a National Security requirement. Let Japan go ahead and legalize it since they donot have the ISI terror threat. Our requirement is different.

I am confident that there are several RBI executives who agree with the hard stand that I am suggesting but will be facing tough arguments from others particularly those who can be influenced by the Bitcoin community.

Even Bankers like ICICI Bank and HDFC Bank who are “Partners” to Bitcoin business cannot be trusted to provide sincere advice to the Government since they have a vested interest. In fact ICICI Bank is experimenting using Block Chain technology for authenticating some Banking transactions which I doubt very much to be a proper application of the technology.

I understand that the Government Committee on Bitcoin regulation consists of a sole representative from SBI who along with RBI represents the Banking perspective. All other members are from different parts of the Government some of whom are from the MeitY. I sincerely hope that they will not be enamoured by the “Technical Beauty” of the Bitcoin concept and take decisions which will be against the security interests of the Country.

Having said that

-the only option before the Committee is to “Ban” the holding of and transacting in Bitcoins by any Indian from now on and

-that any new mined Bitcoin should be reported to a designated authority  and exchanged within say 24-48 hours of the miner coming to know of his success, and

-such a ban should extend to all other “Privately Created Crypto Coins” which does not have the sovereign backing of a Government for immediate exchange into a legacy currency”,

I now advocate to suggest creation of an “Indian Law Compliant Crypto Currency”.

I have already received a response from one of my Virtual Friends that he has developed an algorithm for creation of a Crypto Coin that can be introduced in India to the full satisfaction of the regulatory authorities. He is a technology person who has developed his own crypto coin system and has been trying to convince the authorities that it can work in India. He has identified the following features avaialble in the  Comparative chart sent by him. ( available here.)

His proposed “India Coin” concept is similar to what I called “Bit Rupee” and is configured as a trackable and identifiable system. This system along with a Cyber Law Compliant Exchange can be constructed either for RBI or under license by RBI into a system which is as efficient (except in terms of anonymity) as Bitcoins and could be a global leader of a new strain of Crypto coins which will have the sovereign backing of the respective Governments. Let this “Bit Rupee” or “India Coin” compete with privately created anonymous Crypto coins in a free market. Then it will be the free choice of individuals who like the Bitcoin technology but want to be law abiding.

I openly invite RBI to accept this system for a pilot project and simultaneously invite the Start Up funding enthusiasts to come forward to make this dream of an Indian Crypto Currency that can create a new global system of “Law Compliant Crypto Coins” a reality. I already have some thoughts on how such a regulatory system may function which can be discussed with the team of regulators and the technology providers jointly. Probably a pilot proof of concept can be created if a go ahead is given by the regulators.

This will be a fitting response from a “Modi Vision” of a “New India” which aspires to be a global leader in new technological concepts and absorbs the old values with new innovative thoughts.

If Mr Modi is listening, I wish that he incorporates this thought in his next Mann Ki Baat….

Naavi

P.S: Disclosure as requested by one reader querying about whether I have a financial stake in India Coin:

I have called the person advocating Indian Coin as a “Virtual Friend” because he has been corresponding with me on e-mail for a couple of years since I started writing about Bitcoins.

So far I have not had the privilege of meeting him in the physical society.

At this point of time, I donot have any financial interest in Indiacoin. My own proposition is a theoretical thought and if it is similar to that of Indiacoin, it is a coincidence. I may have some extension ideas on the technological concept which makes my suggestion more robust. (At least as much as my intelligence perceives).

I am not however a technologist and cannot create my own algorithm. So, if there is a technologist who is interested in associating with me and developing what I consider as a challenge to Bitcoin, provided the regulators of India are also part of the project, things may change.

My vision is that through an “Indian Government promoted Crypto Coin”, we should help all law abiding crypto currency supporters across the world to come together to meet the currency requirements of the “New India” and the “New World”. I would like India to emerge as a global leader in this Crypto Currency global network.

Yes, such a proposition will attract attacks from the competition and this is the challenge to the technology people who need to manage the proposed system and its security.

So far it has been the private sector which is disrupting the established world through various innovations in technology.

I now want the Government sector to disrupt the established private world of Bitcoins and other Privately created crypto currencies.

I hope to see a battle of the Good Cryptocoins Vs Bad Cryptocoins and see who will win eventually.

Naavi