With evolution in technology and things getting digitised, its relevance to paper currencies is increasingly being applied around the globe. The Crypto Currency world is getting bigger.
Bringing participants from about 26 countries, the world’s first crypto currency expo ended in Bangkok, Thailand yesterday.
Crypto currency means an electronic currency, which has value and can be traded but is physically non-existent. While it is used and accepted in many countries around the globe, including Australia, Japan and China, some have not legitimised. India is also exploring its use.
Bitcoin became the first crypto currency in 2009. Today along with more than 900 such crypto currencies, it is traded just like the foreign exchange trading.
Besides its emergence as a new investment platform, it can be also used for payment of goods and services. Owners of crypto currency also have the option to convert digital coins into fiat currency without eroding its value. Another new crypto currency, Oryx is scheduled to launch in Mumbai, India next month.
“Bitcoin was first used to buy a pizza,” said Suhail Basit, a technology director from a software company in the Middle East, one of the keynote speakers at the expo. “A pizza cost 10,000 Bitcoins in 2010. Today a Bitcoin is valued at more than USD 3,000.”
The co-founder of crypto currency expo, Jagdish Pandya said his friends made joke out of him when he invested in crypto currency. Today he is a billionaire. “This is the future of the financial world,” he said.
From a market capitalisation of USD 17B this January, it has crossed USD 110B today. Experts say that if integrated with PoS machines and ATMs, it could benefit the economy.
According to a Thai investor, crypto currency has potential in Bhutan, the country being one of the top tourist destinations. “Bhutanese always lose out on foreign exchange because of the lower value,” she said. “Crypto currency like Bitcoin will protect the value because it is the world’s currency.”
Due to the small size and population, she said it would be easier to regulate in Bhutan than other countries. “Bhutan could emerge as a trading hub because for individual investors there is associated market risk but the exchange centres will always benefit.”
Block chain Technology
The technology behind crypto currency is the block chain, which are digital blocks of data secured using cryptography.
Often called as the new Internet, block chain is a distributed and decentralised computer network, which is claimed to be incorruptible. In crypto currency, block chain is the digital asset.
It is a digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value such as personal details, government data, medical history and even for voting. Any user can extract these data within seconds but only the public data would be made available. Private data is highly secured and can be dedicated to two parties in contract.
This technology, Suhail Basit said has proved effective in governance. He said the government of UAE is moving to block chain. In block chain, he said there is no central authority to monitor the transactions. However, there are thousands of users verifying the same transaction and rules because it uses a distributed network. Experts claim that block chain is hack proof.
Be it payment of fee or shopping, Dinesh Sharma, an investor and promoter, said, Bitcoins, can be valued in any currency and cashed out anytime. There are mobile applications to do so and because of this technology, fiat currency will not be needed.
“Government and banks are spending so much on transferring the cash, storing it and securing it. Block chain is securing in cloud, which no one can steal,” he said.
He said the Reserve Bank of India, State Bank of India and ICICI Bank are moving to block chain technology because it is cost effective and efficient. “It brings more transparency because all transactions and value will be recorded in the block,” he said adding that the issue of counterfeit notes will also be addressed with because every block created cannot be replicated or copied.
While not denying the chances of money laundering and illicit transaction, he said the government should set the rules and the game becomes clean. “Even with fiat currency and all the regulations, illicit funds are freely flowing.”
He said that the government doesn’t know who has how much money and where. Block chain makes it possible. He added that block chain could change the whole governance system and the Internet world itself.
The challenge, he said is about acceptance. “Even the fiat currency got value because of acceptance, otherwise it’s a piece of paper.”
Chief Executive Officer of Royal Securities Exchange of Bhutan, Dorji Phuntsho said that since block chain is tamper-proof and transparent, in stock exchanges the technology could be used for depository, which records ownership of financial instruments besides trading.
“Considering the trend and growth of e-commerce industry, I feel that all financial transactions and trading of financial instruments in future will move to block chain, given its efficiency in terms of cost and convenience,” he said.
He added that block chain technology is a disruptive technology, which is revolutionising the entire ICT industry and it’s timely that Bhutan lays the groundwork to adopt the technology.
Tshering Dorji | Bangkok