Budget 2018: Did finance minister Arun Jaitley just kill cryptocurrency for Indians?

Even as the cryptocurrency wave sweeps markets world over with its promises of being a safe and secure digital currency of the future, Modi government seems unimpressed with the phenomenon. In its last full Budget, the government made it clear that it does not recognise cryptocurrencies such as Bitcoin, Ripple and Etherium as "legal tender" and as such will discourage their use. 

Union finance minister Arun Jaitley, in his Budget 2018 speech, said that his government "will take all measures to eliminate the use of crypto in financing illegitimate operations".

His statement comes as no surprise as it only reiterates previous warnings by the government over the use of cryptocurrencies such as Bitcoin – values of which skyrocketed in the past year. 

Earlier, the Reserve Bank of India had also issued warnings against investing in cryptocurrencies because of their extremely volatile nature. Sebi and the Income Tax department, too, had voiced their concerns over the use of digital currencies, which are virtually untraceable and can be used to evade tax and fund illegal activities. 

Does it change anything?

Not really.

The use of cryptocurrencies in India for carrying out transactions was not recognised by the government earlier, and as such, the finance minister's statement in the House does not bring anything new to the table. 

Despite the government's insistence that digital tokens such as Bitcoins are not recognised as legal tender, because of their decentralised nature, many Indians will continue to hold, transact and trade in Bitcoin and other such virtual currencies in the coming days.

Unless of course the government decides to take some radical steps and formulates laws that make dealing and trading in cryptocurrency illegal.

Push for blockchain technology

However, despite the strong reservations against the use of cryptocurrencies, Arun Jaitley did add that the government will explore possibilities of using blockchains – the very technology that works as the backbone of not just Bitcoin, but other altcoins too – to further strengthen the Digital India campaign.

Last year, the Karnataka government had announced plans to use blockchain technology and said it was planning to bring out a white paper on "Blockchain Use in Governance" as a prelude to a separate policy.

Blockchains have grown in popularity in 2017, but are set to take centrestage only in the coming year. They are the decentralised digital ledgers that serve as the backbone of all cryptocurrencies. Working as a distributed public ledger, blockchains provide a decentralised and transparent method for transactions, while maintaining a high level of security.

Experts predict their real value will be seen in more than just digital currency going forward. Recent reports peg blockchain’s influence to expand to the ever-connected world of the Internet of Things (IoT), thus transforming it forever. 

Read more on how blockchain technology will revolutionise India's future here.