Author: Sumit Gupta
Source: Blockchain Outpost
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The conflict in the Middle East escalated, and Bitcoin's safe-haven asset attributes were once again talked about after the Bitcoin surge. Today Bitcoin has exceeded $ 8,000, and the market is even more exciting. But what can Bitcoin do in the face of a national economic downturn? The CEO of CoinDCX, India ’s largest cryptocurrency trading platform, analyzed how India will help India reach a 5 trillion economic scale for the current economic slowdown in India.
India has been one of the world's most high-profile emerging economies for decades. Currently, India ranks seventh in the world with a gross domestic product (GDP) of US $ 2.72 trillion and is expected to surpass the UK in the next few years. Indian Prime Minister Narendra Modi envisions India as a $ 5 trillion economy by 2024. However, if the current economic performance is to be considered, it will be a challenge for a country with 1.3 billion people to realize this dream. In fact, the adoption of Bitcoin in India may be key to its economic future.
Status of India
If India's GDP is to reach $ 5 trillion by 2025, its minimum annual growth rate would need to exceed 10.8% per year. India's current GDP has fallen sharply from 8% in 2018 to 5% in the second quarter of 2019. Manufacturing growth in India fell to a 15-month low in August as sales growth slowed, leading to forced plant shutdowns.
Another reason for the slowdown is the rising unemployment rate in India. The unemployment rate in October was 8.5%, the highest level in the past three years. During the third quarter of July-September, foreign securities investors net sold Indian stocks, withdrawing more than $ 3.2 billion from the Indian capital market. India's central government's fiscal deficit is expected to expand to around 3.7% in FY 2020, rather than originally planned to remain below 3.3%.
Faced with these lower-than-expected results, the Indian government has taken a series of measures to reduce corporate taxes from 35% to 25% by boosting public capital spending to boost the economy from the supply side. The Reserve Bank of India (RBI), the Reserve Bank of India (RBI), has cut interest rates five times since early 2015 to stimulate consumer spending.
As early as 1991, India's economic liberalization helped expand its economy and its role in private investment. As a result of this radical reform, India has achieved the status of a developing country, but failed to adopt similar reforms, which would have pushed India towards full development. What the Indian government can do is take measures to stimulate the economy to rise, while focusing on opening the door to supplement growth. Now India has the opportunity to realize this potential by adopting another radical currency innovation: Bitcoin.
Bitcoin is the world's most powerful currency innovation, and its philosophy is to democratize transactions / storage without being controlled by any single authority. 11 years after its birth, Bitcoin has become the best performing asset class, and more importantly, in the next few years, Bitcoin will move from a purely collectible asset to the status of digital gold. Recently, Bitcoin's hash rate has just reached a record high of 111 EH / s. As the Bitcoin network becomes more powerful than before, it will absorb more monetary value on a daily basis (or more accurately, every ten minutes).
Importantly, the rise in the value of the Bitcoin currency will have a significant impact on the Indian fiat currency. Countries with the weakest monetary policies and currencies are most vulnerable to the threat of economic failure from the start. Once they begin to fall, the domino effect of all fiat currencies will follow. These fiat currencies have adopted the wrong monetary policy and have printed too much money. This threat to fiat currencies is the main reason why governments around the world are hesitant to adopt bitcoin directly. But governments should not see Bitcoin as a threat, but as an opportunity.
Bitcoin becomes the new standard
Long before the advent of Bitcoin, gold was considered a solid reserve of value. In 1944, 44 countries joined the Bretton Woods system. Because of this system and overall confidence in its economy, the United States gained superpower status in the following decades. India can also achieve the same robust growth by adopting Bitcoin.
First, India can open the door for everyone to legally invest directly in Bitcoin through banking channels. As it has done with gold, the RBI can continue to accumulate Bitcoin as a national reserve. Because Bitcoin's fixed supply is 21 million, accumulating Bitcoin earlier than other countries will have a clear advantage in the next few years. These bitcoin reserves will facilitate public capital expenditures and aid the private sector through a series of reforms.
Whenever a new investment opportunity knocks on the door of a country, it is possible for the country to build a complete ecosystem. So is Bitcoin. It will spawn new entrepreneurs, new startups, new businesses, new innovations, new products and services, new consumers and new markets. And that's all happening on the Internet and smartphones.
Other technologies such as artificial intelligence and the Internet of Things are undergoing this change. Blockchain technology and Bitcoin are emerging in countries such as Singapore, Germany and Switzerland. Therefore, letting Bitcoin flourish in regulatory environments around the world is significant. This philosophy may run counter to the roots of the rebellion of some Bitcoin enthusiasts trying to challenge the current financial system. But let's be practical. If Bitcoin has to reach 1.3 billion people like India, it can only be achieved through appreciation, acceptance and small adjustments.
Adopt Bitcoin through access and innovation
For an average Indian, allowing them to invest in bitcoin through regulated channels will help increase their purchasing power. Currently, India's per capita income is just over $ 2,000, which is far lower than other developed countries. In addition, ordinary retail investors are not allowed to enter open global high-performance markets and can only have limited options in India's domestic stock and commodity markets.
If the Indian government classifies Bitcoin as a commodity / currency, then 1.3 billion people will have the opportunity to use the hardest currency channels to store their wealth, resulting in total per capita income increasing over time. What's more, in critical periods such as a recession or slowdown, providing the hardest funding will help maintain basic demand levels. Even today, there are still 190 million people in India without bank accounts, and with the help of Bitcoin, these people can manage funds such as savings and transactions.
Bitcoin's chain growth will prompt multiple Bitcoin companies to launch second / third tier solutions. With the opening of Indian Bitcoin regulations, it will create many important Bitcoin innovations and create a large number of Bitcoin-related jobs in technical engineering, marketing and other fields.
India can take a proactive approach to Bitcoin, first accepting innovation and then acknowledging it. This will help India reach an economic size of $ 5 trillion or more.
All in all, it's fair to say that Bitcoin will soon help India become more compelling and we have the potential to become a great power. Coupled with our goal of integrating financial inclusion, as long as the economy can thrive, we will be overwhelming.
About the author: Sumit Gupta, co-founder and CEO of CoinDCX, India's largest cryptocurrency trading platform and aggregate liquidity provider.