Bitcoin Price Tops $985 on Indian Exchanges
Ban of High Denomination Notes
Indian Prime Minister, Narendra Modi, has announced that 500 Rupee (~$7.28 USD) and 1000 Ruppe (~$14.56 USD) banknotes will be discontinued. This act is part of a set of initiatives known as the Pradhan Mantri Jan Dhan Yojana (PMJDY), or financial inclusion act. The New York Times reports that primary reason for doing this is to prevent government corruption and an “attack on the poor”. His demonetization plans are an encourage the unbanked, to utilize banks. Roughly 25% of India’s billion people do not have their own bank account and roughly 40% of those that do, have a zero balance.
“We can gradually move from a less-cash society to a cashless society”
The immediate effect of this is clear, removing 80% of currency has its side-effects, one of which is a bank-run. People waited in lines for hours to grab all the cash they could from ATMs. Cash is so prevalent in India, that the government made an exception on the large notes to pay hospital bills and airline tickets.The new demonetization policies directed at the moving of large amounts of cash to bank accounts.
India and the Future of Bitcoin
Modi’s financial initiatives have proponents on both sides. The positives of encouraging people to open bank accounts are obvious. The PMJDY laws promise to provide life and property insurance to many it was out of reach from. Bank accounts would allow many Indians a safe place to place cash where they previously weren’t. Although these steps work towards forward economic balancing, large banknotes don’t necessarily encourage illegal transactions. The Guardian reports that Switzerland’s government insists that large banknotes don’t encourage illegal activity. despite it’s significant sum, 1000 CHF ($986).Indians and may encourage better labor laws and standards.
Although many negatives would be hard to find, this demonstrates how much power the government it’s citizens and their money. Millions of people trust banks with their money, and in few exemptions, it has been a safe place for money. It may seem inconvenient and for the greater good, but this snap decision has caused a bit of a panic in India. Even Modi believes the world isn’t ready for a completely cashless society, but people are talking about it.
Indian Bitcoin Price Edges near $985
Upon these announcements, some moved to cash in on Bitcoin. This caused Indian Bitcoin exchanges to edge closer to $1000, way more than the $730 on USA exchanges (at time of writing). Several exchanges such as: Coinsecure.in, are reporting Bitcoin-Rupee exchange rates of more than 70,000 Rupee. Although this price change demonstrates an increase in buying exchange volume, many Rupee cash to Bitcoin transactions are ignored from these prices. Although these prices are likely inflated in the short term due to the announcement, Bitcoin bought through the Indian exchange more than likely require authorization of some kind, preventing those who want to convert their ill-gained fiat to Bitcoin without the scrupuolus government peering in, are out of luck.The only country paying a higher premium for Bitcoin is Nigeria, where Bitcoin typically commands a whopping 70% premium (~$1,250 USD for 1 BTC).
Bitcoin Won’t Replace Cash
Prime Minister Modi’s laws are a progressive way at enhancing the life of millions of India’s citizens. Regardless, Bitcoin is difficult to buy and probably won’t replace cash there. Although there are ways to buy with cash, it isn’t the most practical way. Buying Bitcoin isn’t truly instant either, unlike the tangible goodness of old-fashioned fiat. India’s future with Bitcoin flirts with it’s value as a commodity, not as a currency. The price spike is likely temporary, but Bitcoin still shows promise in the long term for it’s fungibility and usability. Bitcoin wasn’t designed to replace cash.