View: No, India should not buy Bitcoin

It’s hard to miss the sudden increase in chatter around Bitcoin. As the price of Bitcoin scales new heights, there are calls in India not to ban it (and other cryptocurrencies) and instead embrace Bitcoin as a reserve currency. Balaji Srinivasan, a highly respected and accomplished Silicon Valley executive, has been voicing this opinion forcefully.

The timing of all of this is difficult to ignore — by all accounts the Indian government is contemplating banning all private cryptocurrencies soon. Balaji, through a couple of essays and interviews, recently made a powerful argument that India should instead embrace incumbent cryptocurrencies and buy bitcoin as a reserve.

There is no disagreement on the application of blockchain technology and cryptocurrency in India, however. The government has made it clear that it plans to introduce some sort of digital currency to begin with. Balaji’s argument has several flaws, and some of them are flimsy. The essay clecleverly uses arguments in favour of cryptocurrency in general to suggest that Bitcoin should be the favoured one

The first argument is possibly the flimsiest of the lot — that Bitcoin is too big to ignore. Why? It is supposedly a trillion-dollar industry, the likes of Elon Musk are backing it (a case of selection bias) and VCs are investing large capital in it and so on. So, the argument goes, India should not miss out on Bitcoin. In his essay, Balaji says that Bitcoin is going to grow 10x from here and the Reserve Bank of India (RBI) will be better off holding the asset. But no sovereign country or central bank of a large economy is going to make decisions on the basis of price speculations or the actions of a few individuals.

Next, Balaji makes a case that embracing Bitcoin will boost foreign investment. Foreign investors come into India because the economy is worth investing in, not because India owns some Bitcoins. India has created unimaginable roadblocks to foreign investments. For the most the past three decades, foreign investors have overcome those obstacles. For example, by bringing money into India via the Caymans and Mauritius, incurring transaction costs along the way. Investors will come into India and leave based on their relative and absolute assessment of the Indian economy’s growth prospects.

Another argument is around the ease of remittances as migration and remote working grows. Here, it is unclear how Bitcoin alone would help in comparison to any other digital currency or cryptocurrency. Bitcoin has no significant advantage over any other currency. Also, the majority of this remote working is going to be within India, where crypto does not add any special value for remittances, even if we ignore the costs of transactions. The current infrastructure of UPI, NEFT, RTGS provides sufficient means to transfer money at low cost.

Also, linking India’s recommended Bitcoin embrace with foreign policy is bizarre. The argument is — India is nobody in the international financial system, so must bid for its place by buying Bitcoin. Unfortunately, India is not a startup making an aggressive acquisition to justify its valuation to investors.

Balaji suggests that India’s Bitcoins could act as a hedge against being de-platformed. This can happen only when India defaults on its obligations on a very large scale. As Balaji says, India is the №3 economy, so can a Swift really deplatform India? Moreover, deplatforming individuals and nations is not the same.The case for crypto deterring financial fraud is absolutely right — but again, it is a characteristic of a cryptocurrency in general and not only Bitcoin. Similarly, the argument that crypto is the financial internet also has merit — but it has nothing specifically to do with Bitcoin either.

In summary, the arguments for India to embrace Bitcoin wholeheartedly are sensationalist. A large economy like India cannot embrace something that has so many unknowns. Now does this mean India should be this mean India should ban private cryptocurrencies? Certainly not. Despite several unknowns, cryptocurrencies can offer fundamental benefits to the financial world and the likes of Bitcoin have a head start. If private individuals want to transact in Bitcoin, the government should not bother. It could choose to bring in some checks and balances, but banning it altogether is not a good idea.

ETtech Opinion: Sixth Sense strategies: keys to the future of business

The world is becoming increasingly digital by the day. The modern-day consumer, who was slowly moving towards digital, took a giant leap courtesy the pandemic. Today, in most developed and emerging economies, more than 80% of customers prefer to check out a product online before deciding whether to buy it, and more than 90% of decisions are influenced by online narratives. The millennial crowd and the emerging customers of tomorrow, who will soon become decision makers, prefer to shop on the internet than at physical stores. These are serious indicators that businesses need to enhance their digital visibility and outreach.

Traditional Indian businesses have depended on the good old supply chain and market reach to get things to every nook and corner of the country. Many large conglomerates that operate in the FMCG space have been market leaders… until now. But the consumer of tomorrow will be online-first, looking for digital visibility as a metric for the products he/she seeks.

Collaboration and reach through digital means and being served at home seems to be the primary expectation of this new-age consumer. Traditional models, which depended more on the physical world, may slowly become obsolete and giant manufacturing enterprises may become obsolete if they don’t embrace the brave new technology-driven world.

Digital innovations are increasingly being harnessed to enhance competitive advantage in business efficiencies, consumer engagements and logistics. Many businesses are deploying new technologies such as industry 4.0, smart robotics, artificial intelligence, big data, industrial internet of things (IoT) and machine learning to enhance operational effectiveness. Substantial focus has gravitated towards the creation of a digital ecosystem that can drive smart manufacturing, product quality, traceability and supply-chain agility.

Today’s digitally connected consumers express their opinion frankly and openly on social media, exchange information on blogs and forums, search and purchase online, write reviews on ecommerce sites, and share experiences online. This makes it imperative to build an agile system that monitors emerging trends and uses artificial intelligence and neuro-linguistic programming (NLP) techniques to generate consumer insights.

It is imperative that companies recognise and embrace digital technologies to grow in a fast-evolving business and consumer-driven environment.

For example, companies like ITC have been torchbearers of digitisation, which started more than 20 years ago through path-breaking initiatives such as e-Choupal. They have now begun to enhance this digital journey through the even establishment of dedicated marketing command centres, interestingly called Sixth Sense, which are being driven aggressively by ITC chairman Sanjiv Puri. The company has made substantial investments to create a digital ecosystem to drive smart manufacturing, product quality, traceability, and supply-chain agility. It is attempting to bring the benefits of cutting-edge technologies and the digital revolution to enhance operational efficiency and keep pace with evolving market circumstances.

Sixth Sense derives insights through the mining of unstructured data such as relevant social chatter while keeping consumer-centricity at the core. It identifies emerging shifts in consumer behaviour, the rapid evolution of different cohorts and life-stages of people in the country, a shift in preferences in areas such as health, indulgence, authenticity, transparency, etc. This is in addition to understanding the brand preferences of people, consistent benchmarking of ITC’s brands against the competition in the digital space, exploring newer evolving, immersive storytelling by brands across the globe, and measuring the digital performance of ITC’s brands.

Insights from Sixth Sense have helped the company identify both fads and trends and have also helped it communicate better with its consumers through marketing initiatives and digital campaigns. During Covid, the Sixth Sense team was able to generate real-time insights for all divisions of the company by giving early insights on stock management and supply chain management. The company also tied up with new channel partners such as Domino’s and start-ups such as Swiggy, besides launching the ‘ITC Store on Wheels’ to ensure that its products were available to consumers.