Crypto currency not a legal tender in the country

Crypto currency not a legal tender in the country

Recently, crypto currency has been the buzz word in the world of finance and Bhutanese seem to be getting fast interested in the concept of cashless transactions as well. They are using various mobile apps and sharing the chain and network. 

However, according to Chief Executive Officer (CEO) of Thimphu Techpark, Dr Tshering Cigay Dorji, crypto currency is not a legal tender in Bhutan.

“That means they cannot be used in Bhutan legally,” he said.

A crypto currency is a digital or virtual currency that is secured by cryptography and they are generally decentralized networks based on block-chain technology.

“They are generally not issued by any central authority, rendering them theoretically immune to government interference or manipulation,” he said.

Dr Tshering Cigay Dorji said there are thousands of different crypto currencies and the most popular are Bitcoins, Ethereum, Litecoin, Z-cash and more.

Commenting about the use of crypto currency, he shared that crypto currencies are used in other countries where they are legal such as, bitcoin which is legal in Japan, South Korea, Switzerland and some other countries. “Crypto currencies such as bitcoins can be exchanged into the local currency at the crypto currency exchange.”

The difference between Bitcoin and Pi that the latter is not yet properly valued or traded and it may not even list on the crypto currency exchanges. So, Bitcoin is like gold while Pi is like a share certificate you hold of a company that is yet to start operations.

“There is very big difference: bitcoin is a crypto currency that is valued and traded. On the other hand, Pi is a wannabe crypto currency, as far as I know,” he said.

“Your gold will always be valuable, but the value of a share certificate of a company that is not yet operational can be zero, unless the company picks up and does really well in the future. So, Pi seems to be in the same situation. Right now, it has almost no value. It may gain value in the future or it may not,” he added.

Talking about the relevancy, he said, “Of course, if you can earn bitcoins, it is great. Right now, one Bitcoin is worth about USD 10,500. One pi is worth almost nothing.”

“It may be the future of money as it is decentralized, fast and secure. But the disadvantage is that it is still not accepted by many countries in the world,” he said adding, “Bitcoin or crypto currency can be widely accepted in the future.” He said as long as it is legally allowed it could be used and this may be the future but it depends on how fast the countries around the world accept it.

Talking to the Director of Department of Innovation and Technology from Druk Holding and Investments Limited (DHI), Ujjwal Deep Dahal said through crypto currency one can buy and sell commodities or spend for any purchases if the merchants accept crypto currency as a form of payment or transaction, and it can be transacted electronically.

He said technologies underlining the crypto currencies have shown the potential to disrupt systems, though it will depend on how the use cases evolve and are accepted by masses. Pi as a crypto currency would be relevant and any major disruption it could provide to the industry remains to be seen as it evolves in its technology, efficiency in its operation, trust and value it could provide. “It would depend on how it can prove stronger for the functions of money as a medium of exchange, store of value and unit of account, and more importantly acceptance by users.”

He said the crypto asset market has entered the growth stage and that the future is definitely digital even in currency.

An economics professor, Sanjeev Mehta said it is a digital currency and functions independently of the financial institutions. It allows anonymous transactions and ensures privacy of personal information, and it uses a block-chain platform.  

Moreover, talking about the difference between physical money and crypto currency, he said physical money is a legal tender, but crypto currency is not. For this reason, the general acceptability of crypto currency is weak.

“Money performs three core functions- measure of value, means of exchange and store of value,” he said adding both the crypto currency and physical money deliver effectively on the first two functions, but the crypto currency may not be a good store of value due to uncertainty about its continued existence.

He also said that unlike physical money, crypto currency has limited outreach due to digital divide.

Talking about the economic implications of crypto currency, economics professor Sanjeev Mehta said, the most significant implication is reduced control of the central bank on the monetary policy of a country and this may be a potential source of creation of black money, and financing of criminal activity.

Talking about the effect of crypto currency on the value of domestic and international physical money, he said: “Although there is no conclusive evidence on this, I believe that it may not have any significant impact due to very limited use of crypto currency.”

Bitcoin is widely regarded as the first modern crypto currency and the first publicly used means of exchange to combine decentralized control, user anonymity, record-keeping via a block-chain, and built-in scarcity. It was first outlined in a 2008 white paper published by Satoshi Nakamoto, a pseudonymous person or group.

In early 2009, Nakamoto released bitcoin to the public.

Pi coin was launched on March 14, 2019 using block-chain as a network and the project was developed by a group of Stanford PhDs who named it as Pi network.

pic courtesy: Google

Sonam Tashi from Thimphu