A person was at a café. He was obvious via the menu and determined to order himself a glass of lime water. But it wasn’t simply some other lime water he needed. He advised the waiter that his beverage shouldn’t have the style of lemons. He mentioned he didn’t just like the fruit a lot. But he added that he was a giant fan of lime water anyway. Bewildered at first, the waiter finally determined to convey him a glass of plain water. The man gulped it whole-heartedly and paid the waiter an additional twenty for his impeccable companies. He left the café, singing a tune about lemons.
The Reserve Bank of India, or RBI, embodies the identical class of thinktanks that order lime water with out the lemons, hen tandoori with out the chickens, and blockchains with out the bitcoins. Blockchains – let’s speak about that for now.
The blockchain is a fairly easy know-how. It is a database run and managed by a community of computer systems as an alternative of single servers. Every pc on the net will get entry to the complete database. The database is all the time rising as a brand new set of information, or blocks, are added to it. Each block contains a timestamp and a hyperlink to the earlier block. That is how these blocks, organized in ascending order, type a series of blocks. And the contributors operating the community obtain rewards in a worthwhile token referred to as bitcoin for sustaining it.
In a manner, incentivization is lemons to the blockchain named water. That’s the essential ingredient. But the RBI is interested by paying for the water on the fee of lime water. And they’re pleased self-patting themselves for it. Let’s bounce into the context of it.
The Art of Hating Bitcoin and Loving Blockchain
The National Payment Corporation of India (NPCI), an RBI-backed umbrella group for working retail funds and settlement methods in India, introduced that it was contemplating utilizing blockchains to enhance their fee community. The nationwide physique acquired assist from ten banks in India. Meanwhile, it released a notice inviting bidders to suggest their blockchain options as their potential “Liaisoning Consultants.”
In layman phrases, the NPCI hoped to create an alternate blockchain that will compete with the unique Bitcoin blockchain. But it will accomplish that with out providing any incentivization since it will have central management over the validation and addition of blocks. In a manner, NPCI would merely make the most of the blockchain for managing information – the identical they’ve been doing with their present databases. And they might name it ‘progress.’
The query arises, why would NPCI create an inferior database when it could actually already entry safer blockchains. It’s easy: they’ve fallen for the blockchain-not-bitcoin cliché.
The cliché displays a company’s willingness to dump lemons for water – or dump bitcoins for blockchain. As the complete Bitcoin protocol works like a decentralized banking system, which validates and manages transaction information extra cheaply than a centralized monetary establishment, the mainstream business rigorously disassociates itself from this protocol. But to sound extra technological and fewer scared, the banking system begins making a hysteria towards bitcoin whereas saying wonderful issues concerning the blockchain as a standalone entity.
As a end result, the world witnesses a JPMorgan lambasting bitcoin however launching its very-own cryptocurrency later. And now, an RBI-backed physique is beginning digital fee tasks regardless of announcing banking ban on bitcoin-enabled corporations. It is unclear whether or not or not they perceive typical database would run higher than their non-public blockchains.
What RBI has achieved to this point is curbing competitors by misusing its authority. And then, it’s launching an underdeveloped product to mousetrap the fee and settlements market.
Cryptocurrencies like bitcoins are neither foreign money nor coin. Not authorized tender in India in any respect. Trade in these currencies has assumed character of classical Ponzi schemes. Limited provide and uninformed demand makes each new investor assume larger threat. No underlying actual worth.
— Subhash Chandra Garg (@SecretaryDEA) December 30, 2017
The man knew his lime water tasted like water. But he needed to play cool, so he doesn’t embarrass himself. The RBI appears like the identical individual.