Advertisements
  • 8340741640
  • manoranjan@thesaneobserver.com

Monthly ArchiveDecember 2017

Why So High Bitcoins ??

 

 

“In the long-term Bitcoin moves above $500,000 within three years. Bets?” – John McAfee (Founder of the software and anti-virus company McAfee Associates).

In 2009 when Satoshi Nakamoto invented the bitcoin nobody thought it could transform the world of digital payments. Bitcoins are a form of digital currency that can be used to make payments without any barriers of bank charges and government intervention. They run on Blockchains.  Blockchains are decentralized ledgers that are run by “Miners” who are able to crunch transactions. These miners are rewarded by Bitcoins. Bitcoins can be used by anyone who is looking for digitally secured anonymous transactions. From a mere $0.08 in 2010, the value of bitcoins increased to $4000 in 2017. Experts and wall street strategists believe that it will rise to another $20,000 to $55,000 by 2022.  We all have several unanswered questions about this emerging giant in the field of digitization. Here we will try to answer two of the most important questions that all our readers have in mind, namely

What caused the value of Bitcoins to increase by 600 % by 2017?

What does the future hold for bitcoins?

The cryptocurrency that went up by only 40 % by 2015 is definitely very volatile but there are a number of reasons why bitcoins are the “digital gold” and why more than 16.5 million bitcoins are in circulation as of today. We will have a look at some of these reasons: –

1)    Safe against the currency risks- Bitcoins can be a blessing for people living in countries with high inflation or countries with risk of currency devaluation. Digital currency is a safe bet and this is one of the main reasons why bitcoins have managed to gain popularity in a country like China where 90% of the Bitcoin trading occurs because it was recently facing devaluation and hence people resorted to Bitcoins.

2)    Free from Bank rules – In many authoritarian countries, people are using digital currencies like Bitcoins to escape from government rules of capital control. Also in countries like Greece, it is now proven that keeping money in the bank is not a good idea as banks can come up with new restriction and rules every time the economy of the country suffers. So, the investors started to look for something out of the reach of banks and here Bitcoins came to rescue.

3)    Multipurpose – From settling insurance claims to crowdfunding, bitcoins, and blockchains can do it all. They have a wide range of applications. Each application will require only a transaction fee which will add on to the value of bitcoins. Some of the areas where bitcoins are being used are digital trading of securities, for buying properties, settlement and even in auditing and document stamping.

4)    Scarce Resource – It is a scarce resource as there is a maximum limit on the number of coins that can ever be created and circulated. The market will soon realize that there will be a shortage of Bitcoins and just like gold bitcoins will gain its value from its dearth.

5)    Quick Accessibility and Open for all- Investing in bitcoins does not require any long-term plan and you can use it whenever you need it. You can use it to buy pizza or invest in a property of your choice. Also, it is an open source cryptocurrency with no restrictions on the user.

6)    Recent Events – Japan’s legislation accepting bitcoins as a commodity, New financial products like “interest-bearing bitcoin account”, development of new bitcoin products and investor’s confidence in blockchain and bitcoins are all adding to the ever-increasing values of Bitcoins.

7)    Lack of real competition – Even though there are other options available for cryptocurrency but none of them are as popular or as secure as Bitcoins. Initial Coin offerings might seem like a novel idea but they are still in development phase and the remaining directly trading cryptocurrencies available need centralized exchange and so they are not as popular.

8)    Arbitrage – The unpredictable nature of Bitcoins that could have been a problem in its adoption is also taken care of now. With the rise of currencies future market like ICBIT.com the stability of bitcoins is bolstered because these man-made tools and purchasing power parity techniques will help them achieve arbitrage. They will strengthen the beliefs of customers in the bright future of bitcoins.

9)    Ethical – There have been rumors like bitcoins and digital currencies are used by criminals to get away with their crimes but that is not the case. Investing in bitcoins is a way to support fairer monetary system which is free from the control of the global banking organizations. These digital currencies seem like a solution to all the economic crisis usually created by the banking sector. Bitcoins seem like the only possible answer of “One World One Currency” dream that the entire world has seen.

For several reasons Bitcoins have enjoyed its superiority and popularity in the world of digital currency. From the excitement it brings among the investors to the media coverage it gets, all have contributed a lot in making Bitcoins what it is today.  2017 was the year when digital gold officially surpassed the value of real gold. The rate at which Bitcoin’s value is increasing can be understood from the fact that a £2,000 investment on Bitcoins 5 years ago would have made you a millionaire today. Humans despise change but this is one technological change that can cause a paradigm shift in the science of currency and monetary policies, and humans are loving this change. Almost every corporate leader has appreciated and recognized the power of Bitcoins.  Eric Schmidt, Executive Chairman of Google is of the view that “[Bitcoin] is a remarkable cryptographic achievement… The ability to create something which is not duplicable in the digital world has enormous value…Lots of people will build businesses on top of that.”

With the increasing adoption of technology and the loss of faith in the conventional currency, we can only hope to see Bitcoin transform from gold to diamond of the digital world.

Advertisements

Mallya : The Conjuring Brewster

The CBI and the Enforcement Directorate will require a watertight case to demonstrate their current claim that previous alcohol aristocrat Vijay Mallya’s organizations diverted a huge piece of the ₹6,000 crore he got from loan specialists for his Kingfisher Airlines. Else, any shot of removal will go up in smoke., there were reports that both the organizations are setting up a charge sheet asserting Mallya and his organizations washed a noteworthy piece of the ₹6,000-crore bank credits taken for Kingfisher Airlines. The cash clearly was redirected to a few shell organizations in seven nations, including the US, the UK, France and Ireland.

 

The offices ought to have the capacity to demonstrate finances in a specific ledger abroad, that the cash was really occupied to that financial balance from a bank here, and that assets proposed for the aircraft were really redirected for different purposes, he included.

 

This will include a great deal of work, documentation which should bring about watertight confirmation. “At exactly that point an illegal tax avoidance case can be set up, which will be a genuine offense both for neighbourhood laws and with the end goal of removal,” he said.

 

A previous best authority in the UB Group said the CBI and the ED have left the correct sum washed rather dubious.

 

“They have said it was the greater part of the sum and not the whole sum. This can be deciphered in a few ways,” he called attention to. He additionally said there is plausibility that a huge piece of the measure of a solitary seller could have been washed.

 

Usual way of doing things

 

On the off chance that for sure a lot of the advance was redirected, at that point how were the operations of Kingfisher Airlines completed? As indicated by sources, the cash originated from alcohol merchants, United Spirits Ltd (USL) and other gathering organizations.

 

“This was utilized to run the day by day operations of the carrier with the guarantee that it will be returned once the bank credit was discharged. Be that as it may, once the advances were dispensed, the cash were stayed away forever.

 

As indicated by reports, scientific reviews completed by PwC and later by EY demonstrated installments made to Kingfisher Airlines by USL. These advances were later regularized.

 

The previous UB Group official likewise said that as Kingfisher Airlines ran its operations for the most part on rented flying machine, an abroad substance (seller) would be made, which would thus make imaginary solicitations with expanded bills and the cash would be exchanged to it through legitimate means.

 

Whatever the cash the carrier owed to the renting organization would be dispensed and the rest stopped with the substance.

 

For instance, if the rent rental was ₹100, the seller would be exchanged ₹100 in addition to X. A measure of ₹100 would be given to the renting organization while the rest would stay with the merchant.

 

“It might look as though the whole exchange did was lawful as it was done through legitimate managing an account channels. What the seller did subsequent to getting the assets was unlawful. They were heaping up solicitations and making go-between which have nothing to do with the renting of flying machine,” he clarified.

 

He likewise said it was false that a portion of the organizations named in a specific report were shell organizations implied just to launder. For instance, H Parsons was about exceptionally old and was an appropriation organization based out of Mumbai. It was obtained by Mallya and his partners later. Another organization, Watson, was not a shell organization either. It has been in presence for quite a long while now.

Level of verification

Vaidyanathan said the tax evasion charges have just been leveled against Mallya however the reason for activity is new a direct result of new “confirmation” as asserted by the CBI and the ED. “The level of evidence that the court expects is significantly higher. Today, the UK court needs to know whether Mallya has conferred an office in India and subsequently should be attempted in India. In this way, he would be removed to India to confront trial,” he said.

 

Subsequently, it is all the more essential for the offices to see that the confirmation is strong and they have clear narrative proof to help preoccupation of assets, Vaidyanathan included.

India’s women only banks proposed – Do we really need one?

I was eagerly waiting for this year’s union budget after dismal performance of UPA 2 all encapsulated with scams and scandals. But “women centric” budget is like thinking out of the box and it completely took me with surprise. Will it be the last dice thrown by FM before the next year general elections or will it be going to generate more women entrepreneurs in future? Let us analyze it in detail.

There are positives as well as negatives by opening a women-oriented public sector bank (PSB) with an initial capital infusion of Rs 1,000 crore. How much such a move will create an impact but terms like “women empowerment” and “financial inclusion” will surely get a boost.

Women customers will certainly feel comfortable on being serviced by women bankers. Penetration of such banks in rural areas will encourage more of women participation and SHGs in availing microfinance. There will be a sense of freedom among the women in starting their own ventures. But the question arises here are hard to deal with like “Will this bank for women serve the entire country? If yes, how long will it take to roll out across the length and breadth of India? Will it go to the hinterlands, where bulk of our disempowered and un-creditworthy women live? What is that “extra” which will make it work even when nationalized banks and micro-credit institutions are struggling to “include” people at scale in rural areas?

In the era of online and mobile banking, people hardly bother to visit banks. So opening up women banks will require a huge investment and infrastructure to be built. Such banks will be more profitable and will be able to generate more business in rural areas. Many microfinance institutions have opposed this move but I think it’s a positive move for poor women sections of society who borrow money from private money lenders to run their business. Competition will definitely get stiffer but opportunities do emerge from it.

Addressing the gender related aspects of empowerment; it will certainly fulfill a social goal. A women run banks are likely to attract women clients, promoting inclusive financing and other women livelihood schemes.

But did we need to start something new like this in a country where there are 21 nationalized banks, 21 private sector banks, 42 foreign banks and numerous cooperative and local banks, payments banks. Such moves create a serious doubt on our own available resources. A similar banking model was started in Pakistan 28 years back in the name of “First Women Bank” but didn’t go a long way. It has currently only 42 branches all over across 24 cities and the work culture is corporatish.

Let us witness the success story of India Post who through its infrastructure and network has implemented plan into action. It has more than 1.54 lakhs post office branches out of which 90% are in rural areas. Each post office has been providing banking services for decades to people like Post Office Savings Bank.

People who grew up in rural areas without banks, or in places where petty bankers were too strict to entertain the illiterate villagers, know where to go for the safe-keep of their precious money: that little window at their neighborhood post office. It’s not a long trek to the post office. There is a post office for every 7176 people in the country. In rural areas, the coverage is even better – one for every 5682 people. When the UPA government was struggling to find a way to transfer the wages for NREGA beneficiaries, it was this network that came to its rescue. About 2.2 crore people get their NREGA payments through the post offices.

People in rural and semi-urban areas who are familiar with the post office savings banks also know that it is the most women-friendly and inclusive banking system where agents even come home to take your money, update your passbooks and even return the money on maturation.

In rural areas, there are about 2.69 lakh agents who come home to help people, mostly women, with banking. Almost all these agents are also people from the neighborhood and are familiar with the beneficiaries. It is a unique banking eco-system that only Indian Post can claim credit for. It is a model that has evolved over time and is very hard to replicate because it is driven by the sheer needs of people, and nourished by trust and relationships. It will be difficult to establish another system like India Post with such network and coverage anywhere in the world. Currently post offices provide only savings facilities. It has decided to set up Post Bank of India and is all ready to apply for banking license by July under new RBI guidelines to operate as complete banking system.

Chidambaram would have been more prudent in utilizing this network to provide financial services to women at minimal cost. It will take around decades to establish numerous women banks all over India. Will it employ women agents to provide door to door service to women? What kind of banking guidelines will it follow?

There are many questions which have been left unanswered. Last time they lured farmers by announcing a relief package for farmers which included the complete waiver of loans given to small and marginal farmers. Called the Agricultural Debt Waiver and Debt Relief Scheme, the 600 billion rupee package included the total value of the loans to be waived for 30 million small and marginal farmers (estimated at 500 billion rupees) and a One Time Settlement scheme (OTS) for another 10 million farmers (estimated at 100 billion rupees). This time its women who will fell prey into UPA hands.

Sheryl Sandberg has recently come up with a statement that women should learn more from men in the corporate community. This sums up as a whole that just building a women centric bank or office is not helping to evolve gender bias and this will broaden more gaps and build bridges in gender perse evolution. I have a deep regard for poor women and I truly believe in saying that “They are Bankable”.

References

http://www.firstpost.com/india/womens-bank- how-symbolism- kills-real- possibilities and-real-india- 645061.html