[Legendary]

Hi India, We all know that Indian community has lagged far behind on this forum, even behind than countries which don't have their local boards, but let's try to accumulate ourselves again and try to grow together. Let's first start with making the list of the members with us. Please post below the post if you are Indian I'll add your name to the directory here, let's try to gather more and more Indians on the forum together and help each other grow.

Legendary  
Webtricks

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Teosanru


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[Use a tight stop loss:]

The most horrific story of the day. A total of 8 Billion Dollar market got liquidated today in just the last 12 hours due to the violent bitcoin crash from 42k to 30k(even 29k or 28k in a few exchanges). But the most important thing that we should learn from today's crash is the nature of unpredictability that market has. People generally go in with high leverages and end up getting liquidated at very wrong points. Even if they aspire for a correction market sometimes fall so vigorously that they aren't even able to get out at the correct point. Some might say it's manipulation some might say it's Elon behind it. But the truth is no matter whoever is behind this, if you want to stay in the market, obey the market otherwise just walk out. So here are the two things you can do to avoid such crashes especially for leverage traders:

1. Use a tight stop loss: This is by far the most important advice and something you should have heard a lot of times. Never long/short from a point where stop loss can be so low that you won't be able to handle it. Don't be frightened with the small loss if you exit on stop loss you might get a very good chance to buy much below.

2. Never Overleverage yourself: I generally consider anything above 5x especially in altcoins as overleveraging. Do this only if you are very very sure of the support or you sure that your stop loss is too tight. Also, the margin in only a certain percentage of your capital so that you can save the trade by buying again slightly above the liquidation point thereby dollar-cost averaging your price thereby lowering the liquidation price.

We all know after the Doge pump recently, numerous coins have hit the market claiming to be the next doge and most of them either have dog in their name or are having Elon in their name. Some like Shiba Inu even managed to pierce in the top 50 Cryptos and is now listed on Binance too. Utility? None. Thousands of investors or I should say normal people like us might have made 20-50x money with these coins. But an Equivalent number of people lost everything last night after what Vitalik Did. Here is the snapshot of the dog market after what Vitalik did:



Surprisingly Vitalik is now being seen as a traitor who has duped so much money of innocent investors. But up to what extent do you think he is wrong in doing so? I think he is absolutely right. These coins are just spoiling the name of blockchain and cryptos by making it a get-rich-quick scheme.

A piece of concrete news on the regulation of Bitcoin is finally in and it's not really great news. The central government has decided to put up 18% GST on bitcoin trading while deciding to classify it as an intangible asset and not "security". Remember there is no GST on shares/futures/options/bonds because Government has put these outside the definition of GST that is why you don't have to pay 18% GST when you purchase 1 Lakh worth of shares.

Source: https://www.businesstoday.in/current/economy-politics/centre-may-impose-18-percent-gst-on-bitcoin-trading/story/426315.html

The Central Economic Intelligence Bureau (CEIB), an arm of the union finance ministry has put forward a proposal to impose 18 per cent GST on bitcoin transactions. The CEIB told the Central Board of Indirect Taxes & Customs (CBIC) that government could potentially gain Rs 7,200 crore annually on bitcoin trading.

Now, apart from discussing how concrete this news is, I would focus more on the consequences:

• First of all there is no clarity as to what would be the taxable value on which GST would be levied? Will it be the whole amount of Bitcoin you purchase on an exchange or will it be only on brokerage or something specific like that
• Second is who will be liable to collect and pay this GST? Its obvious burden would be at the end on the person buying BTC but what about a seller? This way I would more or less become a bitcoin businessman. When I sell it to someone I charge 18% GST and take ITC of the amount I purchased. This would be a relief as this would mean you will have to give 18% cut out of profits and not out of the total sales value. But this would mean each one of us will have to take a GST Number and file monthly GST returns making the process pretty cumbersome.
• Another option could be that exchanges are given this authority to collect GST at the time of each sale purchase but that too doesn't make a lot of sense.
• It would more or less be a big shocker for the whole crypto industry
• But one good news that comes with this news is that at least bitcoin isn't getting banned. Because the government wouldn't mind a 7200 crore of additional Income.
  

Whenever Bitcoin breaks an all-time high it's pretty obvious that these conversations are going to be in every corner and country. But in the Indian scenario what does a new all-time high mean? It's worthwhile to note that it was just a few months back that RBI had to withdraw the instructions given to banks regarding Crypto regulation. But after that, there has been a different kind of positivity in the Indian market. Even with some speculating that a law prohibiting cryptocurrencies might be around the corner the crypto space has grown just to give you a context of the growth:
Here are the growth metrics of various exchanges:

• Total Number of bitcoins traded on Paxful P2P space grew by 234% from 2019 to 2020
• A major exchange WazirX CEO said: "Our trading volume before the lockdown in India used to be around $1M. It has grown over 10X in just 60 days"

A very crucial topic I was having in mind since many days. We all are pretty aware about our income tax obligations with regards to incomes earned by us in cryptocurrencies. But it has come to my attention that most people were declaring signature campaign/ marketing campaigns/ bounty earnings as Incomes under PGBP/ Other sources. Here there is one pretty big point on which I would like to draw your people's attention and that is GST. This is something over-looked by us because we are of the opinion that GST is merely for people doing businesses. But this is not true!!

Until the Service tax era, (pre-GST era), Export of Services were completely excluded from the space of service tax. This means that you don't have to pay service tax in services exported by you. But now things are not the same. In the IGST Act, I quote:

“Supply of goods or service or both –

(a) when the supplier is located in India and the place of supply is outside India;….. ”

Shall be treated to be a supply of goods or service or both in the course of inter-state trade or commerce.”

This means export of services is treated as interstate supply in GST liable to IGST. Therefore all our services provided to people/ exchanges/ ICO/ Websites located abroad is liable to GST. In general cases these are zero rated supplies subject to certain conditions. Which means either you once have to pay IGST and then apply for refund of GST on such servcies or you have to get Letter of Undertaking and give it to CBIC to avail such exemption. Either ways you would still need to complete all compliance. and in first case even pay tax once before you get refund of it. But we won't be able to get this refund because we will not get our payments in foreign exchange. We will get it in cryptocurrencies.

This means that all of us are doing taxable interstate supplies. But only relief is under the Basic threshold limit where it was cleared by GST council vide: Notification No. 10/2017-IT dated 13-10-17 that people doing only interstate supply of services are not required to get registered under this act if aggregate value of such supplies is below 20 Lakhs.

But remember this is in context of all the services provided by you. This means if you are doing some regular work full time and were thinking that your business doesn't needs GST you should add up your signature campaign earnings in that. Unless they are not in the same business vertical. Moreover if you are giving export of services exceeding 20 lakhs then you have to get registered and issue invoices on the same and pay taxes on such services yourselves.

So before you file your Income Tax return by merely declaring your signature earnings as other source or Business Income. Do keep all these calculations in mind. Alternatively ask help of any CA( because he would understand both Income tax And GST). I would recommend you to go to someone having knowledge of cryptocurrencies many traditional CAs are not aware completely about cryptocurrencies so seek proper help.

[Is Indian government going to Ban Cryptocurrency? If yes then how?]

It's been in news these days that Indian Government is looking forward towards banning of cryptocurrencies. India is one of the major Economic Powers of the World especially in Developing Countries. If after China, Indian government too places a ban on Cryptopcurrencies it could be a drastic state of affairs for the Bitcoin World. A few Months Back a report was submitted by the Central Department of Economic Affairs to Ban Cryptocurrencies in India. I have made a synopsis of the same report in plain English but as being Indian Centric Posted it here in the Indian Section. You can read it here:

Is Indian government going to Ban Cryptocurrency? If yes then how? - https://bitcointalk.org/index.php?topic=5258373.0

It must be noted that Government is putting up strict punishments for those who don't obey the rules which include fines extended upto INR 25 Crores means around $4Million or upto the Amount of Scam involved. Also you might end up in Jail for upto 10 years. It's pretty evident that FBI in a case in US were able to track down a person using his bitcoin Address which reflected that Bitcoin is Pseudo-Anonymous and not Completely Anonymous. Special thanks to the KYC performed by almost all exchanges  
 Here is the Link as to how it can be done: https://thenextweb.com/hardfork/2019/12/26/bitcoin-cryptocurrency-criminals-law-enforcement/

Now if governments are able to track down Bitcoin users. And these 2 big Economies banning cryptocurrencies many other could follow the steps of these countries. Especially in the Eastern World which is still developing.

[Report on Virtual Currencies]

So you all must have heard or seen the news bulletin that Indian Government is deciding to ban cryptocurrency but none of them shows why and how? Moreover what would be the meaning of such a ban? Will this mean you will be fined for using cryptocurrencies? or you would be jailed for using Cryptocurrency? Here is the synopsis of how Indian Government is trying to ban Cryptocurrencies:

It started in 2017 when the Department of Economic Affairs made a recommendation committee headed by Shri Subhash Chandra Garg, Secretary, DEA which would study the aspects of cryptocurrencies and suggest government some legal measures related to it. So the committee finally submitted it's report in February 2019. It's on the basis of this report that Indian government is deciding to ban Cryptocurrencies.

Before reading keep it in your mind that these were merely the recommendations given by the committee and it's not necessary that the original law would come and would match the aspects of report. This is basically a summary of what was written the report.

Report on Virtual Currencies

Characteristics of Virtual Currencies which make it necessary to regulate them:

i. They don't have any intrinsic value and therefore are subject to huge fluctuations.
ii. They are decentralized networks regulated by no central authority.
iii. The transactions in cryptocurrencies are irreversible therefore scams and frauds cannot be reversed.
iv. They carry a degree of pseudonymity, although can't be said to be completely anonymous for participants.

Key Concerns

1. Protecting the consumers from fraud: There have been various frauds in cryptocurrencies. Moreover forking is also done where network protocol is changed for personal benefit of earning money.
2. Protecting financial system and economy: RBI wouldn't be able to regulate the supply of money in the Economy.
3. Need to Prevent Criminal Activity: As law enforcement and seizure of asset becomes difficult in decentralized blockchains

How to make Ban possible?

Here they have taken inspiration from our very good Friend (Sarcasm Intended) China. Example was cited that post ban in China the use of RMB in global transactions fell from 90% to less than 1%. Just like China India would also use a big firewall to ban such sites. Most probably just like the way they banned Porn   . Moreover no place will be allowed to host cryptocurrency related events. They also have agreed that use of VPN could be possible in such cases but would still be traceable as to who is using the website.

Key Recommendations in the Report

1. The Committee notes with serious concern mushrooming of cryptocurrencies almost invariably issued abroad and numerous people in India investing in these cryptocurrencies. All these cryptocurrencies have been created by non sovereigns and are in this sense entirely private enterprises.
2. There is no underlying intrinsic value of these private cryptocurrencies. These private cryptocurrencies lack all the attributes of a currency.There is no fixed nominal value of these private cryptocurrencies i.e. neither act as any store of value nor they are a medium of exchange. Since their inceptions, cryptocurrencies have demonstrated extreme fluctuations in their prices. Therefore, the Committee is of clear view that the private crytocurrencies should not be allowed. These crytocurrencies cannot serve the purpose of a currency. The private cryptocurrencies are inconsistent with the essential functions of money/currency,hence private cryptocurrencies cannot replace fiat currencies.
3. A review of global best practices also shows that private cryptocurrencies have not been recognized as a LEGAL tender in any jurisdiction.
4. The Committee recommends that all private cryptocurrencies, except any cryptocurrency issued by the State, be banned in India.
5. The Committee endorses the stand taken by the RBI to eliminate the interface of institutions regulated by the RBI from cryptocurrencies. The Committee
also recommends that all exchanges, people, traders and other financial system participants should be prohibited from dealing with cryptocurrencies.
6. Accordingly,the Committee has recommended a law banning the cryptocurrencies in India and criminalizing carrying on of any activities connected with
cryptocurrencies in India.

It's pretty evident from the text that Government is a sketchy regarding a lot of cryptocurrencies have arrived in the marketplace where everyone is creating their own currency. Thing is that they call themselves are currencies yet they have no underlying intrinsic value. Moreover as per traditional economics Money must have 4 necessary attributes:
1. Store of Value
2. Medium of Exchange
3. Fixed Nominal Value
4. Divisibility

Now as per the committee Bitcoin cannot have a store of value because it's price is merely a bubble of demand and nothing else. But I don't know why they said it can't be medium of exchange. But then I found the reason they were giving was the high transaction times involved in transferring hinders it's ability to act as medium of exchange here is the quote

"Since these cryptocurrencies are backed by trust and consensus-based algorithms, processing transactions is time-consuming due to validation procedures and network
latency. The large gap in transaction processing speed between cryptocurrencies (especially Bitcoin), and other electronic payment methods, hinders their ability to
be used as medium of exchange"

Thirdly they said it doesn't has a fixed nominal value which is true it is subject to extreme volatility. This is why they are recommending ban of cryptocurrencies altogether.

Now comes the most important Part Banning of Cryptocurrency and Regulation of Official Digital Currency Bill was suggested by the committee which gave the following law.

Banning of Cryptocurrency and Regulation of Official Digital Currency Bill.

GENERAL PROHIBITION

"(1) No person shall mine, generate, hold, sell, deal in, issue, transfer, dispose of or use Cryptocurrency in the territory of India.
(2) Nothing in this Act shall apply to any person using technology or processes underlying any Cryptocurrency for the purpose of experiment or research, including imparting of instructions to pupils provided that no cryptocurrency shall be used for making or receiving payment in such activity.
(3) Nothing in this Act shall apply to the use of Distributed Ledger Technology for creating a network for delivery of any financial or other services or for creating value, without involving any use of cryptocurrency, in any form whatsoever, for making or receiving payment."

LIST OF OFFENCES

1. Whoever directly or indirectly mines, generates, holds, sells, deals in, transfers, disposes of or issues Cryptocurrency or any combination thereof with an intent to use it for any of the purposes such as raising of money, investment, as payment system, related services, basis of credit etc. shall be punished with fine and imprisonment of not less than 1 year extended upto maximum of 10 years .

2. Whoever directly or indirectly promotes, issues any advertisement, solicits, abets or induces any participation in any activity involving the use of Cryptocurrency for any of the purposes or for purposes generally prohibited above shall be punishable with fine or imprisonment which may extend up to seven years or both.

3.  Whoever directly or indirectly acquires, stores or disposes of Cryptocurrency or any combination thereof with an intent to use it for any of the purposes prohibited on a non-commercial basis shall be punishable with a fine.

MAXIMUM AMOUNT OF FINE

For the purposes of Sections 8 and 9 , the maximum amount of fine that may be imposed upon a person for an offence shall be as follows:
(a) the higher of, –
      (i) three times the loss or harm caused by the person; or
      (ii) three times the gain made by the person.
(b) If the loss caused or the gain made by the person cannot be reasonably determined, the maximum amount of fine that may be imposed on such persons shall be as specified in First Schedule as against each of the offences under Sections 8 and 9.

First Schedule:

Offence Maximum Fine Limits

Under section 8(1)-Buying/selling/mining/dealing/disposing/issuing for Commercial purposes	Upto Rs. 25 crores
Under section 8(2)-Using it as crowdfunding/payments sytem	Upto Rs. 25 crores
Under section 8(3)- Promoting/ Advertising	Upto Rs. 25 lakhs
Under section 8 (4)- Using for Non-Commercial purposes	Upto Rs. 1 lakh
Under section 9 (1)- Convicted for the Second time under this act	Upto Rs. 50 crores

NON-BAILABLE OFFENCES

All the offences under this act are Bailable. Except when Cryptocurrency is mined/used/generated/disposed/held for purposes of raising money / as a means of investment or offering financially related products. This offence is Non-Bailable and Cognizable. Cognizable basically means a serious crime where you can be arrested without an arrest warrant.


Also all this would apply to all the persons including Individuals/HUFs/Firms/BOI/AOP/Body Coroporates/Trust etc.

So this was the basic draft law prepared by the committee and as submitted in it's report to Department of Economic Affairs, Ministry of Finance. Moreover it must be noted that in this very same report the Committee has praised the Distributed Ledger Technology a lot and is saying that Blockchain is the future and will be used in various segments of government. Non of this law would be applicable on usage of blockchain in financial systems or other systems. But creating of virtual currencies using these blockchain systems is not allowed.

PS: It must be noted that this is a draft Bill and a recommendation. Do not get into any FUD on basis of this. This is still to be finalized as a bill and then would be presented in Parliament after approval of which and President it would become a Law this thing could take week, Months or even years. Moreover Chances are that Government might quash these recommendations and might order a new committee on the basis of the Status-Quo. This is merely for Educational purposes and Not a Legal Opinion.

I hope you guys like it. Feel free to ask for any query or thing that you don't understand from the text. Would this ban be sustainable?

Reference Document: https://dea.gov.in/sites/default/files/Approved%20and%20Signed%20Report%20and%20Bill%20of%20IMC%20on%20VCs%2028%20Feb%202019.pdf

[1. Deficit Financing:]

Now that, the whole world is in sort of an Economic Outrage due to Covid, It is worthwhile to note that every Government around the world has announced certain fiscal stimulus to boost up the economy once again. Every country has given aroud a 5-20% Fiscal package. Here is a summary of major countries:


So if we look at this metric we would realize that every country has increased liquidity in hands of people by this much percentage. Now where will this money come from? See considering that there won't be much gains in hands of people and less purchasing due to Covid chances are Tax collections which were expected to Increase Y-O-Y might even go down. Therefore countries would be having just two remaining options:

• 1. Deficit Financing: The most obvious answer for every country. For people who don't know what is deficit financing. It's basically printing of money by the Central bank who then gives it as a loan to the Government. But considering that economies around the world already have a deficit financing of average 3-5% Post covid deficit financing rates may go up to 10% therefore Governments might print a whole lot of money than what they expected almost double. This option is more suitable for Stable Economies.
• 2. Approaching the IMF: Now this is a less preferred option as it is an external borrowing which comes with a cost attached to it. Moreover IMF could also be a bit reluctant in relentless lending. But this is a viable option for developing Economies.

So if it's so easy then what's the problem ?
The problem is once again what it has already been. Creating money out of thin air devalues money and creates Inflation. Now most of the investors around the world are worried regarding the demon of "INFLATION" . Now it's a well known fact that inflation backed without by any Economic Growth could lead the country into a hyper inflationary stage. So, while the Countries are printing money relentlessly to fight economy distortion chances are few developing economies just run into Hyper-Inflation. We have seen such a case happening with Zimbabwe previously. Here is once again when Bitcoin comes into action. Here is how it looked for Zimbabwe :
 

Now this is not the only issue second issue is: DEBT TRAP. While most of the developing economy have been liberal in giving loans to individual and businesses. Now when businesses won't be able to pay back the loan. Countries are resorting to restructuring their debt by giving them more Debt. So this could create a situation of a debt Trap pretty similar to one we saw in 2008 only that was more specific to housing sector. Now this would be more devastating as Small businesses and unorganized sector is backbone for developing countries. Now once again people would realize how easily the Debt Trap can fall like a house of cards.

Interesting point to note here is China. China has been very aggressive in providing debt to various countries around the world and due to Covid most of the countries now might not be able to repay China. Moreover, External borrowing from some other Country like US would also not be possible due to stressed conditions in almost every country. Here is a map about how much debt does every country has to China :

Now here chances are that countries might have to lease out their territory to China as a repayment of these borrowings.

People around the world will realize that how easy it is for an economy to crash. I think these issues are already what Bitcoin is striving to fight with but in current times they seem to be more deadly. Bitcoin is providing a practical solution for it at-least as a stable alternative to Fiat.

[How did SC lift the ban made by RBI.]

You all must have heard that SC lifted the ban on cryptocurrencies set by RBI. But why did SC lift the ban? Does this mean they favour cryptocurrencies? Or does this means govt. wants cryptocurrencies to be legal?

Here is my little effort to make you understand that How did SC lift the ban made by RBI.

I know I am a bit late to as order came around 3 months back but have been busy lately.   .

ARGUMENTS AGAINST BAN

So first let me begin the three fundamental arguments that IAMAI fought upon:

• RBI does not has power to declare activities illegal. It's parliament who does that. By banning it from banking system it classified it's contention was to make it illegal.
  Argument by RBI: RBI contended that they did not declare it illegal just prohibited their participants(Banks to deal with it)
  A classic rebuttal was given by IAMAI here that if this is held then RBI can easily ban anything in country just by prohibiting alcohol dealers to deal with it citing that they affect their participants in some way. That might not sound like making it illegal but what severally affect their business making it almost illegal because they can't deal in cash due to Income Tax Laws.
• Second Argument was even if they had this power. Govt. Institutions have to go through an honest process to declare something illegal. Which means RBI must be getting harmed in some way or atleast would have made some mitigating measures to reduce that harm before banning it. RBI cited issues relating to law enforcement but IAMAI Rebuttled that Law enforcement does not falls under purview of RBI.
• Argument of Proportionality: Basic fundamental right of Democracy. Baning something should be done in extreme circumstances. First there should be taken some mitigating measures. This applies to banning everything. A movie, A song, A book, Alcohol etc. This was not exercised here.

FINDINGS OF SUPREME COURT

• Defining RBI's Power. Supreme court found that as per the RBI Act, 1934 & Banking Regulation Act, 1949 and the Payment and Settlement
  Systems Act, 2007. RBI has been vested with powers of regulating moneys and legal tender in the Economy. So first contention was to find whether RBI had the power to regulate cryptocurrencies? Because they issued the notification of ban using these three laws itself. After a lot of brain storming from both the sides they defined the functions of RBI as follows:
  
  

  Thus, the RBI Act, 1934, the Banking Regulation Act,1949 and the Payment and Settlement Systems Act, 2007 cumulatively recognize and also confer very wide powers upon RBI
  (i) to operate the currency and credit system of the country to its advantage
  (ii) to take over the management of the currency from central government
  (iii) to have the sole right to make and issue bank notes that would constitute legal tender at any place in India
  (iv) regulate the financial system of the country to its advantage
  (v) to have a say in the determination of inflation target in terms of the consumer price index
  (vi) to have complete control over banking companies
  (vii) to regulate and supervise the payment systems
  (viii) to prescribe standards and guidelines for the proper and efficient management of the Payment systems
  (ix) to issue directions to a payment system or a system participant which in RBI’s opinion is engaging in any act that is likely to result in systemic risk being inadequately controlled or is likely to affect the payment system, the monetary policy or the credit policy of the country and
  (x) to issue directions to system providers or the system participants or any other person generally, to regulate the payment systems or in the interest of management or operation of any of the payment systems or in public interest
  

  
  Once the vicinity of powers of RBI was mandated now SC went to identify what are Virtual Currencies?
  
• What are Cryptocurrencies/Virtual Currencies? For this there was a long discussion in the court. Wherein various sources were rattled for the definition of the VC because no Government record or any law prescribes definition of Virtual Currencies. So for this India went to search definition of VC in IMF, World Bank, EU and international institutions and then in laws prevailing in around 18 countries. Then it went to look for it's definition in cases of VC theft/ hacking etc. But Court ended up in rattling but couldn't find anything which described the framework and inbuilt procedure of cryptocurrencies rather than found definition which defines the features of cryptocurrencies. Here is what SC said:
  

  (i) depending upon the text of the statute involved in the case and (ii) depending upon the context, various courts in different jurisdictions have identified virtual currencies to belong to different categories ranging from property to commodity to non-traditional currency to payment instrument to money to funds. While each of these descriptions is true, none of these constitute the whole truth. Every court which attempted to fix the identity of virtual currencies, merely acted as the 4 blind men in the Anekantavada philosophy of Jainism, (theory of non-absolutism that encourages acceptance of relativism and pluralism) who attempt to describe an elephant, but end up describing only one physical feature of the elephant.

  
  A very interesting point here was that RBI has the power to notify Cryptocurrency as "other similar Instruments" under FEMA which would have given them power to Regulate Virtual Currencies but they did not do so. So RBI can regulate cryptocurrency by notifying them as they form part of financial system.
• Third contention was that can RBI only regulate VC or even ban them?: It was in this point that SC declared that RBI cannot ban VC altogether as it is already doubtful whether they come in their ambit or not. Best they can is to regulate it using various options provided.

Verdict of Supreme Court

• Then the honorable Judge of the Supreme court gave the following analysis:
  1. RBI cannot be blamed for taking a proactive approach.
  2. All other countries(except China) have a very light touch approach on cryptocurrencies.
  3. RBI has and Can further take any precautionary steps such as mandatory registration of users, KYC etc.
  4. Different types of VC require different regulations as some are fully anonymous(Monero) while some pseudo-anonymous(Bitcoin) so banning in case of fully anonymous could be a more intrusive measure.
  5. Acceptance of Digital Ledger Technology and Rejection of Cryptocurrencies is a paradox

On the Arguments it gave the following Decisions

ARGUMENT 1: They said VC might not be money at this stage but with advent of time they can replace real money so they do fall under purview of RBI. Therefore what RBI did was not ultra-vires and well within it's power. Not everything can replace real money.

ARGUMENT 2: You cannot expect from RBI that they did not look into all the issues and money laundering is a thing to be regulated by RBI. So, RBI did have the powers and made reasonable process and steps also.

ARGUMENT 3:  last and the Main reason why RBI ban couldn't withstand was that RBI Contended that their Banking system would suffer a harm with advent of crypto currencies or VC but Court said that till date there have been no major instances in which RBI can prove that VC have harmed their system.

Till date, RBI has not come out with a stand that any of the entities regulated by it namely, the nationalized banks/scheduled commercial banks/cooperative banks/NBFCs has suffered any loss or adverse effect directly or indirectly, on account of the interface that the VC exchanges had with any of them.

These were the three contentions studied by SC before they lifted the Ban by RBI on cryptocurrencies. It must be noted that even the Supreme court said in it's order that the Counsel Ashim Sood.

PS: Source of my summary is the speaking order of Supreme Court you can see that here: https://main.sci.gov.in/supremecourt/2018/19230/19230_2018_4_1501_21151_Judgement_04-Mar-2020.pdf
I have taken the jist of the whole order and summarized 180 page order also taken help from some interview of Counsel Himself.
I hope you guys like it if you do I'll make another post on how the Government is trying to now ban cryptocurrencies once again.  

[Ques 1: Is Bitcoin Banned in India?]

I have come across a lot of people who are pretty much confused regarding the legal status of Cryptocurrencies in India. Most of this confusion came after the RBI restricting banks from dealing in cryptocurrencies. Followed by certain websites claiming that Bitcoin ban Bill is arriving soon. But I would like to clear all those questions in the most concise manner possible.


Ques 1: Is Bitcoin Banned in India?
Ans 1: No Bitcoin is not Banned in India. Banned as per literal meaning means prohibited from use. So it's not prohibited from use.


Ques 2: Is Bitcoin Legal in India?
Ans 2: Yes, it's legal but basically due to absence of any Law. For Example, Until the enforcement of Information Technologies Act, 2000 even hacking could have been considered Legal as there were no laws guiding it.


Ques 3: If bitcoin is not banned then why RBI banned it or what did RBI do?
Ans 3: RBI is financial Regulator of the Country. Bitcoin maybe considered as a financial asset but it's actually a technology beneath. So it's circulation and usage would fall under purview of Government and not RBI. RBI merely asked the Banks to completely stay away from Crypto Dealings. This means RBI enforced the Banks and not the people to:
1. Stay away from Exchanges dealing in Cryptocurrency.
2. Avoid Transactions which are in relation with flow of Cryptocurrency.
3. Not provide any services relating to Cryptocurrencies.


Ques 4: This means I can purchase and sell bitcoins through banks and Won't be jailed or penalized
Ans 4: Yes, no one can touch you for merely dealing in cryptocurrencies until there comes a law governing it. Now, this doesn't mean you can take contract of murder in payment of cryptocurrencies because you still be charged for murder. I mean using cryptocurrencies for legal purposes.


Ques 5: If RBI hasn't ban cryptocurrencies why was my Bank Account freezed when I used it for crypto transaction
Ans 5: It's because banks are liable to avoid any such transactions and if you do such transactions banks would try to stop them. But you are pretty good to go until you not mention Crypto anywhere in Remarks. Even if you mention there are pretty less chances that someone is going to notice any such thing. Moreover, I have seen just like 5 out of 100 people facing such an issue so try changing to some private bank.


Ques 6: Does this means if I my cryptocurrency are stolen Police won't do anything?
Ans 6: The truth is that Police has the responsibility to find out anything stolen from you which is valuable to you and valuable in General. But considering the practical image of Police, you might have a really hard time complaining and finding out any stolen cryptocurrency so obviously TRADE with CARE.


Ques 7: If cryptocurrency doesn't has any law does this means I don't have to pay tax on it?
Ans 7: The objective answer to this is that you Still have to pay taxes on any earned income in cryptocurrency. Because the mode or medium of earning such income is not of any importance to Income tax. Even the incomes not received yet are taxed pretty much normally. So you won't be able to evade taxes with it. But to save taxes, it is a pretty large discussion for a separate thread.


Ques 8: Is Indian government deciding to Ban Bitcoin and cryptocurrencies?
Ans 8: This is a mere speculation going on since three years. A few ministers have given some indications that they might do so. But no one still knows if this is going to happen. There are no details of this Act made Public. Everything going around the web that it has banned or 90 days will be given to clear of everything is a hoax as of now.


Ques 9: What if I am still holding cryptocurrencies and government bans Bitcoin will I lose Everything?
Ans 9: I personally feel that Government would give some time to people to get out of the mess. Still as there is nothing public on it may ban it immediately. No one knows how things would go so obviously TRADE with CARE.


I think I have pretty much answered all the basic questions. But if someone still has any other question I would add them by editing this thread itself and answer them.

[STEP 1: Understanding Risk to Reward Ratio]

Most of the people think that Trading is merely learning to read charts and then buying low and selling High. But that is absolutely wrong! This is the main reason why certain newbie Traders don't make money. I would tell you a secret which most of the Trade gurus don't tell you while they teach you trading. first of all to understand the Importance of Risk Management I would like you to go see this Post of Mine:

https://bitcointalk.org/index.php?topic=5199458.msg53013312#msg53013312

Now going through the basics. I would teach you how to learn basics of Risk Management and you will learn how to do a disciplined trading.

STEP 1: Understanding Risk to Reward Ratio
Risk to Reward Ratio is the most solid strategy provided by Risk Management Theory. It is called Risk to Reward but actually is Reward to Risk Ratio It basically is a ration which is developed by this formula

Profit you can earn per trade(Difference from Target to Entry)
_________________________________________________
Risk you take per trade (Difference from Stop Loss to Entry)

This means for example if you take a trade at $10000 and your pattern says a target of $10200 and stop loss at $9900. Now feeding in the values in formula:

$10200-$10000             $200         2
____________      =     __________   =   _ = 2:1
$10000-$9900               $100         1

This signifies that there is double the profit potential than the assessed Risk. Now Ideally people would say that 2:1 is the best ratio but I think it should be the minimum atleast until you become an intermediate trader who can have control on his emotions. How this is important? I would quote my own post:

I think a very important concept pretty dear to my heart which you really forgot is Risk Management. I consider 80% of success in Trading comes with Risk Management. If you can limit the amount of risk in every trade to maximize your return. You just don't need any guidance in selecting your trades. Because if you are trading even with a 60% win strategy a good risk management technique can increase the returns upto 80% because it teaches you how to earn greater from the trades you win and lose less from trades you lose by setting a favourable Risk to Reward Ratio. Let's consider an example to understand this.


Case 1: 60% win ratio with 1:2 Risk Reward
You take a Risk to Reward Ration of 1:2 which means you Buy at 9000 and set your target at 9200 but keep your Stop Loss at 8900. Which means maximum loss is $100 but max profit is $200. Now if you keep this ratio over a period of say 100 Trades.

Now Assuming you get profitable in 60 trades which means you earn 60x200 which is $12000 and you lose 40x100 which means $4000. Your net gain still is $8000.


Case 2: 80% win ratio with 1:2 Risk Reward
You take a Risk to Reward Ration of 1:2 which means you Buy at 9000 and set your target at 9100 but keep your Stop Loss at 8800. Which means maximum loss is $200 but max profit is $100. Now if you keep this ratio over a period of say 100 Trades.

Now Assuming you get profitable in 80 trades which means you earn 80x100 which is $8000 and you lose 20x200 which means $4000. Your net gain still is just $4000 with a better strategy.
This is why people say that it's better to have a better Risk Management strategy.

STEP 2: Understanding Power of Compounding
What most traders forget is that aim is to be profitable in long term and earn money and not to just hit a good trade today. So bring the power of compounding in your play. Set small daily targets like 2%-3%. This might seem small but no matter what is your account size this is the only way to earn profits.

Have a look: If you have an account size of $1000 and earn just 2% daily. Trust me it might seem very easy but it isn't that easy to earn 2% consistently unless you keenly apply Risk management. Now,

Earning 2% for merely 100 days would make your capital like:    1000 x (1+0.02)¹⁰⁰ .
The answer would be $7376. This means you would make 7 times of your capital merely by earning 2% daily for 100 days. [People think that compounding is only a long term concept but truth is it can be applied to short term trading too.

STEP 3: Don't Risk everything in one day
You are fighting a war against the world and not merely a battle. A true warrior doesn't gets exhausted in one battle because he is here to fight a war. So never ever risk more than 3% of your capital in a day. Now you have to determine what is risking your capital. we have studies in step 1 that maintain a risk to reward ration so this risk ratio should be something in numeric terms say for example taking example taken in step 1 Risk was of $100. Now if your total capital was $20000. You are risking 0.5% in a trade which is way below the risk cap of 3%
$100
______  =  0.5%
$20000
So no matter how much capital you use in a trade but the risk per trade should never ever exceed what is the maximum risk cap.


These are basic 3 steps towards risk management. If you have any questions I would love to answer them. I would even have a FAQ below this thread about whatever major questions everyone is getting. Moreover I would love to come up with Part-2 of this thread where I would teach some intermediate principles. Stay tuned and I would love seek opinions of anyone who are not in agreement with these points.

I personally think the comparison of Gold with Bitcoin doesn't makes any sense but I couldn't stop myself from sharing this chart comparison between both. Some would say that gold's chart is twitched and time frames are taken in such a way to look like that of Bitcoin but that actually is a normal chart and taken from recent history. Moreover, I am not saying that Bitcoin ETF could provoke a similar pump but similarity on chart does show that this isn't quite the end of BTC and neither are we becoming stagnant here.


picture credits: @bitcoin_holders

[First Halving price: $12]

Phase 1: Starting price: $0
              Highest price reached in phase 1: $32
              Lowest price reached in phase 1: $2
First Halving price: $12
Phase 2: Starting price: $12
              Highest price reached in phase 1: $1163
              Lowest price reached in phase 1: $152
Second Halving price: $658
Phase 3: Starting price: $658
              Highest price reached in phase 1: $19892
              Lowest price reached in phase 1: $3129
Third Halving price: ??

I created a post a few days ago on Halving and price but that was not backed by figures. So here is a chart which shows a similar analysis with proper figures and timeline.

People often tend to say that Bitcoin is a P2P currency based on the trust between two people. However it's obvious that these days scams are on rapid rise while governments are generally not providing any legal security to those who are involved in this. So do you think there can be some central Bitcoin Authority represented by various people who can become jury in such cases of dispute? I think this can also increase adoption as people can trust btc more. Also even countries would feel safer as such an authority can conyrol certain malpractices

I posted a thread a few days ago which displayed why BTC is different from a normal Bubble. But here I am seeing it's comparison as a bubble. But a Bubble which has already been busted but now is moving at it's mean level. So I think even if BTC was a bubble earlier it has returned to the mean mark and now we have a smooth way ahead.

I have lately seen a lots of posts regarding how Binance has introduced trading in Chinese P2P pairs even when BTC exchanges are completely banned by China. The truth is no exchange is operable in China. Binance shifted it's headquarters from China to Malta back when China banned Cryptocurrencies here is the link to Wikipedia page which verifies the fact : https://en.wikipedia.org/wiki/Binance

It clearly states that:

The company was founded in China but moved its servers and headquarters out of China and into Japan in advance of the Chinese government ban on cryptocurrency trading in September 2017.[4] By March 2018 the company had established offices in Taiwan.

So it doesn't comes under the jurisdiction of Chinese Law so there is no need of any Chinese Government permission required by them to operate in CNY p2p pair. It's the people who have to be worried regarding their legality. It's for those people who have started thinking that China has relaxed it's cryptocurrency Laws a bit.

Many people on this forum don't have the idea what this halving of BTC is all about. So for them this is a simple info-graphic I found on Internet which pretty much explains what is Bitcoin Halving.









Source: CryptoManiaks on Twitter.

[Demand]

I have heard a lot of people having a misconception regarding the fact the inflationary currency are bad for economy because they are based on debt and nothing else to back them. Moreover the currency is losing it's power of the course of time. While Bitcoin will gain it's value over the course of time due to it's limited supply. Infact I have seen this pretty popular picture regarding the comparison between both



So now, let me tell you how inflationary currency works as per the KEYNES THEORY which is the best theory until now to explain the Macroeconomic Structure. I will explain everything in layman language the definitions have a lot of things which I would skip so I don't make things complex Basically everything what we need daily to satisfy our needs constitutes Demand and resources available to fulfill our needs is supply. At Macroeconomic level these are Aggregate Demand and Aggregate Supply.

Now, humans create an aggregate demand in the economy and look for products while the producers capture the demand by creating Aggregate supply. The supply they create leads to sale and exchange of currency happens. now they hold resources/ currency once held by their buyers. Now the producers are themselves consumers too(Business owners are humans). So more will be the demand more will be the earnings for suppliers who would in turn distribute it into the hands of stakeholders who would further create new aggregate demand higher than before because they have new money to spend. This would never stop as demand for goods increases so people tend to buy goods now to be safe from inflation. This New money comes from Government who injects additional supply of money to maintain a level of economic growth and fulfill budgetary deficit.

Now coming to simple things, Producers need more money to do production. This excess money is actually fed by the government into the economy. Now with every increase in supply demand is increasing too but not at that rapid scale because population growth is finite. So this excess printing of money is necessary for economic development as money in economy increases the demand in the economy.

In case of deflationary currency such as Bitcoin, as we are giving our aggregate demand at current price levels. Or in layman terms we are buying at certain price level. Say for example( a completely hypothetical situation), Wheat . You can buy 1kg of wheat for 1 bitcoin today. Now imagine that we grow in our economy and it leads to better production of wheat due to increased efficiency in production. Now we would have more wheat to sell. However, the supply would increase and demand will not because people still have the same 21 million bitcoin in circulation. So now we will have more wheat and the prices would go down and down. But in such case people will begin to hoard money. The will not spend their bitcoin in anticipation of it prices declining tomorrow. This would lead to even more deflation as demand would decrease even further. Thus creating a spiral which we often call the deflationary Spiral. I think this is why thinking bitcoin as a mainstream currency could pose a lot of problems for all of us.

PS: Supply of goods( Aggregate Supply) and supply of money are separate things
  Demand of money and demand of goods( Aggregate Demand) are two separate things

Do you agree or refute?

[1. Bounties & Bounty Hunters]

Many people say that BTC has grown in adoption and use. But I think despite of this fact the popularity of bitcoin is going downwards. Here is a very interesting graphic I found which shows the number of posts with #Bitcoin on Twitter I think the graph is pretty identical with the price graph.



However I personally think there are two reasons behind the boom which came during the bull run.
1. Bounties & Bounty Hunters: During the Bull run bounty hunting was at its peak and all the bounty hunters participated heavily in twitter campaigns. Most of the tweets had some basic condition to add a few hashtags related to cryptocurrency I think that was the reason why the graph looks so tall during the bull run.

2. Trading Mentors & Media: A lot of hype was also created by all types of media around the world when they continuously posted around regarding bitcoin and how it went to moon. Moreover even every damn trader became a trade mentor because every coin was going up people gave calls blindly and became trading mentor. These mentors were giving calls on daily basis with these usual hashtags relating to bitcoin.

These can be the two reasons why chart shows such a long tower in December 2017.