Reserve Bank of India Governor, Raghuram Rajan, Speaks about Bitcoin

[infonetenergy]

We just hit a landmark moment with respect to bitcoin in India.  Listen to Reserve Bank of India's Governor, Mr. Rajan, speak eloquently about bitcoin:  

http://youtu.be/Mu97yGzO_ok?t=22m29s

interviewer:  “anybody here plan to go into ecommerce?”
smart student:  “My question is not exactly related to ecommerce, but to a more important topic of bitcoins.”
governor:  “nothing is more important than ecommerce.”
interviewer:  “oh no, bitcoin is fascinating, let’s tackle that.”
smart student:  “reading your book 'fault lines', it comes out as you are somebody who is not pro government intervention.  Being from the Chicago School of Thought, you propagate more free markets.  So I want to know, bitcoin has specifically very good advantages for a developing nation.  So, I want to know, what is your view as a regulator on free banking, and having more of equitable currencies floating in the market?”
governor:  “See, I think we’re still watching the evolution of these kinds of currencies, one of the problems that we envisaged with bitcoin, one of course was security issues and you’ve seen that they’re not as secure as people thought they were and there have been stolen bitcoins and so on.  But the second issue was the fluctuation in value.  For money, you require something called a stable store of value and something that fluctuates so much is less effective in use as money.  There are some lessons to be learned from the technologies that bitcoin has employed, some of them are useful, some of them are worrisome.  And uh, we have to see how we take on board such technologies.  I have no doubt that down the line, we will be moving towards primarily a cashless society and we’ll have some kind of currencies like this which will be at work.  For us at the Reserve Bank, this may happen in 10 to 20 years from now, but we’ll have to figure out how we make money because the way we generate most of our revenue is through forms of seniorage.  People are willing to hold currency free of interest and that’s how we make money, but we’ll figure that out.  But I think these virtual currencies will certainly get much better, much safer and over time will be the form of transaction, and that’s for sure.”
interviewer: “and India will adopt them at some point?  we’re not going to reject them out of hand?”
governor: “you know, in a sense, credit cards are already performing some of that role.  The amount of rupees that flow through your hands I presume are far less than used to before credit cards.  So this is going to go all around, you’ll have near field devices which you just tap and go.  I mean, all that we want to permit.  
interviewer:  “you want to permit?”
governor:  “yes, we want to permit.  I mean we’re not saying we’re going to lose money therefore we won't do it, we’ll find some other way of getting money, maybe the government will fund us eventually."  

[stellar69]

We just hit a landmark moment with respect to bitcoin in India.  Fast forward to [22:30] to hear Reserve Bank of India's Governer, Mr. Rajan, speak eloquently and articulate his position on bitcoin:

http://www.ndtv.com/video/player/india-forecasts/indian-stock-markets-not-in-a-bubble-raghuram-rajan-to-ndtv-s-prannoy-roy/349983

interviewer:  “anybody here plan to go into ecommerce?”
smart student:  “My question is not exactly related to ecommerce, but to a more important topic of bitcoins.”
governer:  “nothing is more important than ecommerce.”
interviewer:  “oh no, bitcoin is fascinating, let’s tackle that.”
smart student:  “reading your book 'fault lines', it comes out as you are somebody who is not pro government intervention.  Being from the Chicago School of Thought, you propagate more free markets.  So I want to know, bitcoin has specifically very good advantages for a developing nation.  So, I want to know, what is your view as a regulator on free banking, and having more of equitable currencies floating in the market?”
governer:  “See, I think we’re still watching the evolution of these kinds of currencies, one of the problems that we envisaged with bitcoin, one of course was security issues and you’ve seen that they’re not as secure as people thought they were and there have been stolen bitcoins and so on.  But the second issue was the fluctuation in value.  For money, you require something called a stable store of value and something that fluctuates so much is less effective in use as money.  There are some lessons to be learned from the technologies that bitcoin has employed, some of them are useful, some of them are worrisome.  And uh, we have to see how we take on board such technologies.  I have no doubt that down the line, we will be moving towards primarily a cashless society and we’ll have some kind of currencies like this which will be at work.  For us at the Reserve Bank, this may happen in 10 to 20 years from now, but we’ll have to figure out how we make money because the way we generate most of our revenue is through forms of seniorage.  People are willing to hold currency free of interest and that’s how we make money, but we’ll figure that out.  But I think these virtual currencies will certainly get much better, much safer and over time will be the form of transaction, and that’s for sure.”
interviewer: “and India will adopt them at some point?  we’re not going to reject them out of hand?”
governer: “you know, in a sense, credit cards are already performing some of that role.  The amount of rupees that flow through your hands I presume are far less than used to before credit cards.  So this is going to go all around, you’ll have near field devices which you just tap and go.  I mean, all that we want to permit.  
interviewer:  “you want to permit?”
governor:  “yes, we want to permit.  I mean we’re not saying we’re going to lose money therefore we won't do it, we’ll find some other way of getting money, maybe the government will fund us eventually."    

Oh well done the smart student!!
I am actually shocked to hear this. I didn't know that governor knew about bitcoins.
He is a wise man, he understand the potential of things and takes steps after giving lot of thought.
Hope we keep on getting such positive results.

[infonetenergy]

Join the discussion on reddit...

http://www.reddit.com/r/Bitcoin/comments/2qiumb/reserve_bank_of_india_governer_raghuram_rajan/

[newIndia]

Join the discussion on reddit...

http://www.reddit.com/r/Bitcoin/comments/2qiumb/reserve_bank_of_india_governer_raghuram_rajan/

This is really interesting. Only about 5k+ people are involved in bitcoin in a country of 110 crore+ people and the governor of the central bank is talking about it.

Thanks for sharing it Sunny...

[stellar69]

Join the discussion on reddit...

http://www.reddit.com/r/Bitcoin/comments/2qiumb/reserve_bank_of_india_governer_raghuram_rajan/

This is really interesting. Only about 5k+ people are involved in bitcoin in a country of 110 crore+ people and the governor of the central bank is talking about it.

Thanks for sharing it Sunny...

I can bet that people involved in it are a lot more than 5k and people who know about it but do not indulge in it are in lakhs.

and lol, what is happening to your stats? We have 125+crore people in India, ever heard Modi's speech?

[infonetenergy]

Join the discussion on reddit...

http://www.reddit.com/r/Bitcoin/comments/2qiumb/reserve_bank_of_india_governer_raghuram_rajan/

This is really interesting. Only about 5k+ people are involved in bitcoin in a country of 110 crore+ people and the governor of the central bank is talking about it.

Thanks for sharing it Sunny...

You're welcome.  Just curious, what makes you believe that there are only 5k people involved in bitcoin in India?  We (www.unocoin.com) alone serve nearly twice as many customers.  (And that number is growing exponentially!)  

Don't quote me on this, but I feel that the number of bitcoiners in India could be closer to 25-30k, quite a bit higher than 5k.  To your point, I still think it's very impressive that Mr. Rajan is speaking so intelligently about bitcoin, I have a ton of respect for him.  Let's not stop here, let's all use this opportunity to educate the Indian public even further.   Bitcoin truly has the potential to bank the unbanked (or unbank the banked), to reduce the cost of inward remittance by an order magnitude, and bring about micro-financing in a way never seen before.  Let's not get left behind.  The bitcoin movement is happening, each and every one of you can make a difference.  

Just like how many Indian people were able to leap frog wired phone lines and go directly to mobile.  Bitcoin offers us a similar opportunity, leapfrog traditional financial services and take part in one that is open source, decentralized, and as the smart student refers to it as:  'free banking'.  Love it!  Go bitcoin...

[stellar69]

Join the discussion on reddit...

http://www.reddit.com/r/Bitcoin/comments/2qiumb/reserve_bank_of_india_governer_raghuram_rajan/

This is really interesting. Only about 5k+ people are involved in bitcoin in a country of 110 crore+ people and the governor of the central bank is talking about it.

Thanks for sharing it Sunny...

You're welcome.  Just curious, what makes you believe that there are only 5k people involved in bitcoin in India?  We (www.unocoin.com) alone serve nearly twice as many customers.  (And that number is growing exponentially!)  

Don't quote me on this, but I feel that the number of bitcoiners in India could be closer to 25-30k, quite a bit higher than 5k.  To your point, I still think it's very impressive that Mr. Rajan is speaking so intelligently about bitcoin, I have a ton of respect for him.  Let's not stop here, let's all use this opportunity to educate the Indian public even further.   Bitcoin truly has the potential to bank the unbanked (or unbank the banked), to reduce the cost of inward remittance by an order magnitude, and bring about micro-financing in a way never seen before.  Let's not get left behind.  The bitcoin movement is happening, each and every one of you can make a difference.  

Just like how many Indian people were able to leap frog wired phone lines and go directly to mobile.  Bitcoin offers us a similar opportunity, leapfrog traditional financial services and take part in one that is open source, decentralized, and as the smart student refers to it as:  'free banking'.  Love it!  Go bitcoin...

Sorry to deviate the topic but, India accounts for 9% of traffic on bitcointalk.org. We are in lakhs.

I also want to see a day when we will be able to buy groceries for bitcoin and tell our children that we were there when the revolution happened.

[infonetenergy]

We would also love to see people be able to buy food from their favourite grocery store with bitcoin.  Let's make it happen!  Which grocery store should we approach?  I'm guessing an online, nation-wide, grocery store may make the most sense.  They could use Unocoin's merchant gateway to process their orders.  By processing their orders through Unocoin, the business can have their clients' bitcoin turned into INR deposited into their bank account in less than 24 hours. 

Let's get a list together of all the merchants we would like to see accepting bitcoin in 2015.  I'll get it started...

1)  Airtel
2)  Flipkart
3)  Ola
4)  Cleartrip
5)  ?

See here for more details:  https://www.unocoin.com/merchants

[RocketSingh]

We would also love to see people be able to buy food from their favourite grocery store with bitcoin.  Let's make it happen!  Which grocery store should we approach?  I'm guessing an online, nation-wide, grocery store may make the most sense.  They could use Unocoin's merchant gateway to process their orders.  By processing their orders through Unocoin, the business can have their clients' bitcoin turned into INR deposited into their bank account in less than 24 hours.  

Let's get a list together of all the merchants we would like to see accepting bitcoin in 2015.  I'll get it started...

1)  Airtel
2)  Flipkart
3)  Ola
4)  Cleartrip
5)  ?

See here for more details:  https://www.unocoin.com/merchants

I'd prefer to see bitcoin merchants coming up rather than FIAT giants accepting bitcoin as it will only result in heavy dumping and thereby will bring down the bitcoin price. An alternative of Airtel in Bitcoin world is not readily possible and I have never heard of Ola. But, Flipkart and Cleartrip alternatives are definitely possible on top of a solely bitcoin economy.

[polynesia]

We would also love to see people be able to buy food from their favourite grocery store with bitcoin.  Let's make it happen!  Which grocery store should we approach?  I'm guessing an online, nation-wide, grocery store may make the most sense.  They could use Unocoin's merchant gateway to process their orders.  By processing their orders through Unocoin, the business can have their clients' bitcoin turned into INR deposited into their bank account in less than 24 hours.  

Let's get a list together of all the merchants we would like to see accepting bitcoin in 2015.  I'll get it started...

1)  Airtel
2)  Flipkart
3)  Ola
4)  Cleartrip
5)  ?

See here for more details:  https://www.unocoin.com/merchants

I would like to see companies like Bill Desk / Bill Junction to be added.
In one shot, you would be able to make any utility bill payment through bitcoins.
You wouldn't need to wait for Airtel to accept, then Vodafone to accept, then Idea to accept....

Edit - We seem to be digressing from talking about Raghuram Rajan's views. Other points can be discussed in separate threads.

[stellar69]

We would also love to see people be able to buy food from their favourite grocery store with bitcoin.  Let's make it happen!  Which grocery store should we approach?  I'm guessing an online, nation-wide, grocery store may make the most sense.  They could use Unocoin's merchant gateway to process their orders.  By processing their orders through Unocoin, the business can have their clients' bitcoin turned into INR deposited into their bank account in less than 24 hours. 

Let's get a list together of all the merchants we would like to see accepting bitcoin in 2015.  I'll get it started...

1)  Airtel
2)  Flipkart
3)  Ola
4)  Cleartrip
5)  ?

See here for more details:  https://www.unocoin.com/merchants

Would unocoin be contacting these guys and asking them to accept bitcoin?
If they accept it, it would be a world wide revolution and bitcoin price will actually go up because then people will start using btc as an actual currency! This would also bring a lot of demand for bitcoin in India.

I would like to see these guys accepting btc too:
5) Shopkeeper near my home
6) Big Bazaar
7) The Mobile Store
Everyone

[bachelor]

 Most Indian's earn bitcoins to exchange it later with fiat money but if there will be shops available who can accept BTC then it will be super cool.

[edmonddantes]

What about laxmi Coins?I think they are of RBI itself.

[Corenin]

What about laxmi Coins?I think they are of RBI itself.

you mean a central bank created that coin
i never heard about this, if it was backed by a central bank of country then it should be a boom

[stellar69]

What about laxmi Coins?I think they are of RBI itself.

you mean a central bank created that coin
i never heard about this, if it was backed by a central bank of country then it should be a boom

it was never backed by the central bank.
its just a rumor that heated the market once.
The coin is going to come out soon, but it will fail if they don't bring any new innovation along them.

[Equate]

What about laxmi Coins?I think they are of RBI itself.

Cryptocurrencies are not officially supported by any country atm , let alone laxmi coin and that too by RBI which has no clear policy on Bitcoin or any other cryptos .

[RocketSingh]

What about laxmi Coins?I think they are of RBI itself.

Stop spreading FUD. This guy creating LaxmiCoin which never took off - https://twitter.com/mittsdaki

[Fernandez]

A reasonable view of the situation.

We would like them suddenly declare they are all for Bitcoin, we have to understand that they can't take decisions lightly. Besides, when the warning was issued last time, I thought it was not so bad, after all if it made some Indians stay away from investing at that time, it saved their money. So in hindsight they made the correct announcement.

[RocketSingh]

A reasonable view of the situation.

We would like them suddenly declare they are all for Bitcoin, we have to understand that they can't take decisions lightly. Besides, when the warning was issued last time, I thought it was not so bad, after all if it made some Indians stay away from investing at that time, it saved their money. So in hindsight they made the correct announcement.

Mr. Rajan has an uncanny ability to predict things in financial world, before the rest of the world. He also predicted 2008 recession while serving at IMF, while everyone opposed him.

[infonetenergy]

We would also love to see people be able to buy food from their favourite grocery store with bitcoin.  Let's make it happen!  Which grocery store should we approach?  I'm guessing an online, nation-wide, grocery store may make the most sense.  They could use Unocoin's merchant gateway to process their orders.  By processing their orders through Unocoin, the business can have their clients' bitcoin turned into INR deposited into their bank account in less than 24 hours.  

Let's get a list together of all the merchants we would like to see accepting bitcoin in 2015.  I'll get it started...

1)  Airtel
2)  Flipkart
3)  Ola
4)  Cleartrip
5)  ?

See here for more details:  https://www.unocoin.com/merchants

I'd prefer to see bitcoin merchants coming up rather than FIAT giants accepting bitcoin as it will only result in heavy dumping and thereby will bring down the bitcoin price. An alternative of Airtel in Bitcoin world is not readily possible and I have never heard of Ola. But, Flipkart and Cleartrip alternatives are definitely possible on top of a solely bitcoin economy.

Thanks for your comments, much appreciated.  After having been in the bitcoin scene for a couple years now, I've come to the conclusion that the price of bitcoin is really one of the least exciting aspects of bitcoin.  Once you come to term with the fact that bitcoin is the internet of money, or that it is digital gold, or that it is an *almost* free protocol for value transfer, or that its a million other amazing things, that's when the fun begins.   

See, large merchants in India will benefit directly by accepting bitcoin.  By accepting bitcoin, they may reduce the number of fraud charges occurring online down to zero.  How amazing is that? 

They may also reduce their cost down to zero (whereas credit card companies often charge upward of 2 or 3%). 

So as you can see, by having a large merchant like Microsoft or Dell accept bitcoin, it DOES create downward pressure on the bitcoin price, you are right.  But at the same time, there is an ever growing demand for bitcoin.  People are buying bitcoin like never before, and this trend will continue because companies like Microsoft and Dell are accepting bitcoin.  So bitcoin has become this entity which serves multiple purposes for different people. 

Regarding price, I recommend that people not put more than 1% of their total wealth into bitcoin.  Keep in mind that bitcoin is still very early and very experimental.  Do not invest more than you can afford to lose.  Having said that, in the next 10 years, I still reckon that the price of each bitcoin will be multiple orders of magnitude higher than what it is today.  I say this because once large scale financial institutions get involved, once the average person is easily able to put a little bit of their investment portfolio into bitcoin, then we'll have the next upward spike.  When that'll take place?  Who knows...