2022 has not been a very great year for crypto investors, as we set foot in 2023 it’s pertinent for us to understand what was behind the crash and what is the way forward. So far, all the major cryptos are down by whopping numbers in price terms, there are many reasons behind this fall, when the market was flushed with liquidity a lot of money was pumped into the crypto currencies pushing the price higher. Back in the year 2021, Bitcoin was at its lifetime high of 64,400 USD; since then, we have seen a steep decline. The price of bitcoin hovers around 18,000 USD, and for Ether, it’s around 1,300 USD.
Earlier in 2022, Russia announced that it might ban cryptocurrency operations, and in July 2022, Russian President Vladimir Putin signed a law banning digital payments across the nation. Not, only in Russia, but even in China, cryptocurrencies have been banned since September 2021.
The interest rate hikes are also one of the biggest reason behind the falling price of crypto as, the Central Bank all around the world hikes interest rates as a result squeezing away the liquidity from the market the markets are natural to react but the ferocity of reaction will depend on how much of it is actually artificially inflated and as we all know that cryptos generally don’t have any underlying assets from which it derives value, more the money pumped in, more the demand and hence the price hike, but as soon as the plug of liquidity is pulled off the demand dries and price falls.
Remember the Terra Luna crash, in the mid of 2022? LUNA fell over 95% in a day, while the Terra network and its leader, Do Kwon, rose to prominence in the cryptocurrency world over the course of four years, all ending in a disastrous fall from grace. The Luna crypto network collapsed in what is considered the largest crypto crash ever, with an estimated $60 billion wipeout, shaking the global digital currency market. Besides that, sources claim that the crash of the cryptocurrencies Terra USD and LUNA caused losses to about 2.1 lac Indians.
A month before, news flashed all over social media that one of the largest crypto exchanges, FTX, had filed for bankruptcy. The entire crypto community was stunned and shocked. Now, the former CEO of failed crypto firm FTX, Sam BankBankman-Fried, has been arrested in the Bahamas at the request of the U.S. government and charged with defrauding investors and diverting proceeds from investors to buy real estate on behalf of himself and his family. According to reports, he could face life in prison. What is more important is that he was once viewed as a white knight in the cryptocurrency community and is now a con man.
These are some of the significant events that have contributed to the downfall. If you look at the top 10 cryptocurrencies by market cap, you will notice that they have all seen massive wealth destruction.
On the other hand, Blockchain, the technology underlying cryptocurrency, has seen increased acceptance by the Indian government in a variety of sectors, most notably:
The Telecom Sector:
The Telecom Regulatory Authority of India (TRAI) has directed that all telecom companies begin implementing blockchain technology. The use of blockchain technology in the telecom sector will aid in the reduction of spam calls. Through blockchain technology, authorities will be able to track down unregistered telemarketing companies. Telecom companies believe that using blockchain technology in conjunction with artificial intelligence (AI) will help to eliminate most of the telecom industry’s shortcomings.
The Tea Board of India:
The Tea Board of India intends to use blockchain technology to improve traceability throughout the whole supply chain. They have been dealing with a decline in the quality of tea produced as a result of adulteration. The use of blockchain technology throughout the supply chain will aid in the keeping of records at each stage. It will help to increase accountability while also allowing authorities to identify and eliminate problem areas.
Blockchain for secured voting:
Three students from Malla Reddy Engineering College for Women have created a novel idea that demonstrates how blockchain technology can be used to safeguard our nation’s electoral system. A pilot project conducted by these students in gated communities and housing estates demonstrated that implementing the concept in real life would be extremely beneficial.
Securities and Exchange Board of India (SEBI):
SEBI has directed all depositories to use blockchain technology to keep records. It will increase transparency in the record-keeping process, as well as in the monitoring of the creation of securities and covenants on non-convertible securities.
Blockchain for Land Records:
India: In 2018, the Uttar Pradesh government announced plans to introduce a blockchain-based record-keeping system to secure land registries and revenue records. Similarly, another state, Andhra Pradesh, is also working with private firms to secure land records in its new capital, Amaravati, using blockchain.
Blockchain for Police Records:
The police force of Goa, a state in western India, has signed a memorandum of understanding (MoU) with blockchain startup 5ire to adopt a blockchain-based record-keeping system. The Goa Police has taken this step to go paperless as well as improve security and transparency to provide better-policing services to citizens.
Although blockchain is a revolutionary technology, as an investor, you might probably be better off reducing your exposure to this highly risky asset. If you are highly optimistic about crypto, then you can limit your investment to at most 10 percent of your investment portfolio. In days to come, we might witness some great use cases and opportunities; till then. Sit tight!
There are numerous other industries where the Indian government plans to implement blockchain technology, aside from those in which it has already been adopted or is in the process of adoption. The Indian government also plans to establish a national blockchain framework that will help transform the future of as many as forty-four sectors, including education, pharmaceuticals, farming, energy, e-governance, and others. Blockchain technology has many potential applications in India, and the government is prepared to make it easier for this new technology to be incorporated and adopted there.
Blockchain technology is certain to change the game for India shortly. It will help in redesigning and eradicating all of the significant issues in the majority of the crucial government services. According to projections, blockchain technology will be worth $176 billion by 2050. Therefore, in the future, India’s adoption of blockchain technology is going to take it to a whole new level and help it move up significantly in the rankings among the countries.
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