Talk on BITCOINS (CRYPTOCURRENCY) : REALITY OR BUBBLE?

On 20 December, 2017 from 5.00 pm to 7.00 pm at VIA

Forum: Economy & Finance Forum

Speaker: Dr Tejinder Singh Rawal

Gold is dull in comparison to Bitcoin’s Shine – Dr T S Rawal

The most widely searched sentence on Google nowadays is – “Buy Bitcoin on Credit Card” said Dr T S Rawal while speaking on an interactive meet organized by Economy & Finance Forum on topic – “Bitcoins (Cryptocurrency) – Reality or Bubble?” He said that nowadays “Gold is dull in comparison to Bitcoin Shine” In an attempt to demystify the hype created about Bitcoin, Dr Rawal started his talk with basics covering definition of money and explained the properties of money which makes it a legal tender. He explained the entire technology that is into working of these cryptocurrencies and explained the basic concept of Block chains being the base behind this Bitcoin protocol. Bitcoin is the first decentralized digital currency, as the system works without a central bank or single administrator. The network is peer-to-peer and transactions take place between users directly through the use of cryptography, without an intermediary. These transactions are verified by network nodes and recorded in a public distributed ledger called a blockchain. Bitcoin is like publicly disclosed linked ledger of transactions stored in a block chain and it is a reward driven system for achieving consenses (mining) based on “Proofs of Work” for helping to secure the network. Dr Rawal said that “Satoshi Nakamoto” created the reference implementation that began with a Genesis Block of 50 coins and the first whitepaper of Bitcoin was published on 31st October’2008. Bitcoin was proposed to replace the entire Banking System and thus it was named as “Bitcoin: A Peer-to-Peer Electronic Cash System”.

Dr Rawal elaborated on the entire concept of Bitcoins as money and gave a list of more than 100 companies accepting bitcoin payments worldwide. He extensively covered controversies linked to bitcoin and the major concerns arriving out of it. Use of Bitcoins for illegal activities and speculations cannot be ruled out. He explained the Legal position of Bitcoin in India and shared Reserve Bank of India View as –

The Reserve Bank of India advises that it has not given any licence / authorisation to any entity / company to operate such schemes or deal with Bitcoin or any virtual currency. As such, any user, holder, investor, trader, etc. dealing with Virtual Currencies will be doing so at their own risk.

On February 1, 2017, “The Reserve Bank of India advises that it has not given any licence / authorisation to any entity / company to operate such schemes or deal with Bitcoin or any virtual currency. As such, any user, holder, investor, trader, etc. dealing with Virtual Currencies will be doing so at their own risk.”

On December 5, 2017, “Attention of members of public is drawn cautioning users, holders and traders of VCs including Bitcoins regarding the potential economic, financial, operational, legal, customer protection and security related risks associated in dealing with such VCs.”

Hon’ble Finance Minister on November 30 said, “The government’s position is clear, we don’t recognise this as legal currency as of now.”

Bitcoin is not recognized as a legal tender in India. Dr Rawal covered this event in three parts i.e. Technical, Indian Legal Scenario (Legal or Illegal) and his prediction about Bitcoins.

He discussed about possible solutions in taxation as under :

1) Mining of Bitcoin (similar to self-generated goodwill),

2) Transfer of Bitcoin (where Bitcoin are either a capital asset or a stock-in-trade depending on the activity undertaken by the tax payer), and,

3) Transfer of Bitcoin as consideration (where Bitcoin are either a capital asset or a stock-in-trade depending on the activity undertaken by the tax payer).

As far as Taxation impact under GST is considered, he said:

  • ‘Goods’ has been defined under GST. Section 2(52) “goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply; Bitcoin doesn’t have any intrinsic value in itself; hence it would be technically incorrect to refer it as goods.
  • Under GST, if classified as software/computer programme a rate of 18% shall apply

Earlier, CA O S Bagdia, Vice President – VIA in his welcome address said that VIA has covered so many hot current topics earlier like Panama Papers, Tata and Infosys-Boardroom Battles (Lessons To Be Learnt), The Greek Crisis & Its Impact on India and therefore to highlight about this talking term “Bitcoin – its reality or bubble” and whether Indian Government has authorized this or not, VIA has organized this talk with a very learned and efficient speaker Dr T S Rawal. Rohit Agrawal, Chairman – VIA Economy & Finance Forum welcomed CA Dr Tejinder Singh Rawal with a floral bouquet. CA Saket Bagdia, Program Coordinator conducted the proceedings. CA Naresh Jakhotia, Jt Secretary – VIA coordinated the question answer session and summed up the discussions and proposed a formal vote of thanks. Prominently present were Praful Doshi, Past President of VIA, Aditya Saraf, Vice President VIA, Ashit Sinha, CA Girish Deodhar, Treasurer VIA, CA Yash Verma, CA Mahendra Kamath, CA Sagar Mitkary and a large number of audience from CA, CS, and other professionals and industrialists.

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