The Reserve Bank of India (RBI) has been a huge blockchain supporter but hates Bitcoin. This might sound strange to the crypto die hard but it is a fact that has baffled many. To many onlookers, the indecisiveness of the institution could give wrong signals given the transparency the new technology offers.
Blockchain is a transparent technology and its database run by a string of computers which negates the use of a single server that can be manipulated. Each computer on the network string has access to the database which has been growing through additional blocks that are time stamped since ushering in the technology.
Separating Bitcoin from Blockchain Payments
Bitcoin is a major player in the market and key ingredient of the blockchain. By isolating Bitcoin in the blockchain payment system, RBI is shooting itself on the foot. The RBI backs the National Payment Corporation of India (NPCI) to ensure seamless retail and settlements system operations. The corporation announced that it is planning to use blockchain to optimize the existing payment and settlement systems.
Simply put, the NPCI is set to create its native blockchain the will compete with the original Bitcoin Network. Surprisingly, it does not offer any form of incentives and will have total control of adding blocks and validating them; this means heading back to a centralized system.
What baffles many is the reason why NPCI is using blockchain in the record management and they have been maintaining their database with the current system. Why are they not using Bitcoin technology? Is the financial institution moving forward or backward in this tech era?
NPCI Double Standards
If the RBI backed NPCI goes ahead to create their native blockchain, chances are it will be inferior at a time when they have the opportunity to access the more secure and original blockchain. This means they are set to embrace “any blockchain” and not that of Bitcoin standards.
Dumping Bitcoin technology which is decentralized means they are applying double standards and headed back to the old centralized system. The original blockchain is even cheaper than a centralized one when it comes to transaction management and validation.
Modern institutions are shifting focus to Bitcoin blockchain and the RBI and NPCI are just being hysterical. Any financial system negating the role Bitcoin plays in the market will be avoided by the altcoin economy like the plague. This might lead to traditional currency based boundaries.
India Headed the JPMorgan way
JPMorgan has been against Bitcoin and blockchain only to backtrack on its stance in February to launch their native JPM coin. The RBI digital currency payment project comes at a time when the Central Bank of India has banned Bitcoin. This simply means their database will be run on a private ecosystem and users have lass say in its functionalities.
Already Bitcoin enabled retailers in India are stranded after the ban and the support RBI is getting from the banking sector might not hold since they are simply resisting change that is inevitable through the original blockchain technology. Opting for a private run blockchain will send the sub-continent more than 10 years behind.
The RBI is merely using its authority to hit on the competition. Unless they are using the substandard blockchain to tax its citizenry, the private ecosystem will never be competitive and by the end of the day, they will have to bow down to the consumer demands and let Bitcoin be.