Just when I was feeling bad about myself for not understanding anything about cryptocurrencies, came the happy realisation that I have a good company in: Arun Jaitley, the country’s Finance Minister.
In his Budget speech, Jaitley said, okay I’ll be honest here, I fell asleep five minutes into it. Economics in itself is not a cheery subject. And when it is droned down, for a good part, in Hindi, it gets worse. After head injuries suffered in automobile accidents, economics in Hindi has to be the second major cause of coma.
Anyway, I managed to read the text transcript of Jaitley’s speech, and his views on cryptocurrencies caught the eye. Jaitley said, I quote, “the government does not consider cryptocurrencies legal tender or coin and will take all measures to eliminate use of these cryptoassets in financing illegitimate activities or as part of the payment system.” So far fine, because it is clear enunciation of an idea. And then comes the kicker: “The Government will explore use of block chain technology proactively for ushering in digital economy.”
Correct me if I am wrong in my reading here, the Finance Minister’s position on cryptocurrencies is: 1) the government is against them 2) the government will try and use them.
Compared to this, Indian cricket team’s selection policy on Rohit Sharma comes off as a paradigm of clear thinking.
But before we get all smug about Jaitley being muddleheaded, let us also be clear that when it comes to cryptocurrencies, no one, including all those who deal in them day in and day out, is any clearer.
To get a better understanding of these cryptocurrencies, I called up Rakesh* (*His real name is Rajesh. But we changed it to protect his identity), a friend’s friend, and someone who has invested a lot in Bitcoins, one of the popular cryptocurrencies.
When I rang him up, Rakesh said “most cryptocurrencies operate on an open-source, public, blockchain-based distributed computing platform.”
This was like reading Kamal Haasan’s tweets in Swahili in a situation when you have difficulty making sense of them in Tamil or English itself.
“This sounds too techno, you know. I thought this was going to be economics,” I said feebly.
Rakesh paused for a bit, and asked, “yes, it is. But what else do you expect cryptography to be?”
Cryptography? Suddenly that seemed to ring a bell. “Cryptography, isn’t that what Aravind Swami was an expert in in the film Roja? Wait. Does Bitcoin also involve Kashmir?”
“Boss,” Rakesh sounded impatient, “why bring in films here? Also, Aravind Swami in that movie was into cryptology?”
Besides not understanding Bitcoin, I now had a bigger confusion: What is the difference between cryptography and cryptology? Or is it like economics and econometrics, one and the same, but they came up with another name just to fool the unwary students into believing that they were learning something different.
But I was too afraid to ask Rakesh. And he proceeded, “cryptocurrencies are not real currencies. They don’t exist in physical form. There is no real central agency, like the RBI, to control or monitor them. There are very little merchant places in the world where you can use them as a legal tender. They are transacted over blockchains, which, I will agree, is a bit difficult to define.”
Now I had to stop Rakesh. “Wait a minute. You are telling me that cryptocurrencies have no regulators, they don’t have physical copies, nobody knows who is doing what, you can’t buy any real stuff using them in markets. And there is something called blockchain that you yourself can’t explain much. And you have plenty of well-educated, well-informed guys investing in this. Superb.” I let my sarcasm wash down the telephone line.
But Rakesh didn’t seem to notice it. In general, sarcasm doesn’t work with finance guys or advocates. Never waste any joke on lawyers or accountants is my sincere advice to all the other normal people in the society.
Anyway, I asked Rakesh who started this Bitcoin.
“Everybody says it is one Satoshi Nakomoto, which may or may not be his real name. Also, nobody has seen him. And apparently he is no longer with Bitcoin,” Rakesh said.
It was getting ridiculous and I was not getting any wiser about the cryptocurrencies. And so, after thanking Rakesh, I ended the call.
Back at the office, I was asked whether I had collected enough information on cryptocurrencies to write this week’s column, and I replied 1) I know nothing about cryptocurrencies 2) I will still deal with cryptocurrencies.
Which, when you come down to it, is what Jaitley also said in his Budget.