The governor of the Reserve Bank of India, Raghuram Rajan, was highly upbeat about the potential for digital currencies as mainstream money in the not-too-distant future.
His comments on digital currency were made during a televised speech on NDTV, during which he discussed the broader Indian economy.
He also highlighted the current drawbacks of digital currency, namely its volatility and security issues, which today preclude it from functioning as a real currency. On the security issues, he said, “You’ve seen that it is not as secure as people thought they were and there have been stolen bitcoins and so on.”
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He said they “will never reject them out of hand,” and when asked if the bank will one day adopt them, he had this to say:
“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.”
He also drew parallels between digital currency and credit cards, saying the latter are already performing a similar role and that people are using less physical cash. It should be noted, however, that the raison d’être of Bitcoin is to have a payment structure highly different from credit cards. Bitcoin payments incur virtually no fees, do not allow chargebacks, function in p2p form and are actuated by a push, not pull, mechanism.
This outlook has come a long way from the sentiment in the country late last year when the RBI warned about digital currencies. This led wallet and bitcoin buying service Unocoin to halt services, which were subsequently reopened and received investment from Barry Silbert.