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Should Bitcoin be Banned in India? | Crypto Bill 2021 | Dhruv Rathee - YouTube
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Hello, friends!
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According to a report, there are more than 100 million crypto investors in India.
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A much bigger number than in any other country.
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The USA is at the second number.
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And 27 million.
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And then Nigeria with 13 million, as per this report.
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So it's quite obvious
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if our government comes out with any statement regarding crypto,
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then many people would suffer heart palpitations.
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Some days ago, it was reported that
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crypto MAY be banned entirely in India.
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A complete ban on Bitcoin and all other cryptocurrencies.
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Then our Finance Minister gave the statement that
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photos of the older Crypto Bill was being circulated on social media.
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The New Bill is yet to come.
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But they wouldn't all crypto to be used as currency in the country.
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One thing is certain,
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the government would try to regulate cryptocurrencies in India in some way.
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Because the Ministry of Finance had said that
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Cryptocurrency and Regulation of Official Digital Currency Bill, 2021
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is under consideration of the Cabinet for finalisation.
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But the question arises,
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what kind of crypto regulations would be introduced?
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Which regulations would benefit the country?
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Will banning cryptocurrencies help the country?
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Or will making it a completely legal tender be beneficial for the country?
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We will get the answers to these questions
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when we try to understand the crypto regulations around the world.
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Come, let's find out.
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"The Crypto markets crashed
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following news of the Government introducing a Bill in Parliament
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to prohibit all private cryptocurrencies in India
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barring a few exceptions."
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"Crypto Bill was actually part of the over 20 Bills
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to be introduced in the upcoming Winter Session."
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"Awareness Issue or alert, if I can use the word,
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has been issued,
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so that people are very cautioned
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that this may be a very high-risk area..."
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Before making a law on any matter,
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it is very important to define it.
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But it is not an easy task to define Cryptocurrency.
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Crypto-Currency.
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Is it a currency?
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If it is a currency, in how many countries can one use it as such?
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Only one country allows cryptocurrencies to be used as legal tender.
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That's El Salvador.
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So if it isn't a currency, what is it then?
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Is it a commodity?
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That you can buy and trade.
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Like the Pokémon cards, you used to buy and then trade in your childhood.
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Or the WWE cards that you'd buy to trade.
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Or is it an asset?
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In which you can invest with the hopes that
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the value of your investment would grow in the future
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and you'd get better returns.
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Like you invest in property
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and treat the property as an asset.
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This is the reason why in many countries
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regulators use the term Cryptoassets for cryptocurrencies.
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Secondly, What is the need to regulate cryptocurrencies?
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Governments say that cryptocurrencies and Bitcoin
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are used for money laundering.
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For funding criminal activities by criminals
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and for tax evasion.
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Actually, if you look into the foundational ideas behind cryptocurrencies,
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the basic fundamental idea,
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is Decentralisation.
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Today, every government controls the monetary system of its country.
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Through their country's Central Banks.
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And because Bitcoin and cryptocurrencies are so decentralised,
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they are out of the control of the governments.
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But the governments do not want to give up their control.
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In May 2021,
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the largest oil pipeline system in the US
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was targetted by a ransomware attack by hackers.
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They named it Colonial Pipeline.
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They shut down the entire pipeline for a few days
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And they asked for Bitcoins as ransom.
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These hackers knew that Bitcoins are anonymous
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and they cannot be traced
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the source or destination of the payment or the location of the receiver
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so they planned to accept the payment and leave without any fuss.
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But within some weeks,
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the US government actually traced these hackers
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and recovered the Bitcoins.
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This was very surprising.
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Because up till this point in time, many people believed that
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Bitcoins and cryptocurrencies are actually anonymous.
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That no one would get to know the source or location of the Bitcoins
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or how they are used.
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The reason was that the US government has a lot of resources
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to trace the IP addresses
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to recover the Bitcoins.
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The same cannot be said for the governments of other countries.
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If we talk about money laundering,
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then according to the Enforcement Directorate of India,
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₹40 billion was laundered outside India
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in the last year
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by using cryptocurrencies.
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Money laundering, attacks by hackers, terror financing,
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are definitely legit concerns regarding crypto.
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These are cited as the reasons why there's a strong need for regulations.
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Let's talk about regulations.
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What have the other countries done to regulate crypto?
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In most countries, friends,
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Bitcoin and cryptocurrencies, though legal
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aren't legal tenders.
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Meaning that they can't be used as currency
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but can be used for other purposes.
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It is legal to buy, sell and use them as assets.
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For example, Bitcoin is legal in the USA
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and it is taxed as property.
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In countries like Germany,
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even banks are permitted to buy and sell cryptocurrencies.
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In fact, the European Union
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does not charge any VAT or GST on crypto.
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Cryptocurrencies are treated as property in Australia as well.
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So that Capital Gains Tax can be levied on them.
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On profits arising out of it.
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On the other hand, countries like Turkey,
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it is legal to trade in cryptocurrencies and to hold them after buying,
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but using it for banking is banned.
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It is completely illegal to use it as currency.
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Whereas the other countries that I talked about,
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if someone there says that they would accept payments in Bitcoin
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that is allowed.
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Some people may accept it as currency.
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So overall, in most countries, the rule is that
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cryptocurrencies are accepted as digital assets and commodities.
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And they are even taxed.
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But then there are countries like China,
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it has a complete ban on cryptocurrencies.
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As of November 2021,
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according to the Library of Congress,
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there are only 9 countries in the world,
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that has an absolute ban on cryptocurrencies.
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Algeria, Bangladesh, China,
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Egypt, Iraq, Morocco,
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Nepal, Qatar and Tunisia.
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Since China is the largest country among them,
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let's focus on China.
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Since 2013, 8 years ago,
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China had started putting restrictions.
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In 2013, they said that banks aren't allowed to do cryptocurrency transactions.
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4 years later, in 2017, they said that
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the payment gateways that do cryptocurrency transactions would be banned.
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That's the reason why Binance, the largest crypto-exchange platform in the world
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although launched in China,
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in 2017, it relocated its headquarters outside China to the Cayman Islands.
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But in 2021,
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China made its rules stricter.
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In June,
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they banned the mining of crypto.
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Bitcoin can't even be mined in their country.
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And then put up a wholesale ban.
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Every activity related to cryptocurrencies is now banned in China.
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In fact, the rule states that
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this rule is applicable even outside the borders of China.
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If any platform related to cryptocurrencies,
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caters to the Chinese population,
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it would be banned.
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Even if it's doing so outside China.
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What was the impact?
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As of April 2021,
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two-thirds of the Bitcoin mining in the world
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was based in China.
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But by July 2021,
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this Bitcoin mining moved out of China.
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The Bitcoin miners,
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started operating from Kazakhstan,
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the USA or Canada.
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They moved out of China.
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Or they simply sold off their equipment.
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And left the industry.
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In a way, this industry exited China.
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Many experts believe
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that China did this because
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China wants total control over everything.
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The Chinese government is a dictatorship.
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They cannot tolerate the existence of something
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decentralised.
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Out of the control of the Chinese government.
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They want to have absolute control over everything.
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The second reason is that
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the Chinese government have introduced their government-backed digital currency.
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And the government doesn't want to let Bitcoin compete with their coin.
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Publicly, the reasoning by the Chinese government was that
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Bitcoin has a harmful impact on the environment.
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It isn't actually wrong,
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the electricity consumption of Bitcoin,
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and the environmental impact,
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is very harmful.
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But the experts believe
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that this is just a superficial reason by China
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the real reason is to establish their control.
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On the other hand, countries like El Salvador and the Bahamas,
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are the exact opposite of China.
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El Salvador was the first country to make Bitcoin legal tender.
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Prior to that, only the US Dollar used to be legal tender in their country.
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It means that not only is Bitcoin legal,
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it can even be used to buy other things.
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I discussed it in detail in this video,
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you can go watch it.
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The link will be in the description below.
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Friends, if you are interested in investing in Crypto,
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I would like to recommend an amazing app
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Coinswitch Kuber.
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India's largest crypto app.
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More than 14 million users use this.
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Because it has a simple interface.
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You can start investing with only ₹100.
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In any crypto.
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The most common complaint of the users of this app used to be
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that Coinswitch took a lot longer to list new cryptos.
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The complaints have finally been answered
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on the occasion of getting 14 million users.
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They launched a festival
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5 Days, 5 Coins Festival.
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Not only are they going to list some of the most awaited coins,
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but they also have a 5 Day Giveaway Series.
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They'll give out Bitcoins worth thousands of rupees.
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You should definitely participate in their giveaways.
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The link is in the description below.
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For more information, visit the social media handles of Coinswitch.
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Especially their YouTube Channel.
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The link to that is also in the description.
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But do remember
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research properly about all new coins
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before investing in it.
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Anyway, let's return to our topic.
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The simple reason behind doing this is said to be
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that El Salvador's economy relies largely on remittances.
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The citizens of El Salvador,
that reside outside El Salvador
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send a lot of money into El Salvador.
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And that is a major contribution to their economy.
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In 2020, the total remittances to come into El Salvador from outside the country
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was $5.9 billion.
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One-fifth the GDP of the country.
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And $400 million out of this,
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were only transaction charges.
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Because the companies like Western Union, Money Transfer and MoneyGram,
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charge a lot of money for international transactions.
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But if the money is sent through Bitcoins
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the transaction charges would fall to nearly zero,
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and more money could come into the country.
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This is said to be a major reason behind this.
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Apart from this, the President of El Salvador hopes that
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foreigners would go to invest in their country
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because their economy is so open to Bitcoin.
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The Bitcoin miners from other countries
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would want to live in their country
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and would bring in more money with them.
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The crypto-traders
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the people who got rich by trading in crypto,
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would also want to live in their country.
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In fact, El Salvador is planning
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to build the first Bitcoin City in the world.
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An entire city that revolves around Bitcoin.
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One thing that's very clear here
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the countries that completely ban cryptocurrencies
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have to bear economic loss due to it in some form or the other.
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The crypto-traders and crypto-miners left China.
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Or they moved their money out of the country.
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The investments in the crypto industry,
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have moved out of China
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and countries like El Salvador are benefitting from it.
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The crypto industry,
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if it is completely eradicated from a country,
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then the innovations that will happen in the future,
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the various areas that will use Blockchain and cryptos in the future
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the countries that have banned crypto will have to bear these losses as well.
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If you are wondering about the innovations that may happen in it,
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I talked about several examples of it in this video on Blockchain.
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It can be used in elections.
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In healthcare, education,
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to make the existing systems better.
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And many countries have started doing this.
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But the biggest point here is the tax revenue of the government.
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For countries like China, there is no more tax revenue from cryptocurrencies.
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But what's happening in other countries?
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In the European Union, the USA and Australia,
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people invest in crypto,
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make a profit out of it,
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and pay Long Term Capital Gains Tax on it.
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It is a good source of tax for the government.
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Countries like China will have to lose out on it now.
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If we talk about India here
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initially, the government tried to
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ban it as soon as possible.
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The RBI had banned cryptocurrencies in April 2018.
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But this ban was legally challenged in court.
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And the Supreme Court in its landmark judgement,
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struck down this ban in March 2020.
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The Supreme Court held that
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the business opportunities from cryptocurrency exchanges
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are threatened by the ban.
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And banning everything is not the solution.
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They accepted that there are negative points related to cryptocurrencies
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that they have the potential to be used for wrongful purposes
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but it doesn't call for a ban.
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Proper Regulations are needed instead.
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And finally, the government has started to understand this point.
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That's why there are discussions on framing regulations for it.
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Time will tell what these regulations would entail.
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What's your opinion here?
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How should the regulations be framed?
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The regulations should be similar to which country's regulations?
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In my opinion, following El Salvador would be quite extreme.
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There's no need to have such open regulations.
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Who knows what unexpected risks would follow?
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But the steps taken by the other developed countries
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in Europe or the USA,
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if such regulations are framed,
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then it would be the best option for the country.
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And it would be a good option for crypto investors as well.
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The negative points of cryptocurrencies
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can be prevented
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through processes such as Know Your Customers (KYC).
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At the same time, in future,
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the potential of crypto-innovations would increase,
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and it would be fostered in the country.
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I hope you found this video to be informative as always.
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Let's meet in the next video.
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Thank you very much.
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