‘Elon Musk tweets ‘Crypto’, the prices have surged’. ‘Elon Musk is concerned about the environmental effects of crypto; values have gone down’. For most of us in Nepal, these were the only cryptocurrency events happening throughout. Thanks to the Digital Nepal Campaign, digital literacy is on the rise and we are slowly but steadily heading towards cashless transactions. Although the older generation would have fewer concerns, a group of youths is keeping a tight check on the whole situation. Just a few years ago, It would have been impossible for people, who have been exposed to digital payment gateways, to mine, invest, and trade in the newfound ‘monetary disruption’. Nepal Government couldn’t care much; on the 13th of August 2017, Nepal Rastra Bank declared bitcoin illegal; implying, one could face a penalty for possession and trading in bitcoins. The decision would mean other Cryptocurrencies like Ethereum and Dogecoin would be banned as well.
Bitcoin is a decentralized digital currency founded in 2009 by the ideas presented in a concept paper by the mysterious and pseudonymous Satoshi Nakamoto. Bitcoins are not issued, endorsed, or regulated by any central bank. Instead, they are created through a computer-generated process known as mining. In addition to being a cryptocurrency unrelated to any government, Bitcoin is a peer-to-peer payment system since it does not exist in physical form. As such, it offers a convenient way of conducting cross-border transactions with almost no exchange rate fees. The process allows users to remain anonymous, hence free from any regulating authority.
Countries like the USA, Australia, Canada, and the European Union have taken positive stances on Cryptos, whereas China, known for its heavy government regulation, has deemed it illegal. Major economies like Russia and India are yet to develop a legal framework on Cryptocurrencies and are also supposedly developing state-backed cryptocurrencies. The negative attitude of many countries towards Bitcoins can be understood as a defense mechanism to favor the state’s traditional regulated finance system.
Likewise, the case of Nepal is rather straightforward. Instead of treading on the difficult road of ensuring legal status to the digital asset, the government-owned central bank continues to ignore its essence and banned Bitcoins, the pioneer cryptocurrency pioneer.
On October 29, 2017, Nepal Police arrested Ram Dhakal, 32, and Purusottam Dhar Tuladhar, 26, for allegedly running a bitcoin racket. Those were one of the first people to spend time behind bars, for the reasons many countries around the world wouldn’t care. The list of people doesn’t end there, for far more lives have been at stake for the sheer incompetence of the Nepal Government and Nepal Rastra Bank.
There has been an argument against Bitcoins that it could strengthen the black market, which contradicts the fact that the existing financial system already backs a lot of illegitimate funds. The logic behind the black market, being only the government’s illegal tag, holds barely any ethical value against the alleged illicit market. To recapitulate, today, every bitcoin owned by a Nepalese is also a part of the grey market. The second disagreement against Bitcoins is based on the presumed large energy it consumes to operate, which has been disputed in the studies by Galaxy Digital, a cryptocurrency firm founded by venture capitalist Michael Novogratz, showing Bitcoin’s energy consumption of 113.89 terawatt-hours annually (TWh/yr) to be less than the banking sector’s, which stands at 263.72 TWh/yr. Nonetheless, Bitcoin’s energy usage is high and requires a transition to more renewable forms of energy.
Logics aside, it could still be a long wait before Nepalese are finally able to transact in Bitcoins legally until a big mass of us shows some interest in advocating for fair crypto use. We could have invested 1$ in 2011, to have valued the sum at 60000$ on 10 April 2021, or lost a big chunk after the price plummeted, but the choice to invest or trade in bitcoins should have always resided with us, not the central bank.
