CRYPTO CRAZY – The dangerous obsession with digital currency
Possibly the best way to describe the ongoing craze for cryptocurrencies, bordering on lunacy, is to recall former Fed chairman Alan Greenspan’s immortal words, “irrational exuberance”, which he used to describe the senselessness on Wall Street at the height of the dotcom mania in the early 2000s when billions of dollars were sunk into the blackhole of eyeballs and valuation. It’s bewildering that cryptocurrencies, which are nothing more than sophisticated memes, would command market capitalisation of $1.7 trillion.
Speculators are free to bet their money on anything, but when something like cryptocurrencies starts entering the mainstream of the global economy without any regulations, then the global monetary system is sitting on a ticking timebomb, which when it eventually explodes will leave a massive trail of destruction.
As pointed out in our cover story by Madan Sabnavis, chief economist, Bank of Baroda, the Indian government and the Reserve Bank of India need to find ways to regulate cryptocurrencies. Otherwise, the sovereignty of India’s monetary policy will be under challenge, very soon. Already, more than ₹7 lakh crore has been invested in cryptocurrencies. Since the origins of such digital currencies remain anonymous, it also poses a threat to national security….