Wednesday, February 8, 2023

Indian Government Considers Creating ‘Lakshmi’ Blockchain Currency

Indian Government Considers Creating ‘Lakshmi’ Blockchain Currency

India’s government it the latest to consider issuing its own cryptocurrency, according to local reports. This one even has a name — “Lakshmi”, after the Hindu goddess of wealth.

Also read: Bitcoin $25K in Five Years, ‘Makes Perfect Sense’ to Under 30s, Says Wall St Strategist

A Blockchain Currency Like ‘Lakshmi’ Would Be Useful: Officials

Indian media reported a panel of government officials “found the idea of setting up and running blockchain for financial services useful”. However it’s not known when the technology may appear, or even if the government is serious about pursuing it.

The hypothetical “Lakshmi” would be controlled by the Reserve Bank of India, which has studied cryptocurrency in the past. However, executive director Sudarshan Sen last week said the central bank is “not comfortable” with Bitcoin.

Other governments have floated the idea of a state-sponsored cryptocurrency in the past, either to complement or replace the national fiat currency. China, Russia and more recently Estonia have all supposedly been interested — but so far, none have developed it past the hypothetical stage.

India’s Radical Currency Experiments

India has made some pretty radical currency moves in the past year though, first banning all high-denomination banknotes on short notice.

Indian rupees cashThe move, designed to attack the “black economy”, caused widespread disruption in the still highly cash-reliant society.

Large denomination banknotes (500 and 1,000 rupee bills) made up 87 percent of the physical currency in circulation. Recently, India issued bills with brand new 2,000 and then 200 rupee denominations and redesigned other bills, as a system reset.

These moves showed the government is prepared to experiment with the national currency, even if it means social upheaval.

Do We Really Want or Need a Government Cryptocurrency?

The Bitcoin and cryptocurrency community remains divided on whether a government-sponsored digital asset would be beneficial. On the one hand, it appears to legitimize the technology. On the other, it could lead to bans on non-government alternatives, as Ecuador (unsuccessfully) attempted.

Reserve Bank of India logoHowever it looks on the surface, governments don’t like alternate currencies in general. Regulating the money supply as an economic lever and requiring it for taxation has become a central pillar of government power. Some countries who gave up this power (e.g.: Greece) are now wondering if it was a good idea.

Therefore, any move to establish Lakshmi, or any government-controlled blockchain currency, is inherently anti-Bitcoin. Sen’s comments are further proof. More libertarian-inclined bitcoiners are open about their desire for non-central bank money.

There’s also the question of why a government would need trustless blockchain technology, when a centralized digital currency could be more efficient.

What do you think of national cryptocurrencies? Please share your thoughts in the comments.

Images via ProHinduism, Reserve Bank of India, Pixabay

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