How to Lose $3B of Bitcoin in India
bloomberg.com
bloomberg.com
Could someone familiar with the matter talk more about what the days/weeks following Modi's announcement looked like for the every day Indian?
Pretty dramatic, certainly could have helped the massive crypto price run-up in late 2017. Also helps to demonstrate the value of a currency that can't be manipulated by state actors.
Unless satoshi has somehow hidden a large chunk of coins that has never been released somehow (which, would be weird, since as soon as they release it, it would invalidate the current chain!)
Taxation is theft.
And I'm not sure that your comment adds anything to the discussion here, I would consider elaborating on why you think you should not have to pay taxes after being able to generate wealth using public infrastructure as a foundation.
Happened on 8th Nov 2016 - the western news cycle was laser focussed around a certain historic election.
This wouldn't have hit front page on the 9th, for sure.
I don't read any American news websites, but I think from memory it wasn't really covered at all on the New Zealand news websites.
People with money sold extra rupees to people below the maximum conversion at a small discount. Bank deposits bumped up, which was the point of the exercise—Indian state-owned banks are woefully uncompetitive and undercapitalised. The line about dirty rupees being extinguished was a farce, mostly because most large-scale illicit activity in India happens with hard currency and/or in Mauritius or Singapore.
And then after all of this - we gave out massive loan waivers to farmers yet again.
So back to square one I suppose?
They don't, but it gives the bank cash. Cash makes life easier.
Fact 1 : 86% cash of the currency in circulation was made invalid
Fact 2 : Unaccounted income in cash is approx. 3%
Once you combine Fact 1 and 2, you'd know where this goes. Anyways, NPR has two podcasts on this [0,1].
PS: I recognize your username from /r/india!
There are numerous ways that wealthy individuals and businesses got around demonetization - for example, a bank manager could spread a large amount of "black money" across multiple accounts in the names of existing account holders, deposit a minimum deposit to avoid reporting requirements, and then withdraw the original amount later (minus a 20% commission) and return it in the form of new currency. The only people who were hurt were the average people who had to stand in long ATM lines or withstand reduced economic volatility. An established business may be able to withstand a month of severely reduced business but a street vendor, laborer, service worker, etc (a large part of the population) could not.
* The political disarming is from my own speculation and the Washington Post wrote a great article on the economic impact: https://www.washingtonpost.com/news/global-opinions/wp/2017/...
This is exactly what my experience and observation have been too!
Even the upper middle class folks had the work around ready and at times recommended to them by their bank managers. I work in Bangalore (South) but I am from UP (North) and one thing, in both the regions, I learned from traders and rich people regarding demonetisation that it was not more than a minor or major (in many cases when too much black money was involved) annoyance for them.
PS. I am from the region that borders Nepal. A lot of money was moved to Nepal during that period as demonetisation apparently didn't apply to INR in circulation in Nepal (INR is quite common there).
I had myself witnessed this. One of those days people were waiting outside a particular bank ATM, since the guard had said it may take 2 hours for cash to arrive. An ATM Van came and cash was unloaded into a bank ATM machine.We saw that bank officials were withdrawing the cash, and wouldn’t let us (the general public) withdraw cash. Obviously they were doing this to curry favors to some influential rich.
Also, I missed my friend’s marriage because of this.
Only yesterday did I get to know that one of the prominent builders ran out of business courtesy demonetization.
It was utter chaos when this happened. People literally queued up at ATMs for hours and most ATMs would be out of cash. PayTM, now an household name in India for online wallet, turned out to be the biggest beneficiary from the whole fiasco. Black money however lives on.
This meant that people who honestly report their income (usually salaried) are at a huge disadvantage. I don't have 5 million lying around in cash. I'll have to pay everything from my bank account, which will get tracked eventually to the seller I purchase my house from. Now, all of this bullshit is gone. The housing market is much more reasonable, there is no talk of cash payment. I love it. Even initially, I didn't have to stand in ATM lines, because I always use my cc. Where they don't accept cc, they accept Paytm.
> I'll have to pay everything from my bank account, which will get tracked eventually to the seller I purchase my house from.
Sorry dude. You are disconnected from reality. Workaround always exist. People still prefer to pay, as much as possible in cash, to save on that huge registration fees.
This demonitization was just a smoke in people's eyes. Those big thugs are still scaming the banks and fleeing the country with billions of Rupees.
I can only talk from my experience. Me and my father searched for an apartment about 6 months before the demonetisation. And I'm searching one for me now. There is a clear difference.
Keep note that any builder where software engineers buy, the big builder types, do not take cash money. In fact the payment schedule and mechanism is all in cheque or RTGS transactions. So that is barely a problem with or without any government action. Even in the worst case you still have to submit your PAN, so the government can easily audit your case even in case of cash transactions.
If you are complaining about the bribe you have to pay during property registration. Make note you will be made to pay that even you do not do undervalue registration and pay the full amount. They charge you bribe even if all your papers are right.
That sort of corruption can already be dealt with. But no one really tries hard enough because you have to burn down the whole system to do that. Every table in the registration office takes a cut to pass a paper to the next table.
If your whole system is corrupt top down, you have little hope to fight these things apart from long term social reforms.
Of course. Every system has workarounds.
> People still prefer to pay, as much as possible in cash, to save on that huge registration fees.
For large real-estate companies, like Aparna Constructions in Hyderabad, most of the transaction is with fully accounted money. About 10% of the transaction is with un-accounted for cash.
Cash transactions are happening with smaller builders, but even they are finding it difficult to find buyers with a lot of liquid cash.
Now most of the money is being moved through faceless anonymous companies, and those are a step above unaccounted cash, when it comes to tracking and monitoring cash flow in the economy.
> This demonitization was just a smoke in people's eyes.
Perhaps, but along with the introduction of GST, I now find even traditional traders who usually prefer not to give a bill with a sale (for construction items, cement, steel, electrical wires, equipment, etc) are insisting on a GST bill. It was a really big surprise to me.
Also, this is a political masterstroke. Most of the country is below middle class and hardly every see a 2000 Rs. note. Most of them don't have much liquid cash. Most of them are happy that the rich are finally 'getting it' as in, finally there is someone in power who is not afraid to walk the talk.
Whether this is just smoke and mirrors is a different debate. But for most of the country, most of the poor people in the country, it's a eye-brow raising move, a very big talking point for worker level party operatives.
My personal opinion is that these sorts of actions are required to take the populace from cash to digital transactions. Waiting for natural course of movement to digital transactions will take an un-accptably long time.
With demonitization, many farmers, people in remote villages, even street vendors are using digital transactions. Credit-card use has increased, digital payments from mobile phones has increased.
Most importantly, the concept of digital transactions, virtual cash, in some very remote places, even the concept of bank accounts has entered into the greater public consciousness.
> Those big thugs are still scaming the banks and fleeing the country with billions of Rupees.
This happens in even the most developed countries. Even in the US, Europe, UK etc. The only difference is there the money is transferred to accounts in the Cayman islands, here in India, perhaps some other route.
Its impossible to register a property in Karnataka, without a PAN card/number. So in short for high value transaction its already possible to have tax accountability. Same with jewelry. The question is that of enforcement. You don't need to demonetize anything for these things.
>>Perhaps, but along with the introduction of GST, I now find even traditional traders who usually prefer not to give a bill with a sale (for construction items, cement, steel, electrical wires, equipment, etc) are insisting on a GST bill. It was a really big surprise to me.
What is going to be a bigger surprise to you is discovering a few years down the lane that a full scale parallel unregulated economy is in motion.
In fact that is already the case with a lot of small time things now.
>>Also, this is a political masterstroke.
Lol
>>Most of the country is below middle class and hardly every see a 2000 Rs. note.
Middle class these days is like people who make a good 30-40K a month. These people see a lot of high value notes.
>>Most of them are happy that the rich are finally 'getting it'
What do you think the year is? 1985?
The rich don't exactly keep their money beneath their mattress these days.
>>My personal opinion is that these sorts of actions are required to take the populace from cash to digital transactions.
>>With demonitization, many farmers, people in remote villages, even street vendors are using digital transactions
Before you implement all these pie in the sky electronic transaction ideas. Please ensure people get electricity. In Bangalore in weekdays there are half a day power cuts.
How should public do electronic transactions without electricity?.
How do you explain the actual change that has occured in the real estate market then?
> What is going to be a bigger surprise to you is discovering a few years down the lane that a full scale parallel unregulated economy is in motion.
Of course. Nobody says that this will kill all illegal activity for all time in this country of 1.25 billion people. But there was a big positive effect due to demonetisation. Even if it dents the black economy for 5 years, that's good enough. We'll take more such actions when needed.
> Middle class these days is like people who make a good 30-40K a month. These people see a lot of high value notes.
https://www.livemint.com/Opinion/TvcFydQcN6KEFkvdW7BprM/Indi...
From the article: vast majority of middle class in india earns less than $4 per day. A ₹2000 note is 10 days wages. Yeah, I don't think those guys will ever save that much while still surviving.
> The rich don't exactly keep their money beneath their mattress these days.
Yup, they were forced to move it from there in 2016. Some moved it to bitcoin, as described in TFA.
> Before you implement all these pie in the sky electronic transaction ideas. Please ensure people get electricity.
Bullshit. Electrification and economic reforms can happen simultaneously in the world's seventh largest economy. For example, 2018 was the first year when all villages satisfied the criteria for being electrified. Long way from 24x7 electricity, but hey, it's a start.
What change has happened in the Real estate market? The big builders are continuing to sell their inventories as they were doing before with cheques and RTGS transactions.
People still continue pay bribes to registration offices.
In fact plots around vicinity of Bangalore are still going like hot cakes.
If you are fed up about property rates, then there is going to be no relief there. People are coming to cities for jobs through flood gates, and demand is far higher than supply. Every year one crore babies are born in India, and all of them need homes to stay 20 years from now, this is year after year, every single year.
When the demand is this high, how do you expect prices to not go up?
>>Even if it dents the black economy for 5 years
It didn't anything even for 5 minutes.
Only thing it achieved is slowed economic growth.
>>We'll take more such actions when needed.
Again, who is this 'we'.
>>vast majority of middle class in india earns less than $4 per day.
That's the poor, and they were worse effected. The unorganized sector where these people are largely employed suffered and many jobs were lost.
>>Yup, they were forced to move it from there in 2016. Some moved it to bitcoin, as described in TFA.
Not even fools keep their money in cash, even in the past. People invest money.
Indian economy didn't exactly come magically into existence in 2016. So please...
>>Bullshit. Electrification and economic reforms can happen simultaneously in the world's seventh largest economy.
You call these 'economic reforms' :)
Great, carry on.
A majority of the indian economy is in the unorganized sector - and India has large tools to ensure that we recover taxes via transaction taxes.
All this does is demolish that sector - and thus harm the larger economy on which the organized sector depends.
Wishes and horses - we may want the whole sector to be organized and transparent - but this isn't going to happen quickly.
Its going to take time, and gradual improvement in laws AND in understanding/education + convenience for compliance.
Theres an optimal path, and nothing else.
Umm... what? Are you sure you're replying to the correct thread?
> All this does is demolish that <unorganized> sector - and thus harm the larger economy on which the organized sector depends.
Wrong, this converts a large part of the unorganized sector to organized. Contrary to your assertion, this has helped include the large unorganized sector in the growth story of the country. I believe this is why we're seeing record economic growth.
> but this isn't going to happen quickly.
OK, doesn't mean we shouldn't try to help speed it up.
----
No disagreement, but this is not the path, and it really cant be sped up.
The same way its going to take X amount of time for someone to climb rank in an online game, its going to take time for compliance and ability to comply to catch up.
The same way you cant feed jet fuel to a fiat, you cant expect to push the economy beyond its adjustable rate.
Wishes arent horses.
Who is 'we'? Why does this 'we' think they are entitled to decide for other the terms of economic participation?
Political it had superb optics.
All in all, it was a political spectacle paid for by the exchequer.
Here are the critical pieces of information needed -
1) The large majority of the Indian economy is "black" - i.e, the unorganized sector.
2) Cash is the main medium of trade, years after demonitization, we are back at similar levels of cash use, indicating no lasting impact on customer habits.
3) The reasons provided by the govt changed by the day, Initially it was sold as "stopping black money" or illegal accumulation of untaxed wealth.
This was updated to "removing counterfeit currency", later "increasing digital transactions".
4) The govt claimed that this was a well planned out strategic move, and not some ad hoc pie in the sky idea they were working on.
However, within a few days it showed clearly that the govt had not planned for the event - Amount of money demonitized >>> ability of the mint to print new notes, even with the several month lead it was supposed to have - if the mint was working non stop for that period.
The new notes did not work with many ATM trays, and this caused further problems- not to mention the scale of the logistical problem in getting the new notes to every corner of the country.
5) Loopholes: Within a few days, if not hours - people were using mules to launder money.
The govt said that you could deposit only X amount of money, after which you had to account for it and show where you got it from. The argument was that people holding untaxed or corrupt proceeds, would not be able to deposit them.
however - almost all the money demonitized was re-deposited into the banking system. This means that all the untaxed money, somehow was legally deposited in legit bank accounts.
PS) Indians HATE corruption, and the idea that someone got ahead of them by cheating. People happily accepted the sudden demonitization announcement because they believed that the rich and corrupt will suffer. This was why the PR was good.
-----
For each of the stated reasons given by the government, it is easy to show with actual numbers, that the exercise failed to achieve its goals.
Where a positive improvement can be shown, the gains are not commensurate to the losses incurred by the economy, and costs paid to undertake the exercise.
Digital transactions have not increased significantly, for example - and will not until the underlying telecom and trade infrastructure improves.
Most of the wealth was recovered, and very few people, if any have been caught as a result of this - especially since its common knowledge that most politicos sit on piles of cash.
----
However, it is very likely that the goal of the exercise was to harm other political parties who had cash based war chests.
Since the people most harmed by this are in the unorganized sector, the results will not show in any GDP projection.
The current dispensation is far more pro corporate than the previous govt, and so their chief patrons and metrics are not impacted, so it was at a relatively low political cost for the party.
In short, it was an audacious political stunt, and carried out with verve. Its also hard to criticize it because of the amount of ire you attract online for being negative about actions of the current dispensation.
SO please note, this is the take on Demonitization, and not on the BJP entire.
The Delhi-based lobbyist told me a story he had heard from a minister. On 8 November 2016, as Modi prepared to announce his surprise decision to annul all high-denomination bank notes, he gathered his top ministers. After handing each a piece of blank paper, he asked for their opinions on whether he should withdraw all Rs 1,000 notes, all Rs 500 notes, or both. “Jaitley, being the finance minister, said, ‘We can demonetise 1,000-rupee notes but not 500-rupee notes. It will be a big jolt.’ To which Modi, not in jest but sarcasm, said, ‘Are you saying this because lawyers mostly store their money in 500s?’ Rajnath said, ‘Pehle hi kar dena chahiye tha, I am fully supportive of it.’” Venkaiah Naidu, also a cabinet minister, supported the move as well. Then it was Gadkari’s turn. “He said, ‘This problem of black money should be finished once and for all. Demonetise everything from 1,000 to 100. Nobody keeps bundles of 50-rupee notes.’ Modi was taken aback.” When a colleague later asked Gadkari about this, “he said, ‘He had already made up his mind, he was just doing a paper exercise to corner us. So I tried to go one up on him.’
In short it was the Prime ministers personal pet project, done to drain out the cache of money held by opposition parties.
Gone horribly wrong.
Horrible, and hopefully not precedent setting.
People also say it was done to win some state elections. Modi says it was for the war against corruption/black money and to improve the tax base.
(* for those that didn't read the article: India banned large bills, say, their $100 bills. People had x months to turn it in to exchange with smaller bills. But you had to explain how you got that much money and why didn't declare it to the taxman. So quite a few turned to Bitcoin etc.)
The title seems almost unrelated to the article. The title refers to money lost in the bitconnect ponzi scheme, but the article is mostly about kidnapping schemes worth much less money, and that demanded payment in bitcoins.
AMP version: a bit funny looking (big pictures, full width layout rendering), but otherwise very simple and clean, just text and pictures. The only real issue is the pictures are big, but that's kind of nice in its own way.
Non-AMP version: slow to load, janky video loading that moves the text around while I'm trying to read it, janky side bar menus that jerk as I scroll, the actual article only occupies the middle 1/4-1/3 of the layout.
I'll take the AMP version, thanks.
AMP version: not loading, I assumed due to blocked JS, but I just went back to check, and oh it finally loaded.. so maybe it eventually falls back with my first-party-only JS policy.
Non-AMP version: immediate load, perfectly readable, refreshed with no JS (not even first-party) and it's imperceptibly fast. (Reloaded the AMP version again with no JS just to check, and of course - without the JS to say: Hey, after a timeout, if AMP JS hasn't loaded, fall back on standard - it doesn't load at all. Great.)
Edit: actually, it did, eventually (not sure how that works then) but with no images and full-width text. I'll take AMPless any day.
Looks like the culprit is this piece of code:
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animation:-amp-start 8s steps(1,end) 0s 1 normal both}
@keyframes -amp-start{from{visibility:hidden}to{visibility:visible}
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