India seeks to block most cryptocurrencies in new bill, government says

No, banks would not be forced to do that. First, banks don't need deposits and some big banks - investment banks - refuse to even accept deposits. Banks make money by borrowing from money markets at one rate and then lending at a higher rate. Their value is credit analysis and credit intermediation.

E.g. if you are a household, then you would like to borrow for a mortgage. Well, the Smith Family does not have access to the bond markets. But Big Bank does. Big Bank makes loans to thousands of families like the Smith family, it does all the credit analysis checking their work history, etc, and then it either sells bonds to raise the money for the mortgages, keeping the mortgage on its own books, or it packages up the mortgages and sells them off as mortgage backed securities.

It is the fact that you can't borrow from the money markets but banks can that explain the existence and profitability of banks, as they sit between you and the capital markets. If you kept your money under a mattress, the banks would still sit between you and the capital markets. If everyone emptied their bank accounts overnight, the bank would need to sell some assets for reserves, and then buy paper money with the reserves, and then give you the paper money. The Central Bank would then purchase assets creating enough replacement reserves and the system would continue as before, just with a lot of money stuffed in mattresses. In fact this isn't even theoretical, as there is a lot of drug money in the form of cash hiding in Latin America. It's not in mattresses but it has left the U.S. economy and no one cares as we just print more.

Whether or not banks want to get into the deposit game is a function of whether they think the deposit fees and customer relationships created will be of sufficient value to offset the costs of providing those services. For many banks, getting depositors establishes a relationship in which you will turn to that bank when you need a loan, etc.

Moreover the interest charged to banks is not subject to manipulation by households that refuse to deposit their money in banks, first because banks don't lend deposits, but second because the bank's cost of funding is determined by the Central Bank's overnight interest rate plus a premium for the credit-worthiness of the bank itself. Whether the bank does or does not provide deposit services is irrelevant. Deposit services are purely sales channels and fee generation channels.

https://www.bankofcanada.ca/2020/02/contingency-planning-cen...

https://www.bankofcanada.ca/research/digital-currencies-and-...

"Citizen, too much meat eating this week. Your CBDC non-cash is now suspended until you lose 10 pounds"

My warning is that the open-source Pandora's box of zk proofs is necessary, technically feasible, and inevitable. ZK proofs are coming, and there will be systems built on top of them. Our governments and societies need to be ready for this reality.

Their focus on requiring "origin of and taxation of" attestation may impact the perceived value of cryptocoins when traded for currency, but they don't seem to much care if people want to generate hashes and sell them to each other, just as long as it's not used to launder money or avoid taxes.

It is of significant debate whether the perceived value of cryptocoins is in part due to its value for both laundering money and avoiding taxes, but that's distinct from whether the perceived value is in part due to the ability to sell cryptocoins for currency.

The difference between this and something like the 1920s alcohol black market in the US is exactly the point that people are raising when they talk about cryptocurrency lacking fundamental value. Alcohol has fundamental value (it is a drug with some effects that have proven to be valuable to many humans for thousands of years), but a currency does not have any value in isolation. People didn't stop wanting alcohol when it was banned, but they will stop wanting a currency if it is banned. It will not have a similar "constrained supply driving up the prices" effect to black market alcohol, because alcohol's demand never wavered but demand for cryptocurrencies will. It is not irrational to buy black market alcohol that you can drink or sell, but it is irrational to buy black market currency that you can neither drink nor sell.

This is all made generally moot if India is the only place to ban it, because they won't make a huge dent in the global market.

Demand for a cryptocurrency is set by some combination of (a) it's utility as a payment tool and (b) it's value as an investment vehicle.

Legal restrictions reduce it's utility as a payment tool, driving down demand. They also disallow a significant group of investors from using it for investment, both reducing demand, and temporarily increasing supply as many legitimate investors (especially institutions) would have to sell off their holdings before the law coming into force. There's no obvious mechanism how these restrictions would somehow curtail supply more than the demand.

It's one practical use case. Bitcoin's value rests on multiple use cases and eliminating other uses cases reduces demand for bitcoin. And that effect also reduces bitcoin use for wealth storage (but might not eliminate, sure).

How would that work? Can't you just not donate the house, after they have given you their crypto?

1) I'm not familiar with tax laws in India (or Brazil) but in many places this would trigger gift taxes, imposing a large financial overhead to this transaction.

2) The regulatory bodies monitoring for illegal transactions will see right through this one.

But why would you want to sell a house this way instead for a permitted means of payment? Even if your scheme is unlikely to be detected, if does add a nontrivial risk of getting detected (or getting intentionally exposed, or blackmailed to get exposed) and get very unpleasant consequences for that, and given the extra difficulties of enforcing the deal, you would likely expect a significant extra markup above "normal price" to sell the house this way. Furthermore, if this is criminalized, then even offering or requesting this as an option carries some risk.

Also, I'm not informed of Indian law, but in most western countries this "donation of house" would definitely incur a significant tax and possibly trigger a tax audit/money laundering investigation. Combined with the risk markup, that would meant that laundering cryptocurrencies would be somewhat expensive. Not impossible, of course, money gets laundered - but it would mean that you would actually have to follow all the inconveniences, risks and costs of a money laundering process if you'd want to handle cryptocurrency, and that would discourage many people from doing so.

There are many checks and balances to all successful open-source projects.

And when that fails you can always fork it.

So miners have to make a cost-benefit analysis as to how much control they can exercise while not causing a hard fork as well as what the consequences of causing a hard fork would be. Likely right now they're using accrued coins to prime their stake in PoS rather than directly working against it - delay helps them here.

>The value of digital property is widely accepted for decades now.

You're conflating all digital 'property' with blockchain bullshit, and also pretending my bank account is a digital property.

>What crypto adds is that you can hold the key to your property yourself. So others can not move or delete it against your will.

Society need not support your want for crypto, especially where it harms society and reduces its ability to control financial regulation.