Bitcoin’s price has zoomed past $7,000 after the Chicago Mercantile Exchange’s announcement that it plans to start futures trading in the cryptocurrency by the end of the year, after regulatory approval. This gives Bitcoin the sort of credibility that it had hitherto lacked in the public eye, and is potentially a harbinger of wider adoption, with more institutional participation a likely possibility.
Until now, the Indian government has issued advisories against investing in crypto-currencies. But this development is likely to provide an impetus to the domestic market, where Bitcoin exchanges are already growing fast. One of the major exchanges, Zebpay, has doubled its app downloads in four months from May, hitting the million mark this month.
Using Bitcoin reduces transaction costs through faster and cheaper transfer of value, circumventing the regulated banking system. Greater adoption of Bitcoin can pose various problems for the government by loosening its control over the financial system. It will be interesting to see how the government responds to this challenge.
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