There are no laws that prohibit cryptocurrencies in India. They operate in a regulatory vaccum . It is not illegal to deal in digital currencies. You can buy them and sell them. However, cryptos are not legal tender. Even then no where in the law of contract, a consideration has to be in fiat money.
Just now, these currencies are on the fringes of digital payment space. Cryptos transactions are difficult to trace. If anonymity is stripped off the cryptos, they do not have other significant advantages.
Despite no backing of the government, cryptos have value in effecting certain transactions. These could be a store of value too. But they are not good as exchange and storage. Crypto investments serve as a hedge against poor economic growth. Whether cryptos will be common as currency, it is difficult to answer. Governments will always prevail when it comes to controlling the medium of exchange. Central banks can think of having its own cryptos. However, there is no possibility of replacement of regullar currency and bank accounts. There are payment apps. A payment wallet is used. The money is converted into cryptos. The receiver receives cash. Blockchain brings down the cost of transaction.
There are new sign ups at crypto exchanges. Many are just speculators. It is an alternative asset class like gold and silver. There are 20 exchanges in India that accept trades across all major cryptos. Banning cryptos may damage local economies in the long run. Cryptos and fiat currency can co-exist. Cryptos can be treated more as a store of value.
Cryptos technically are just a code with numbers and hash. It is a code that is equal for all. If codes have no value, then Uber and Google are junk too.
Cryptos are not the only option. There are blockchains or demat currency or database currency options. Cryptos follow no monetary policy. Facebook talks of pegging the cryptos to a basket of currencies. Here the issuer will try to manage the value of the basket by buying-selling.
Japan legalised Bitcoin and other cryptos in 2017. USA, Japan, South Korea, UK, Russia and China lead the global crypto market.
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