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India's new central bank governor concerned about Bitcoin

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February 12
10:35 AM 2014

Reserve Bank of India Governor Raghuram Rajan has again expressed the concerns of the country's central bank regarding the credibility of the Bitcoin, TechCrunch reported. Last year, RBI also gave a warning regarding the digital currency that worried Bitcoin traders.

In a technology conference held in Mumbai, Rajan said, "As a currency, I do worry a little bit when the underlying (value) fluctuates tremendously. One of the values of a currency is stability and the extent (to which) a currency is target of speculation as opposed to primarily a means of exchange."

Rajan added that there is a need to understand the role played by virtual currencies and how they will interact with paper currency. He said that questions like who maintains the currency value and if people can have confidence in unseen centers or algorithm that maintain its value need to be asked. "[We] need more credibility there," he said.

India's Bitcoin traders still have high hopes for the currency, however. Highkart became the first and only e-commerce platform in India to begin accepting Bitcoin as a form of payment last month. Co-Founder Amit Kumar told TechCrunch that in India, one of the challenges that hamper the growth of the digital currency is that a lot of early adopters are not trading the Bitcoins but hoarding them. For its first Bitcoin transaction, Highkart was able to sell a pair of shoes from Provogue. The platform has 150 products and it does not give extra charges for shipping, the report said.

Kumar added that Bitcoin acceptance is still legal and that they are following the RBI's regulations. He said, "There's nothing illegal in accepting Bitcoin - the RBI will take more time to come up with clarity."

Bitcoin developer and consultant Benson Samuel told TechCrunch that no major change has happened for the digital currency in the country since the last time the central bank gave its warning. 

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