Even though Bitcoins and other cryptocurrencies are still in a grey area, no one can deny the fact that they have captured our imagination.
Bitcoins were created by an anonymous person or group called Satoshi Nakamoto and pierced into the financial world with a storm. India has always been a hotbed for technology-related developments, and bitcoin is not an exception.
Keeping all the recent developments in mind, this article attempts to investigate whether bitcoins can have any impact on India’s real estate industry. We are not claiming that Bitcoins are immune to market volatility or that no bubbles exist. It analyzes how cryptocurrency may interact with the real estate space in India.
Five negative impacts of bitcoin on the real estate industry in India:
- Transactions done using bitcoins are irreversible
Real estate transactions in India involve a high value of money. The parties involved often hire professionals like surveyors, brokers, etc., to get the transactions done smoothly and securely. One common problem with any electronic transaction is that it can be easily reversed if not done correctly.
Unfortunately, bitcoin transactions are not reversible. If any party involved in the transaction receives the payment through bitcoins, they cannot be reversed, and this may create problems for both parties in the future, especially when it comes to legal disputes.
Legal battles in India sometimes become very lengthy and expensive, and there is a possibility that one party might pay more than they deserve to end the litigation. If bitcoins are used, then there is no way that the other party can get their money back.
- Bitcoins cannot be confiscated by any government
As mentioned earlier, since transactions done using bitcoins are irreversible, it becomes challenging for any government or enforcement agency to seize or confiscate them. We have not seen any regulations or guidelines from the government or RBI in this regard.
Until now, there hasn’t been any case where bitcoins have been seized by enforcement agencies in India. If they become a mainstream currency or medium of transaction, it will be tough for the enforcement agencies to catch hold of them.
- Tax Implications
Taxation is one of the major problems faced by bitcoin users in India. Bitcoins are not considered currencies by the Reserve Bank of India (RBI). The RBI doesn’t recognize bitcoins or cryptocurrencies as a form of legal tender. Bitcoins and other cryptocurrencies are treated as goods or assets and not as currencies by the Indian government.
This means that any income received through selling bitcoins has to be added to the seller’s taxable income after converting rupees into dollars, etc., based on current market rates. Click here bitiq.org.
Also, all the gains made from selling bitcoins cannot be taxed since there are currently no provisions regarding the taxation of cryptocurrencies. There must be some clarity regarding bitcoin taxation in India before bringing them to the mainstream. –
- Government can ban bitcoins anytime
The Indian government has not banned Bitcoins in India; they are still legal to use. However, they can become illegal at any point in time. The government can ban them overnight if they wish to do so. This may result in large amounts of users’ funds getting stuck with the exchanges.
A good comparison would be China, where trading volume has reduced from 90% to less than 1%. If this happened in India, most people who have invested their hard-earned money would not do anything. Hence, it is essential for all bitcoin users in India to understand that they are playing with fire, and there exists no protection mechanism if something goes wrong.
- Exchanges can shut down anytime
There are only a handful of bitcoin exchanges in India; most are either not legal or not regulated. Some of them can be shut down at any time without prior notice by the authorities. This is one reason why they are mainly used for trading purposes, and one should never use bitcoins for storing large amounts of money.
Bitcoin is here to stay, and people who are investing or trading in cryptocurrencies must understand the above-mentioned facts about bitcoins. Understanding those facts will help us make our decisions wisely.