#IndianDataDollar: A whitepaper (Version 1.0: Third Page)

 Contd....

The question today is not whether it would happen or not rather when it would happen. If that is so, where does India stand in this currency conflict between two monetary superpowers. Will India allocate an equivalent share of its forex reserves to e-CNY like it does to USD? Will India ever match with China in digital payments infrastructure any time soon? China has over 1.2 billion active users paying via Alipay and over 1 billion using WeChat Pay 

.............................................................................................................................................................................................. If India and China are equal in terms of population, why such a big gap in digital capabilities? The answer lies in Chinese state’s focus on mass adoption on both the future of money and the future of technology for decades. India cannot match China by copying the same model rather it needs an out-of-the-box thinking to bridge this gap.

1.1  Facebook’s Libra (now DIEM) and other corporate currencies

.................................................... If we equate Facebook network with a virtual nation, it has nearly as large a population (2.89 billion) as that of China and India combined. There is hardly a corner in the world that does not have Facebook users. The number is not only large but also quite embedded due to its massive network effects. Such a big user base does have the potential of becoming the largest P2P currency network in the world. The plan was scaled back after US regulators restrained Facebook. However, the plan is still alive in somewhat diluted form and with a different name. The issue here is that it may be halted today but the idea of a corporate currency is very seductive for large platforms. What if Google, Amazon or Microsoft start moving in the same direction. It is only a matter of time when it will unravel.......................................................................................................................................................................................................................................... If this happens, corporate currencies will create a new twist in the geopolitics of money. If countering e-CNY is a challenge for India, adding corporate currencies to this would make it too big a threat for the country to manage. Doing nothing on the monetary preparedness front now might become a huge risk for India if such a threat emerges in near future.

1.2  Rise of decentralized & non-sovereign currencies on public blockchains

The invention of Bitcoin in 2009 was a curtain raiser for a radical departure in the matters of money. This offered a new consensus mechanism called proof-of-work to settle transactions in a completely decentralized manner. In monetary history, this was the first time that humanity found an alternative that was completely unlike LOLR consensus. The new consensus was not a top-down hierarchical model rather it was a circular economy managed by global computer nodes. It put peer to peer actors at par with institutional actors with full censorship resistance. It was the beginning of a flat world in the truest sense. It may seem a bit theoretical or idealistic start but over the last 12 years, the course has turned out to be far more radical than expected earlier. Bitcoin attracted a stream of innovators and entrepreneurs who built multiple kinds of decentralized consensus mechanisms. If Bitcoin as Blockchain 1.0 disrupted money-as-cash, the next innovation came in the form of smart contract capable Ethereum as Blockchain 2.0 which disrupted money-as-capital. Anybody could build a decentralized organization over Ethereum virtual machine (EVM) and issue a new token symbolizing a currency, asset, financial product or whatever digital imagination can create. ...........................................................................Not just three generations of blockchains have simultaneously grown as a collective wave rather