India’s Finance Minister, Nirmala Sitharaman, calls anonymity in blockchain a risk factor. She also said that there is a need to take precautions as the usage of this technology increases. However, it doesn’t mean that the government is against the use of blockchain tech. In fact, they support the same and also called its use very important. But it will be critical to see how the authorities tackle the privacy challenges that come with the tech.
Blockchain’s anonymity factor
Even though crypto transactions are visible on a public ledger, they are not entirely public. The addresses of the wallet that are involved in a transaction are visible, but not the names of users or any other details. This is a matter of concern for India’s Finance Minister. She said, “The anonymity of the person or whoever or the robot is the one which we have to be absolutely readying ourselves as … a future challenge.” Unless the government finds a way to track individuals in these transactions, it could become really difficult to prevent crimes and other illegal activities.
Nirmala rightly pointed it out, saying that unless they prepare themselves for the same, there will be inherent risks involved in dealing with it. For example, we have seen that hackers steal funds from blockchain networks, and until they make a transaction linking to the outside world, they can’t be caught. This could be buying a car, paying for food, or something else.
India is planning to launch its own Central Bank Digital Currency, which will be similar to the fiat currency. The only difference would be the blockchain technology it will be based on. However, the Indian authorities are already so much worried about the anonymity of this tech that they might eliminate privacy altogether in the CBDC.
India’s capital markets regulator, SEBI’s chief Madhabi Puri Buch said they do not wish to have anonymity in their CBDC. This defeats the entire purpose of crypto, but the authorities working on CBDC around the world already know that.
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