cryptocurrency: from today, bitcoin will not even add a rupee to your bank balance

NEW DELHI: The deadline for the Reserve Bank of India (RBI) for banks to stop any relationship with cryptocurrency trading expires on Thursday. For many, who have tried to make a fortune by exchanging cryptocurrencies, here is what development means:

NO FIAT: Until now
One could buy or sell crypto-currencies such as bitcoin on exchanges. The process involved transferring money to a bank account linked to the exchange and getting the equivalent number of bitcoins. Starting today, it will not be possible. Some exchanges will become peer-to-peer (P2P), that is to say you connect with another trader, with which you can buy or sell bitcoins. P2P trading, from now on, will only allow you to trade bitcoin for another crypto, say litecoin, and not fiat.

BLACK MARKET: Bitcoin holders will need to approach buyers on stock markets – think of OLX – or the black market to convert crypto into a rupee or any other fiat.

NO LOANS: Brokerage or cryptocurrency companies will no longer be granted loans by banks, nor even be allowed to hold a business account.

ROOKIE BURDEN: The circular will touch new bitcoin traders harder than those who are experienced. Anyone who wants to be a bitcoin investor in India will now have to buy from their peers and not trade, probably after paying a premium on the current exchange rate-1 bitcoin trades for more than Rs 4,30,000.

DELETION PORTFOLIO: Bitcoin firms such as Zebpay can put a rupee value in portfolios, much like ordinary online portfolios. This money, if it's not already retired or converted, could be blocked.

Yet this is not the death of cryptocurrency in India. RBI has only prohibited banks from associating with cryptocurrency, and not with cryptocurrency itself.

Exchanges could provide alternatives such as buying bitcoin for dollars via Paypal. This, however, will push the cost higher because you would have to pay a charge on Paypal to transfer the dollar amount to your bank.