Well, hind-sight is 20-20 but let me post-rationalize.
India's biggest problem is unofficial economy and low tax base, and is trying to expand tax base and trying to get more and more people into formal economy. Cryptocurrencies are not really tax-base expansion friendly even if regulated. So this makes sense from the point of view.
The interesting part here is Government of Andhra Pradesh is a member of Ethereum Enterprise Alliance, so now how are New Delhi and "Amaravati" going to deal with this situation would be interesting.
With the alliance, Govt of AP is primarily aiming at integrating blockchain tech in to governance and that's that. Their vision is still perfectly aligned with RBI guidelines and will perfectly act as a case study for the rest of the states to follow should things fall in place. Not sure what "situation" are you hinting at.
There are many bans in place in India but the law enforcement agencies infrequently enforce anything. There are building regulations that are flouted openly, environmental regulations that are frequently ignored. I don't think this would affect the black market as much.
Of course there is the other aspect that cryptocurrencies are probably not very well known yet to those that operate in the black market ...
India has strict laws on tender or cash. Personal foreign currency holdings are severely restricted. So, this doesn't come as a surprise at all.
That said,
> The regulator, however, decided that it will promote the use of blockchain – a public ledger that serves as the backbone of bitcoin – in financial services for strengthening transparency and improving inclusion.
As reported earlier, Wall Street is already cooling down on the blockchain hype:
So that's what I should've done while I was there so we could've gotten a legit database to handle our yield curves processing! We were expected to do everything in Excel, and if we were lucky, MS Access :|
Well, yes. The Albanian Lotto Riots of 1997 are still remembered, many Albanians lost their shirts over it. People made money through the free markets after the fall of communism, but there wasn't much of a banking system yet or experience with investments, so Ponzi schemers jumped in to fill that need. When these schemes failed, there was rioting that the police and military suppressed only half-heartedly (they had lost hard-earned money themselves), so local gangsters took it on themselves to restore order and became warlords in the process. If this sounds like a big mess, it was. English Wikipedia even calls it a civil war: https://en.wikipedia.org/wiki/Albanian_Civil_War
Whatever word is appropriate, it was basically a complete disappearance or the rule of law. Basically, imagine all the police and military disappearing instantly, in a country that was already quite corrupt and infantilised by communism (not that I'm sure a more 'civilized' country would do any better under the circumstances).
The sad thing is that while the Indian government has all these regulations to prevent you from holding $2,000 of Bitcoin, or goes on adventures like demonetization disaster which affect ordinary working people, giant scams and irregularities (like Nirav Modi getting away with billions, or prominent citizens being named in the Panama papers) are business as usual.
A few tweaks to the phrasing and you’ve basically described all nation state behavior and the entire history of human attempts at “society”.
Power brokers control the activity and discourse of the populace. Ignore the rules for personal enrichment (the US Congress and others pass rules for us [ banning insider trading] but not them).
Anyone who want's some insight/context into India's economic regulatory environment from which these controls came from should watch this (2 part) video:
There's a crazy amount of regulation and paperwork for even the most benign business. And much of it differs as you go between the different areas, so businesses that have to say transport goods from Mumbai to New Delhi may have to stop 4-5 times to fill out each regions regulatory paperwork.
It's really not surprising to such a top-heavy state being wary of something which seems like it can't be as easily controlled top-down. Which we saw with the "banning" of those paper bills - which had a significant negative impact on the economy, as much of the economy manages to function in spite of those rules, large by side stepping them.
India will never catch up to China's growth unless they clean up this mess. And even beyond growth, it benefits no one to have so many businesses feel the need to completely bypass all the rules because they are so bad ones in between the good.
"It's really not surprising to such a top-heavy state being wary of something which seems like it can't be as easily controlled top-down"
I don't disagree with your analysis but I think the conclusion is debatable. The problem isn't India is top-heavy, China is too. The difference is that China is highly centralized. It's been that way since the Qin dynasty. The Qin dynasty standardized everything from weights, measures, and even the language itself. The example you cited is a problem of standardization. If all the paper work is the same, the process should be pretty simple and efficient.
That said, India is a VERY diverse country and seems very tolerant of differences. Part of this may be because India was not historically centralized nor homogenized. Just as a personal opinion, it would be a shame for India to lose its cultural diversity in its pursue of growth and efficiency. Once you lose the culture, it's really, really hard to bring back.
> And much of it differs as you go between the different areas, so businesses that have to say transport goods from Mumbai to New Delhi may have to stop 4-5 times to fill out each regions regulatory paperwork.
This is no longer true. With implementation of E-way Bill under GST you need not stop anymore. A single e-way bill is enough. Also those stops were needed earlier because there was no uniform taxation between states. However with implementation of GST there is no need to fill up paperwork while transporting goods between states. Just need to procure an e-way bill. This came into effect from April 1st 2018. Changes are happening rapidly so take these old videos with a grain of salt.
Quoting: "To avoid technological glitches, the GSTN and the National Informatics Centre have ramped up the infrastructure. The system can now handle 75 lakh e-way bills daily, compared with 26 lakh earlier. To prevent harassment of taxpayers, e-way bill rules specify that goods will be inspected only once during the journey except in cases where specific information on tax evasion is received. Further, in case a vehicle is detained for more than 30 minutes, the transporter can report it on the portal."
True, but taxes like GST are really trying to make all this easy. Change comes slowly in India and off late there have been some changes that were once thought impossible to implement (like GST)
And mostly these regulations are used by more established aka politician & bureaucrat bribing companies and conglomerates to kill competition in the market. In India regulations are not for consumer rights protection but for highest bidder so that regulatory mechanism can be unleashed with full wrath on the competitor. In his book the former head of central bank wrote that in the Indian state of Madhya Pradesh no one could set up any industry in mining if there were not part of the Jindal group. No entrepreneur or businessmen would get license from the state government if they were not part of the Jindal group. The Jindal group would in turn pay the politicians and bureaucrats in money and sex. Thank god that Soviet Union failed and global economic conditions with that forced India to become more market friendly. But these regulations are still there.
India's regulation love is mind-boggling and matched only by Venezuella or North Korea. Only difference being that people beat the system no matter what.
My family decided to start a fully self-funded private school in 2004. Here are the steps.
1. First we need to get NOC from the local government which we will get only if we show the land, building etc. Most important factor in NOC is "need". So we need to show paperwork that there are not enough schools nearby for the projection of new students over 10 years and all that.
Clearly, you can't argue that "my school would be better". (We paid $10k as bribe to get this)
2. There is lot of regulation related to teacher's salaries and qualification, teacher-student ratio etc. Fee regulation etc. but relatively easier to get with very less bribe.
3. Right to Education Law (RTE) kicks in.
We have to do tremendous amount of paper work and give 25% of our seats to government for free which the government allocates based on complex lottery that uses caste/income etc. Given that our school caters to lower middle class a plumbers kid is paying to subsidise education of electrician's son because the former did not win the RTE lottery.
We have to increase fees of remaining 75% students to cover the expenditure on these 25%.
The government promised a small money per seat by law. However for last 4 years we have not got a penny. The amount is any ways very little.
But then RTE has various other provisions and the violation of that results into withdrawal of NOC, closure of school and criminal proceeding against the principal/management.
Here are some of the provisions:
- There should be X toilets per 100 students.
- You can not dismiss any student for any reason. (not just 25% RTE students but all 100% students)
- You can not set any admission criteria what so ever. No tests, interviews, family background nothing. Pure lottery only. (For the 75% students)
Most parents know this and will simply refuse to pay fees after we give admission to their kids. All we can do is to beg.
4. There is 100% exemption to any school that is run by management whose members are Christians, Muslims, Buddhists, Jain or Sikh. (which means RTE applies to your school only if the management is Hindu or Jewish)
5. RTE resulted into closure of thousands of schools in India and mushrooming of Church run schools.
My family closed the school in 2016. There are various court cases still going around this.
Re 4:
Article 30 in The Constitution Of India 1949
30. Right of minorities to establish and administer educational institutions
(1) All minorities, whether based on religion or language, shall have the right to establish and administer educational institutions of their choice.
This was put in the constitution as a guarantee to linguistic and religious minorities that they
could maintain their identity within the vast majority. This was in liu of the more unpalatable option of providing special representation in Parliament for each minority group. In subsequent years after independence the Supreme Court clarified that the minority status would be determined by state. So presumably, you could set up a school in Mizoram if you are a Hindu. Or a Hindi language school in Tamil Nadu. If I am not mistaken, Sindhis run their own colleges in Mumbai under these minority rights.
Yes. Indian constitution discriminates based on religion when it comes to running schools and other edu institutions.
Article 30 gives special rights to christians and muslims and subsequent amendment 93 also gives right to occupation to minorities but not to Hindus and Jews. RTE was deemed unconstitutional even in the light of Article 30 in TMA Pai vs State of Karnataka thus giving rise to 93rd ammendment.
> If I am not mistaken, Sindhis run their own colleges in Mumbai under these minority rights.
You are most certainly mistaken.
States can only declare linguistic minorities. Religious minorities are determined by a body called NCMEI. NCMEI by law can not have a Hindu as its member as a result a body that comprises of Muslims and Christians gets to decide if a Hindu school in Mizoram can start a school and avail minority benefits. They have categorically refused to do so in Kashmir, Nagaland and in Kerala so far.
Not unexpected. China might follow suit too. Developing countries who are experiencing capital flight will want to close the cryptocurrency loophole. For the same reasons, our governments are unlikely to want to chase away the golden goose.
Blockchain without decentralization isn't that exciting. The problem with banning crypto is that there will be an entrepreneurial group of people willing to accept cryptocurrencies for a high fee and turn it into fiat or a commodity in a neighboring country. As someone developing in the crypto space, I look at this tech as the formation of a global, secure, always-on, always-accessible, standardized, permission-less database. When people talk of "the cloud" I feel that crypto platforms fit that description more aptly then traditional services.
This is still an ongoing debate in the crypto space.
The opposing argument to concentrated mining pools is that they still require individuals to point to these pools and are essentially acting as proxy votes. It's decentralized because mining pools only have as much power as individual participants allow them to have and there have been multiple occasions where individuals have forced an action such as the UASF.
PoW seems to be on the outs recently with PoS, DPoS, DAG and other algorithms emerging as potential alternatives.
If you need someone else's permission to use it, then that person is both a bottleneck and a source of control with power that is likely to be abused. It is really important that these systems be "permissionless" in order to be legitimately decentralized. (Though I wonder if you ask that because you think the term means something to do with data control. It doesn't.)
I know exactly what "permissionless" means in this sense. However, given the only way that a transaction is materialized in the blockchain is for a block to be mined by someone, that sounds like a bottleneck to me. A pretty bad one if Proof of Work is being used!
Since the BJP government took power, India has had multiple faux pas from the central government front. They swapped out Raghuram Rajan with a no name yes man as the governor for central bank. Then they did demonetization, a quixotic adventure at getting rid of black money by making all legal tender obsolete on one fine morning. This caused deaths amongst people standing in queues in front of ATMs. They couldn't print the new money fast enough. To protect the new money from being used in black market, the party spread a rumor about some advanced tech embedded in currency to make it easy to track from satellites. This is demonetization 2.0 and would permanently damage all progress Indian startups made in FinTech space.
I'm surprised they waited so long. But decision meshes well with the government push for government-approved (UPI?) digital payments, all with pretty strict KYC policies.
Indian governance is a mess right now. A govt sending a message like this while collecting tax in parallel from the same system is a contradiction to me.
To start with RBI needs to sit with IT dept. And please include some CS professors.
>Accordingly, the RBI has constituted an interdepartmental committee that will submit a report on the feasibility of a fiat digital currency. The committee will submit its report by June-end.
Man, I really hope they consider Taler. No blockchain bullshit, but it would be really nice to have a privacy-first digital currency launched in .in
I've said this before but it bears repeating: GNU Taler wants to give the government a backdoor. That's privacy in the same way the Clipper chip in the 1990s was privacy.
The matter is not entirely clear from the article. Surely they aren't banning individuals from holding bit coins? What does regulated entities even mean: I don't think they mean bitcoin exchanges because they aren't regulated; probably it means banks.
The irony of all these banks and governments banning crypto currency purchases is that all they are doing is strengthening the use case for crypto currencies to begin with. One of the most appealing things about crypto currencies (specifically decentralized ones) is that you are free to hold them and use them however you like.
There aren’t restrictions on who you can send them to, what time of the day you can send them, the maximum amount you can send. You don’t have to worry about your bank account being frozen or suspended. You don’t have to wait days for transactions to go through. You don’t need a bank account at all to store them. The more that banks restrict the way people are allowed to use their money, the more it will push people into crypto currencies.
State backed crypto currencies are unlikely to succeed in the same way that decentralized ones like Bitcoin are because central control allows the bank or government to print as much as they would like and alter transactions however they see fit. It’s unlikely there will be any sort of public ledger/blockchain or accountability. Eventually people will catch on to this and figure out a way to move back to Bitcoin and others. It may take 10-20 years or longer, but I don’t think this charade is going to last forever.
In addition, I am always wary when banks do things like this citing reasons like: “Our goal is to protect our customers. It’s too volatile. It’s used for money laundering.” Banks have never and will never care about their customers. In fact, they benefit from their customers going into debt (credit card fees, loan interest, overdraft fees, etc). How concerned were the banks about issuing loans to customers leading up to the 2008 housing crisis? Money laundering is still primarily done using cash and often with banks turning a blind eye.
This is all about banks understanding the threat of crypto currencies and trying to maintain control of the financial system by eliminating any and all competition. They know that widespread crypto adoption will make them obsolete. I think this battle will go on for years, but I think eventually the banks are going to lose. It’s possible that they already know that too.
>They know that widespread crypto adoption will make them obsolete.
Could be true. But are we seeing adoption grow? I see a lot of merchants ending support for bitcoin and other crypto-currencies. I think more people use it as a speculative investment than as a currency right now.
Agreed. It’s a long game. The market cap of Bitcoin is still minuscule compared to other markets. If you look historically the volatility has decreased as the price has increased and I expect that will continue. I consider Bitcoin in a price discovery phase right now which could continue for another 5 or 10 years or more (assuming the powers of the world allow it to).
The lightning network and other software will solve many of the issues with regards to transaction fees and delays. I think adoption will eventually come back.
For people to be "pushed" into cryptocurrency they need to encounter a situation where they want to do a financial transaction and their usual payment systems don't work. How likely do you think that is?
I disagree with that. For people to be pushed into cryptocurrency, it has a lot more to do with debt and inflation and problems with fiat currencies. I didn’t mention that in my original post because I wanted to focus more on the technology aspects, but I believe the monetary aspects will be the real catalyst that ultimately causes adoption.
The fact is, if you hold your savings in USD in a bank account with close to zero interest rates, your life savings will be worth less every single year (purchasing power, not dollar amount). With a deflationary currency such as gold or bitcoin, that is not the case. I think as people realize this, it will eventually become a self fulfilling prophecy where people are pushed into cryptocurrencies as a hedge against hyperinflation (it is already happening in certain countries such as Venezuela).
It stands to throw off the entire balance of power in the world which is why people in high places are trying to slow it down and prevent it from happening, but I believe it is just putting off the inevitable. That is why I am saying it wont happen today. I said 10 to 20 years as an aggressive estimate, but in reality it could take 50 to 100 years.
I also believe the entire surge in Bitcoin and crypto and subsequent crash may have been orchestrated by big players in order to shake the public’s confidence and trust in these markets to push adoption farther down the road.
Bitcoin is not "deflationary". It's lost roughly the same amount of purchasing power since around Christmas as the USD has in my lifetime.
The difference between the USD and BTC isn't that one loses value every single year and the other doesn't. It's that one is actively managed to ensure it retains ~98% of its purchasing power over the course of the year and the other isn't.
That 2% fall really isn't such a huge deal for people that want instant access to the only money their creditors are required to accept, the only money they can pay their taxes in and the only money that's widely accepted elsewhere. (Other assets might actually gain purchasing power more often than not, but can also fall relative to that impending tax bill)
Most of the world's wealth is stored in assets which are not money or bank accounts anyway. And if people want to hold all their savings in something with a better return than their bank account, then bonds and stocks have been around, fungible and convertible to cash via apps for a very long time and payment app-ized versions of those are a far more plausible alternative to traditional banking for the average person than intrinsically worthless cryptographic signatures "mined" in China and shilled for on forums. The only thing unique about cryptocurrency as an economic asset is that it has no legal tender status and zero income stream, rights or assets attached to it. There might have been people orchestrating surges and crashes, but that's pretty much the best case scenario for assets which people have no reason to value at all.
Clearly my opinion is quite unpopular. I am fine with that. If you gave me $10,000 today and gave me the option to put that money anywhere: Stocks, Bonds, Savings, Gold, Silver, etc. I would choose Bitcoin 10 times out of 10.
Yes, Bitcoin has lost a lot of value since Christmas, but it is still up around 600% from last year. I am taking a long term view here. It is unfair to criticize Bitcoin’s decline because in terms of an asset class it is still miniscule. I consider it in the early price discovery days. Amazon stock declined from $107 to $7 around 2000-2001 so you could make the same argument that buying Amazon was a bad investment then, but you would look pretty dumb today. For reference, just last year, Bitcoin’s market cap was around $15 billion. That would be the equivalent of buying Amazon at around $32 based on the current price.
The Bitcoin volatility will stabilize over time, and I think it will become a legitimate asset class. I would like to ask you in response to
> There might have been people orchestrating surges and crashes, but that's pretty much the best case scenario for assets which people have no reason to value at all.
Why would you say that fiat currencies have value (other than because the government says so)?
> Why would you say that fiat currencies have value (other than because the government says so)?
This is a good question. Two reasons. Firstly there are many people who must obtain dollars in future to repay debts (all new dollars are created as someone's debt) or to pay taxes of around a quarter of GDP per annum. Secondly, central banks actively intervene to decrease supply when purchasing power drops faster than they desire. Since people need dollars, others will be able to purchase things they sell with dollars.
Bitcoins on the other hand are created permanently, and BTC-denominated future repayment obligations are tiny in relation to supply. Since virtually nobody needs Bitcoin there is little reason other than optimism for value to remain above zero, never mind increase over time.
AMZN was not the only stock to drop in 2000-1. Enron also dropped. Bitcoin does not have the properties of AMZN (a legal claim of a share of ownership of a business which has since become very successul indeed) but does have similar properties to those of Enron share certificates after the company was wound up (people have spent money acquiring them, their authenticity is verifiable and they cannot be duplicated, but they grant no claim on any tangible assets or income stream and thus are only worth what some Enron-certificate-enthusiast is willing to pay for them)
Your post forgets to mention the negative aspects of deflationary currencies, though. If your money is going to be worth more tomorrow, and thus goods would be cheaper, you're going to push off purchasing things. People continuing to do this means that the makers of goods aren't selling, and therefore aren't making money. Thus, they have to cut expenses, meaning laying people off.
Using the boogeyman of hyperinflation is also rather dishonest, as that takes much, much more to happen than just the 2% inflation target the Fed has.
But if you're talking about long-term savings, people don't normally keep their life savings in cash. There are an enormous number of possible investments.
I can envision a cryptopia when we have city-states with commerce as the engine of interaction and integration. I do not see cryptopia when Nation-States and their huge navies/armies lumbering around the globe.
You are right in highlighting the issues with current financial systems. But what is the basis for assuming that a decentralized and unregulated system will be way better in addressing all the issues you have highlighted?
Even if you keep aside the regulation aspects, there is no assurance that money kept in a cryptocurrency account is safe. The fact that bank accounts are insured is a big deal. Nobody apart from the government is gonna sign up for that. And if someone does, they will not do it without tracking the flow of money.
They're not banning cryptocurrencies, though. They're just saying that the regulated banks, presumably the ones that are insured with taxpayer dollars, aren't allowed to speculate with them.
>There aren’t restrictions on who you can send them to, what time of the day you can send them, the maximum amount you can send. You don’t have to worry about your bank account being frozen or suspended. You don’t have to wait days for transactions to go through. You don’t need a bank account at all to store them.
All of that applies to cash under your mattress.
And "You don’t have to wait days for transactions to go through."? Nonsense. Blockchains don't scale.
If you wanted to pay someone in another country $1,000 would you trust sending that much money in the mail?
> Blockchains don’t scale
This is very shortsighted. I’m not talking about now. I’m talking in 10 or 20 years. The internet didn’t scale in the early 90s. Software by its nature is designed to evolve. I think there is a high likelihood Blockchain tech will rival traditional payment gateways in the next 10 or 20 years.
Zero! That is extremely wishful thinking. Even as a historical artefact Bitcoin will never go to $0. Hell, Bitconnect is still trading at $0.69 with $13,000 volume today. I really hope this is wash trading.
Not 0 due to the cost of printing, but 4.2 trillion Marks to $1 USD in Weimar Germany 1923 is pretty close. Given that they aren’t in circulation now, I think we can assume at least some period of 0.
Cryptocurrency is just high tech money. Governments that ban cryptocurrency just prove that they are obsolete governments.
I know this will sound crazy to most people but one of the things I am hoping to see from artificial superintelligence is for repressive outdated human institutions like the large countries to be replaced by systems that are contemporary and functional.
A friendly AGI would replace so, so much more than just banking or institutions it makes no sense to even bring it up.
And this does not make them obsolete. The government will easily win. Bitcoin wouldn't have near the amount of adoption, even for drug markets if it was made illegal.
I don't get how anyone thinks governments are so weak or powerless. How some fancy math obsoletes or in any way inhibits a coordinated group with weapons and societal backing to use force.
Edit: And I like bitcoin and have been playing with it for years, when CPU mining worked. Enough so that I could retire if I find my all my old hard drives. I think it's cool and I don't buy into the existence of money laundering other than a fake crime used by lazy prosecutors and greedy governments. But still saying that government is obsolete... come on.
Forget crypto, governments are moving towards banning cash which is far more threatening to our liberties.
>Plenty of countries limit exchange of their local currency to other currencies.
This is true, however if those countries (and companies within) take out loans denominated in another currency, and want to pay in their local currency, they still have to worry about the offshore exchange rate via instruments like non deliverable forwards.
I wouldn't be surprised in the next coming years if NDF markets expand to using cryptocurrencies to enable even greater speculation on those local currencies.
How should India tax people? Society and government won't succeed without income to provide for things like police, military, inspectors to make building construction safe, food inspectors. It's just crazy to think that we can just live in an anarchy where only rich people can afford safety.
You'd think that country that has issues with tax compliance and has already done things like removing large denomination bills would want to move to a fully traceable currency.
Furthermore it would make even more sense that it would use a currency of its own creation rather than one that isn't under its own control.
I think most of finance has accepted that cryto currencies are the future, it just won't be bitcoin or Etherium but rather a currency for each country/region just like fiat currencies we currently have.
Cryptocurrencies don't make any sense unless they're decentralized and not controlled by governments. That's where the value is. Bitcoin has value because it cannot be controlled, printed (inflated) or easily confiscated. It gives financial sovereignty and freedom.
But, it's not for everyone. You obviously believe that governments need to control finances. That's fine. I think most people don't want freedom. But there's certainly SOME percentage of the population that really want and value freedom. That's why Bitcoin has and will continue to have value.
There's a meme that hashing power is equal to control, but the truth is that having a hashrate majority gives you a pretty limited set of powers, and if you abuse them you will see people flee to other cryptocurrencies or systems.
> don't make any sense unless they're decentralized
Things that make sense decentralised to service freedom have a track record of becoming centralised to service convenience. Source: The Master Switch by Tim Wu.
Devil’s advocate: Financial freedom requires freedom from forceful confiscation. Thus, without a military backing of some sort, perhaps by the sovereign nation state the crypto’s owner resides in, cryptocurrencies will always be vulnerable to real-world regulations and bans.
Forceful confiscation is pricey if you don't know whom to confiscate it from and how. A person may not have bitcoins. Or he might have it stored securely in another country to which he doesn't have immediate access. Those who have a lot already prepared themselves accordingly. And confiscating a little from many people is really pricey.
Confiscation is, as you've identified, fruitless. Only governments without level-headed leaders will try.
Global regulation remains a risk for cryptocoins. If the only remaining utility is the black/grey market, cryptocoins become much less valuable and will end up losing a lot of interest.
I agree that confiscation requires knowledge on who the owners are and rough amounts they own. With that knowledge, physical threats to demand exchanging cryptos for safety or freedom could be used quite efficiently depending on the laws and customs of each country.
The fact that the assets may not be easily traceable make them a more lucrative target for criminals to use unlawful threats against innocent owners as well.
>I think most of finance has accepted that cryto currencies are the future, it just won't be bitcoin or Etherium but rather a currency for each country/region just like fiat currencies we currently have.
We don't know what the future will bring. But each country with its own cryptocurrency doesn't look like an equilibrium to me. I don't think that advance economies will ever fully outlaw bitcoin, so if it, in fact, becomes a store of value, developing economies will eventually adopt it, even if it's behind their government's back.
Could you please explain why will the advance economies never fully outlaw it? As far as I can understand, till bitcoin is a niche miniscule part of the economy, they might not care. But if it starts to become mainstream, I don't see how being developed or undeveloped would make a difference? All governments want to have control over the currency...
Due to the fact that most advance economies are also advance democracies. I agree with your point, that government's will certainly try to regulate it but I don't think they will outlaw it. They may regulate it enough, so it never becomes a medium of exchange, and therefore it doesn't turn into a threat to sovereign currencies.
But I don't think they will fully outlaw it, since there is no reason to restrict the options that citizens have to invest in. If people can invest in wood or orange juice futures, there is no reason, not to allow them to invest in cryptocurrencies.
Governments don't outlaw all speculation (which is what cryptocurrencies currently are), or for that matter actual investments for the most part. They regulate them to ensure that mostly people aren't being robbed blind, and they want their cut (i.e. taxes).
So long as you aren't hoping to use them as a tax fraud scheme I don't see why you would expect the government to want to shut it down. If you do hope to use it as a tax fraud or the like, you're likely in for an unpleasant time once the slow-but-steady process starts to focus on that.
With decentralized and automatic currency exchanges, a large number of cryptocurrencies that you can easily exchange is no problem at all. The more the better :)
India's biggest problem is unofficial economy and low tax base, and is trying to expand tax base and trying to get more and more people into formal economy. Cryptocurrencies are not really tax-base expansion friendly even if regulated. So this makes sense from the point of view.
The interesting part here is Government of Andhra Pradesh is a member of Ethereum Enterprise Alliance, so now how are New Delhi and "Amaravati" going to deal with this situation would be interesting.