Reserve Bank of India Backs Blockchain After Warning About Bitcoin in 2013

(FILES) In this photograph taken on January 24, 2012, the Reserve Bank of India (RBI) head office facade is pictured in Mumbai. India's inflation rate unexpectedly retreated to a more than three-year low last month, data showed on February 14, 2013, opening the door to more interest rates to revive a sharply slowing economy. AFP PHOTO/ Punit PARANJPE/ FILES (Photo credit should read PUNIT PARANJPE/AFP/Getty Images)

The Reserve Bank of India (RBI) released a statement this week that they are keen on Blockchain technology, focussing on the ability of the technology to combat counterfeit currency which is rampant in India.

“With its potential to fight counterfeiting, the ‘blockchain’ is likely to bring about a major transformation in the functioning of financial markets, collateral identification (land records for instance) and payments system,” said the RBI.

The central bank pointed out that the traditional system of record maintenance works on the basis of ‘trust’ and the ‘regulatory’ and ‘controlling’ power of central entities and counter-parties. 

“As against this, the ‘blockchain’ technology is based on a shared, secured and public ledger system, which is not controlled by any single (‘central’) user and is maintained collectively by all the participants in the system based on a set of generally agreed and strictly applied rules,” the RBI said.

in 2013,  the RBI warned Indian citizens against the use of digital currencies and it issued a note of caution that focused on potential dangers concerning financial, operational, legal, customer protection as well as security-related risks entailed by the use of Bitcoin.