In a wide-ranging interview with CNBC-TV18, former Reserve Bank of India (RBI) Governor Raghuram Rajan shared his views on the valuation of cryptocurrencies, the problem with regulating them, and what can governments do to address this rapidly growing financial sector. His views come as the Indian government is looking to introduce the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, during the winter session of the parliament, which is set to begin on November 29. While there is a lot of confusion as to whether the government will outright ban cryptocurrencies or take a more lenient approach, one thing is for certain: the discussions on cryptocurrencies are only getting started. Where do cryptocurrencies get their value from and are we in a bubble? Cryptocurrencies have two sources of value: Rajan explained that cryptocurrencies currently have two sources of value: It is a store of value that people buy as an asset thinking it will appreciate. But the underlying source of this appreciation is that; It can be used as a form of payment We do not need 6000 cryptocurrencies for payments: "Do we really need six to 6000 cryptocurrencies to do payments? One or two, maybe a handful are what are going to survive to be used as payments, even if the technology is so useful that it substitutes for cash and fiat currency issued by the central banks. So that would suggest that most cryptos are unlikely to survive with high values going forward because there's no use case for them"…
