In India, a digital currency can be used as a medium of exchange by mutual consent. Legally this can be considered a barter exchange. But for it to gain economy-wide acceptability like cheques, credit cards or digital wallets, it will need some sort of a regulation or a "killer app", such as a widespread goods or service provider accepting it as a payment system. This could be the government itself—highly unlikely anytime soon—accepting payments in Bitcoins (or other digital currencies) or platforms like Flipkart or Amazon. It is unlikely that Bitcoins or other related currencies would become acceptable on a large scale within India in 2018.
In 2018, it is possible that exporters or importers might start using Bitcoins for specific types of transactions if they become acceptable in the target countries they do business with. Of course, compliance with FEMA will have to be kept in mind, but it is possible to structure transactions in a compliant manner.
currencies like Bitcoins. Some might also suggest that an official RBI or government-backed cryptocurrency like RupCoin be floated. Of course, this seems to conflict with the original idea behind Bitcoin where a distributed ledger not controlled by any central authority issues the currency.
The problem with a central authority is that it is prone to intentional manipulation by those in authority or to hacking by those not in authority but being able to target the efforts towards the central ledger. Bitcoins are based on the Blockchain technology. Blockchain technology maintains a "distributed ledger", i.e. it is a non-centralized ledger with potentially millions or billions of copies. The whole peer-to-peer network would have independent copies of the Blockchain ledger which is authenticated by the whole network itself. So there is no centralized authenticating authority or ledger and hence hack attacks or authority manipulation is not possible.
Within 2018, it is likely to become more and more widespread as an instrument for speculation. With easy money seemingly being made, more and more people would explore ways of owning and trading Bitcoins or other new cryptocurrencies. It is likely that the mania can spread further and SEBI will probably have to step in to regulate it or at least clarify its stance on how to allow people to lose their money through trading in a safe way; i.e. allow people to lose money via trading mistakes and stupidity but not to outright fraud. Clarity on taxation is also not there, but until it is defined clearly as a security by SEBI, or currency (whether domestic or foreign) by RBI, it is likely to be treated as an asset on which capital gains will have to be paid.
So far, we have only addressed the visible and widespread uses of Blockchain as currency and speculative instrument. The most important and beneficially disruptive use of Blockchain is for transactions. It is likely that smart contract platforms will emerge within private ecosystems, probably backed by some large financial institutions, which will allow the participants to transact with each other.
Bitcoin is a specific use of Blockchain technology to issue a currency. However, Blockchain can be used to replace all transactions or interactions which required a central authority to authenticate. Now all of that can be done, in principle, using distributed ledgers on Blockchain.
