Cryptocurrencies banned, RBI's July 5 deadline now in place

With the Supreme Court refusing to overturn RBI ban on lenders from dealing in cryptocurrencies, all the banks and financial entities will stop operating accounts linked to virtual currency trade from today

Cryptocurrencies have witnessed a massive fall in prices since they hit a peak in December last year. Bitcoin, by far the most popular cryptocurrency, is currently trading around $6,493.77 as compared to its peak price of over $19,000 - a loss of two-thirds of its value from the peak.

Other cryptocurrencies have witnessed a similar steep fall in their prices over the last quarter as investors have pulled out of the market.

At their core, bitcoin and its imitators are sets of software protocols for generating digital tokens and for tracking transactions in a way that makes it hard to counterfeit or re-use tokens. It's not recognised by most main street stores.

Bitcoin has come a long way since its birth in 2009. It has emerged as a popular alternative to fiat currency in certain parts of the world where fiat currency has lost value (Venezuela or Zimbabwe), or where banks are few and far between (remote areas of Africa).
Even in the developed world, countries like the US, South Korea, and Japan have shown willingness to integrate Bitcoin and other cryptos into their financial systems by setting up regulated markets.

Many experts have viewed the rise of bitcoin and other cryptocurrencies as a massive bubble. Goldman Sachs warned investors in February that most cryptocurrency prices are headed to zero as they lack intrinsic value. Cryptocurrency enthusiasts, on the other hand, view the crash as just another healthy correction.

Despite slumps and falls, Bitcoin and likes have found increasingly positive voices across the globe. It remains to be seen whether it will actually increase in value significantly until the end of this year or whether it will remain around the current level. Many of the other cryptocurrencies have been consistently rising in the past couple of weeks.

The government in India has always expressed its uneasiness with virtual currencies and cautioned investors since 2013. The RBI has had cautioned users against potential security threats.
The government and the RBI have issued several warnings against dealing in cryptocurrencies including Bitcoins, the former even comparing it with a Ponzi scheme.
Now, the RBI has finally pulled the plug on cryptocurrency exchanges from July 5. The RBI's circular directs banks against offering services to exchanges, pushing them towards a P2P or peer-to-peer exchange.