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National ID Programs In Practice: Aadhaar Card & Its Analogues

Nearly a decade after its inception as a national identity registration system, Aadhaar ID enrollment is now mandatory for taxpayers who file their returns in India. The Finance Act of 2017 required all taxpaying members of the public, including foreigners residing or working in India, to include their Aadhaar ID number in the tax filing process.

 

Aadhaar, a Hindi word that means a ‘strong foundation,’ is a card that assures its holder access to all government-sponsored programs, which benefits both the needy and those who are more privileged. It serves as a verified proof of one’s identity as a documented resident of India.

 

Since July 2017, it has become mandatory for all working people in India to link their Aadhaar number with their Permanent Account Number (PAN). However, an exemption is made for people residing in India for fewer than 182 days in the 12-month period immediately preceding the date of enrollment for the Aadhaar identity form.

 

 

These include:

 

  • An individual who is not officially a citizen of India.
  • Any individual who is 80 years of age or older during the previous year.
  • Individuals permanently residing or working in the states of Jammu and Kashmir, Meghalaya and Assam.

 

Who can receive an Aadhaar ID in India?

 

Anyone who is residing in India for six months or more can apply for an Aadhaar card if they can provide all the required documentation and identity proofs. Even foreign citizens are allowed to apply for the Aadhaar card, given they fulfill the required conditions and provide the authorities with sufficient information.

 

Fraud prevention and privacy protection

 

There were 19.3 million Aadhaar cards issued in New Delhi, the capital of India, alone, which accounts for a population of 17.6 million. In addition to pervasive fraud, the privacy of users can also be compromised, which confirms the need for a foolproof system that prevents misuse and protects privacy. One way it can be done is through a third party that plays the role of an online auditor.

 

 

Verification Id’s in some countries across the globe

 

Brazil

In Brazil, the Indian Unique Identification Authority Of India (UIDAI) counterpart is known as The Brazilian Association of Digital Identification Technology Companies (ABRID). Its identity card verifies citizenship and is considered a valid form of ID to clear various government processes.

 

Indonesia

The national identity program in Indonesia is known as Karta Tanda Penduduk (KTP) and its electronic version is called the eKTP. Here, the identity card is embedded with a smart chip and its overall features are a combination of Indian Aadhaar card as well as the one used by China. However, there are separate versions for non-residents.

 

Ghana

Ghana has an issuing entity, known as the National Identification Authority (NIA). Its program was first initiated in the country in 1970. The primary purpose was to cover all the nation’s residents, including non-Ghanians, and also enable secure banking transactions.

 

Malaysia

Malaysia operates one of the most advanced forms of national identity cards in the world. It was one of the first countries to initiate a biometric security system that comes with a computer chip and photo identification system in a single card. The Malaysian MyKad can be used as a digital wallet, a driver’s license as well as an ATM card. A MyKad is a compulsory identity card, required by all citizens over the age of 12. This was first introduced in September 2001 by the National Registration Department, as a replacement for the High Quality Identity Card.

 

 

Bitcoin With Vigilance Is Worth The Risk

Following the substantial increase in the value of the digital currency market, Bitcoin has transformed the traditional medium of exchange. Bitcoin is a virtually existing form of currency for making digital transactions and payments. In recent years, its value has reached new peaks and is proving itself better than the conventional system of currency exchange in some key ways.

 

There is no doubt that risks are involved in a Bitcoin-based transaction. But many benefits are just as apparent. Bitcoins eliminate intermediaries. The value of a Bitcoin is decentralized; it does not depend on a few fund-controlling parties like banks in the case of standard currency exchanges. Bitcoin has owners and the flow is distributed. There is no possibility for the fall in its value by manipulating its supply. The reason is that Bitcoins’ increase in value takes place at a stable rate and is limited by a quantity of 21 million units. It is created and then divided every four years.

 

Bitcoin is free of service charges. This means that there is no single proprietary entity that holds its rights – it’s an open source of technology. The currency is free to be exchanged using a private key, making it a safe and reliable source to trust as well as invest in. Bitcoins provide its customers an open market to invest without any rules and regulations set by the banks or government. Notably, Bitcoins are valued on par with gold. So cross-border transactions are also easily possible using Bitcoin.

 

Bitcoin ensures the protection of one’s privacy. It is nowhere linked to one’s name or address, so if a person wants to stay incognito, he or she can make the transaction through a Bitcoin account, which is numbered. Therefore, no one knows who holds a particular account. Also, one entity can possess more than one account. The downside is that this anonymity equally promotes some illegal activities and makes it difficult for authorities to track down someone making payments for illegal activities.

 

Online wallet

 

Bitcoin is a great tool for making payments online. It’s like an e-wallet, which allows its users to buy goods and services with any digital device. However, experts are far from unanimous in endorsing its usage and continue to monitor its progress with a skeptical eye.

 

The case of India is instructive, as the country has witnessed an increasing number of Bitcoin exchange users, accounting for up to 5,000,000 downloads of the app. As the user base grows, the pressure on the government substantially increases. There have been a rising number of petitions being put up, one being directed to Finance Minister Arun Jaitley, pleading him to legalize Cryptocurrency and Bitcoin in India.

 

The regulatory norms are still not very accepting towards such foreign currencies and rely more on nation-built modes of payment, especially when some technology is often associated with cyber-crimes, money laundering, frauds, and trafficking. There is a long road ahead, but with smart oversight, the future of cyrptocurrency is bright as demand continues to grow.

 

 

 

 

Bitcoin Means Business

 

Bitcoin has not yet graduated from the niche market to mainstream currency. However, with the increasing digitalization taking place in the currency exchange process, Bitcoin has successfully grabbed the public eye, which has increased its reach across the globe.

Fundamentally, Bitcoin operates on the premise of scarcity. One can purchase Bitcoins online through a process called ‘mining’ or via various cryptocurrency portals. Bitcoin-mining, however, favors the fastest machines, so users prefer to buy Bitcoin by using Bitcoin ASIC, which is a chip specifically designed for this purpose.

Growing curve

As the network of the Bitcoin market grows bigger, competition for buying becomes tougher. The system is designed in such a way that the virtual currency will never exceed 21 million – currently, 17 million Bitcoins are in circulation. With the rise in its market value and also the limits of scarcity, there is a constant demand for upgraded systems and advanced techniques.

Meanwhile, governments worldwide are avoiding the usage of Bitcoins in the mainstream market due to the cryptocurrency’s reliance on anonymous payments and purchases. One can make payments online without using a formal name or providing other vital information like a bank account or an ID, which could lead to an increase in dark web crimes like hiring assassins, purchasing illegal weapons or narcotics, money laundering, trafficking and more.

Following the recent withdrawal from the market by China, which accounted for almost a quarter of Bitcoin trading, there was a steep fall in its network. Citing cryptocurrencies’ linkage with web crimes, the governments of countries like China are still skeptical about adopting this system.

Why is this futile? Massive transactions conducted using Bitcoins cannot be stopped or frozen by governmental authorities since there are no bank accounts involved.

Chinese authorities fear that the increasing network of Bitcoin can spell financial trouble for the banks in future. Hence, China has banned such exchanges and trading practices.

 

Impact on India

With the recent advent of Crowdfunding, Bitcoin, FinTech-based industries and Blockchain technologies, India has taken steps towards becoming a digitalized nation. The system has also been hailed by major investors. R. Gandhi, Deputy Governor at the Reserve Bank Of India, recently addressed a gathering where he stated that these digital currencies are still in their nascent stage but will one day become an established part of the exchange module.

As for now, Bitcoins have a long way to go before they are adopted by a majority of the Indian population.

A government-authorized grievance cell or a fixed framework for such new concepts keeps this virtual currency under surveillance. These tend to pose financial and security risks, so national authorities have to be cautious at all times.

Any perpetrator of crime has to be held accountable under stringent laws that need to be formulated vis-à-vis Bitcoins and other cryptocurrencies.

Until the time comes when a majority of the people gains more confidence in these currencies, authorities need to remain vigilant at all times. Crime fighting must be a top priority for all government regulators and the community, but that should not stand in the way of innovation.

The Expansion Of India’s Aadhar Program

Aadhar is the largest national identity registration program ever conceived in India. It’s a nationwide program launched in 2009 that is now covering almost 99 percent of the country’s population – nearly 1.13 billion people.

The purpose was simple: it was designed to get more identities registered under the direct supervision of the government. It aims to identify every identity in India so that corruption is rooted out from the ground up.

In a developing nation like India, administering basic functions like opening a bank account or accessing various government programs is difficult for some people. This is largely due to the lack of basic forms of identification, like a birth certificate. The purpose here was to eradicate this obstacle by launching a single identity card that was acceptable all across the nation for every citizen – the Aadhar Card.

By all measures, this program of the Indian government has been a success. After almost a decade since its initiation, it has increasingly linked different services, including banking, Internet, marriage and registrations. As a single ID linking a range of different services, it has proven to be a great achievement.

Also, for hiring different services like cleaners, drivers and other support staff, the Aadhar ID authentication serves as an identity verification tool for prospective employers.

Scope of expansion

The Unique Identification Authority of India (UIDAI) is further broadening the scope of Aadhar – by allowing third parties for specific companies or agencies to join the process of identity authentication. Currently, access is limited to banks and government entities. By transferring the access to the agencies under the norms by e-KYC, these agencies will be able to access the name and address of the Aadhar ID holder and store the required information.

 

According to reports, there are already around 330 authentication and validating service agencies in the country. Also, almost Rs 1,110 million transactions have taken place, including by telecom service providers like Vodafone, BSNL, Airtel and others, since the initiation of this service by the government.

 

Privacy, security of identity

Given the growing dependency on this form of identity verification, the UIDAI is increasingly encouraging all Indians to participate in a bid to oversee citizens residing in the nation in a much better, organized manner. Also, it will provide a layer of protection against any unlawful entry of non-citizens or potential terrorists. This will thus curb infiltration at the borders, adding to the existing security framework of the nation. This system also helps to minimize the number of people using multiple identities.

 

The central Indian government has taken the mandatory step towards making Aadhar card a crucial identity requirement, which is especially valuable considering the country’s international borders. It is customized to address the unique identity movement of those in the country.

 

Crucial questions

However, a few crucial questions remain: Who should be trusted with the responsibility to verify the identity of an individual? Should the subsidiary agencies be given the authority to be managing this task? To ensure greater effectiveness of this project, the government should exercise caution.

 

Banking on India’s Financial Literacy

The importance of citizens in India – and all over the globe – having accounts at banks or financial institutions cannot be overstated. The current banking rules require that a person provide proof of residence and have a face-to-face meeting with the financial institution’s officials prior to being granted permission to open an account. For people in India’s rural areas, especially in disadvantaged communities with limited transit access, these hurdles stymie their progress as far as opening a bank account is concerned.

In a country of 1.4 billion people, having access to basic financial tools, like a bank account, is still far too difficult. In effect, there are two Indias: one is an educated mass, often living in cities, that can study the available financial options and deposit money in banks according to their needs; and then there is the uneducated poor section of society that often lives in undocumented housing, walled off from access to basic banking facilities. Therefore, this section of the population must rely more on other, inefficient sources for credit, such as moneylenders.

In the early 2000s, massive government programs were launched in order to further regulate the banking system in rural India. However, individuals opening accounts have faced severe difficulties while proceeding through the customer identification and verification processes.

One of the main problems that India faces is that the prospective customers, situated in far-flung rural areas, lack access to basic banking facilities. Also, opening up a bank account without sufficient proof of residence is a cumbersome process. Essentially locked out, many find it more convenient to avoid the banking system altogether. As a result, hawalas – or informal trading networks – were created and have grown in popularity due to the ease with which citizens can access as well as benefit from them. They also end up opting for easier and more traditional methods, including cash transactions.

Another significant flaw with the current banking framework is the way these institutions routinely make profits even as they ignore the poor. Earning higher interest on loans and larger deposits incentivize banks to seek higher profit margins, instead of serving the poor.

Allowing more consumers to open bank accounts with simpler and fewer bureaucratic rules is required to ease the growing ‘Digital India’ complexities. An Indian whose identity has been authenticated, verified and documented via an Aadhaar number should not be required to produce any other form of identification prior to being permitted entry into the banking system.

 

The road ahead

In the recent years, there was a shift of focus towards opening ‘zero-balance’ accounts under various government schemes. The reason behind it was to promote wider access to basic banking facilities. But the no-frills accounts that were opened in this period remained dormant or unused, indicating other deeper problems that were not remedied.

 

Developing countries like India need to focus more on various financial literacy programs. Knowledge of offerings like the ‘Bill & Melinda Gates Foundation Financial Services for the Poor Program’ and other state-sponsored financial literacy programs ought to be imparted through weekly courses that aim to educate the poor, thus increasing their capacity to save money and understand the banking industry. It will enhance their financial literacy by making it a core part of their routine. Digitally connecting the pool of all the underprivileged communities will serve to reduce the rich and poor client gap in the banking sector.

To make a sound financial decision, the client must be well aware of the various financial tools and products that suit his or her preference. Numerous tailoring methods can help them save, and, at the same time, garner access to banking facilities in case of emergencies.

Added to that, just like any wealthy businessman, a rural resident should have the opportunity to yield returns on their savings, while ensuring the safety of their deposits. Thus, knowledge of the best financial tools available is very much required by them as well.

The government, banks and financial regulators need to focus more on removing these common problems that are faced by rural populations, especially in a country like India where the majority is poor. Also, as an identity-proving document, the usage of an Aadhaar card could ensure easy financial accessibility for all sections of the society. Ease of access may result in a flourishing banking sector.

With the government’s recent establishment of norms designed towards digitalizing India, there is now a greater focus on mobile banking for almost 800 million users in the country. Unquestionably, this must be combined with various literacy programs that can create robust progress in the banking sector.

 

The future holds much promise for both India’s banking industry and its potential customers.

 

Should Bitcoin Be Legal?

Ever since the conception of Bitcoin in 2008, its legality has been hotly debated. It’s still common to hear Bitcoin and other cryptocurrencies described as “criminal money” by people who have heard about its use on the dark web, and those claims are, indeed, legitimate.

That being the case, it would be dishonest to argue that Bitcoin doesn’t have some negative aspects when it comes to legality. However, it seems that this is intrinsically true of any technology. The question we should be asking is: do the costs outweigh the benefits?

Let’s get started with the element that enables most of Bitcoin’s features — the blockchain. For anybody who doesn’t know, Bitcoin’s blockchain is a public, digital ledger that chronologically records all of the transactions made in Bitcoin. It is built using cryptographic algorithms such that new Bitcoins can be mined (i.e. created) and transactions can be verified without involving a central authority, which is why you’ll often hear cryptocurrencies referred to as “decentralized.”

The blockchain enables pseudo-anonymous peer-to-peer (P2P) transactions. In other words, people can send and receive Bitcoin without involving a third-party or having to prove their identity first. This makes it quick and easy to use for criminals, which is why Bitcoin developed its reputation as “criminal money.” However, transactions are not fully anonymous because the blockchain is a permanent public record of every transaction that has ever occurred with Bitcoin, and so it is possible to analyze the blockchain and to use other information in order to link people’s identities to their Bitcoin wallets and thus to unlock their entire transaction history.

One other drawback of decentralization that can be used to argue against the legality of Bitcoin is that not having a central authority also means that there isn’t a way to artificially stabilize the Bitcoin market in the way that governments are able to stabilize fiat currencies. That leads to extreme levels of volatility and risk for investors, and so it’s possible to argue that governments should make Bitcoin illegal to protect citizens from potentially losing a lot of money.

So the case for Bitcoin prohibition centers around those two issues — criminal use and protecting investors from financial losses. Now let’s look at the positives of Bitcoin and decide if they outweigh the negatives.

Because the creation of new Bitcoins is determined by an algorithm, it cannot be counterfeited. Moreover, there is no possibility for a central bank or government to create hyperinflation of the currency such as what happened in Zimbabwe and, more recently, Venezuela. (https://www.economist.com/news/americas/21695934-venezuela-today-looks-zimbabwe-15-years-ago-spot-difference)

And while the fact that anybody with an internet connection can use Bitcoin makes it popular for criminals, it also makes it a censorship resistant way for people to achieve financial independence in the face of political uncertainty. Not only that, the public ledger provides an alternative to the corruption that might otherwise exist within corporations, banks, and governments.

Finally, there’s the bright side to all the Bitcoin hype and the financial risk that many investors are taking on because of it. That is, the success of Bitcoin and other cryptocurrencies generates strong interest in the technology which promises to drive further innovation that makes our civilization run more fairly and efficiently.

There’s no denying that Bitcoin isn’t perfect. As with any nascent technological or commercial advancement, Bitcoin must be accompanied by smart regulatory oversight that doesn’t stand in the way of innovation. Consumers, businesses, governments, and law enforcement will have to adjust and evolve as the impact of cryptocurrencies spreads throughout society, just as they have done with the internet itself.

There will surely be growing pains. But to render a promising advancement like this unlawful would be shortsighted and unwise. Instead, let’s work together to make the impact of Bitcoin and all cryptocurrencies as positive as it can be.