The Present and Future State of Bitcoin in India
People started using the Internet because it was gave borderless, permission-less, fast and cheap access to the world’s information and communication. Similarly Bitcoin enables borderless, permissionless, fast and cheap access to the world of finance.
Bitcoin is the Internet of money...
After the 2008 financial crisis and the current global financial crisis, the world is increasingly realizing the weaknesses of our current financial system. A majority of central banks in the world now have 0 interest rates. Countries like Russia, Latin America have seen record breaking currency devaluations.
Bitcoin provides the vision of a new era in the financial world. By purchasing bitcoins, it allows ordinary people to protect themselves from the possibility of a sudden drop in the purchasing power of their money because of a debt ridden government.
The current western financial infrastructure based on banks, credit card companies and a mish mash of different payment networks is at a very early stage in India. 60% of our population is unbanked and credit and debit card penetration is in single digit percentages. Our PM and the RBI both have financial inclusion as a top priority.
Just like mobile phones helped India skip the landline generation in connecting a billion Indians, embracing Bitcoins can help India skip the current generation of financial infrastructure and move India directly to the future of finance.
A financial infrastructure based on Bitcoin and its underlying technology Blockchain will herald a revolution just like the Internet. Very similar to the Internet, Bitcoin is a free to join, open source, decentralized network. Bitcoin is a sound currency which has all the best characteristics of sound money. And the Bitcoin network is the fastest, cheapest and easiest way to send money from one person to the other.
Already progressive governments like the UK and Singapore are pro Bitcoins and trying to attract Bitcoin companies to operate in their jurisdiction by providing them favourable working conditions.
State of Bitcoins in 2016
Since the beginning of the year, global economic landscape witnessed a disastrous start with all major stock exchanges around the world taking a nosedive. Some respected financial services firms like UK’s RBS have even suggested their investors to sell everything. They have predicted a global recession, worse than 2008 comparing the current scenario with that before the Lehman Brothers crises.
The world is in an unprecedented economic crisis with the value of commodities and currencies nose diving. In such gloomy situations, investors will prefer to diversify their portfolio, especially where the future lies. Since the supply of Bitcoins is fixed, its increasing demand has pushed the price of Bitcoin from a few Rs in 2010 to more than Rs 25,000 currently. In the next 5 years as the supply reduces further and more and more people adopt Bitcoins, the price is expected to scale new highs.
Generally, when market is going to witness some sort of scarcity or controlled supply in a promising concept – like Bitcoin, the demand starts rising with positive sentiments. That said, markets start making speculative moves and this pushes its price upwards thus building pressure to grab the opportunity and get share in the revolutionary future.
Global Bitcoin trade is skyrocketing touching 35 billion USD per month in December 2015. Billion dollar companies like Dell, Expedia, Overstock, Rakuten (Japan’s Flipkart) have started accepting Bitcoins on their websites.
Bitcoin companies raised almost 1 billion USD in VC funding in 2015. All the major banks and credit card companies have got involved with Bitcoins last year. So in just 6 years of its existence, Bitcoin has achieved spectacular success.
In India, Bitcoin adoption has had a slow start but awareness is growing rapidly. Bitcoin trade in India grew exponentially and is at an estimated Rs 500 crores per year. There are around 50,000 Bitcoin wallets in India and around 700-800 Bitcoins are traded everyday.
RBI, in its recent report on financial stability, has appreciated the strengths of the underlying ‘blockchain’ technology.
India’s leading law firm Nishith Desai Associates and the Center for Internet and Society, both have published white papers stating that Bitcoins is legal in India under all existing laws.
After early adopters, Bitcoins is attracting a new class of users like professionals, HNIs and all institutions. As the Bitcoin community matures, we shall see an increase in the quality of analysis of Bitcoins price.
Users are now using bitcoin for eCommerce, airtime top up, paying bills, buying gift vouchers from popular online retail sites. Bitcoin transactions in India are about Rs 500 crores a year. We believe India will see an explosion in bitcoins over next 2 years.
China does a volume of more than Rs 10,000 crores per ‘day’ (no typos here) India is where US and China were in 2013. About 40% of the population across the country does not have bank accounts. Bitcoin wallets could be used in remote areas without the need for brick and mortar banks.
India is the world’s biggest remittance market at more than $70 billion. The majority of the remittance is small amounts of around $200. For small amounts especially, users end up paying up to 15% in fees to companies like PayPal, Western Union or to banks through transfer and exchange rate fees. Bitcoin makes it extremely easy to send a small remittance back home. This could save India upto $7 billion in fees paid to third party and add to country’s wealth.
India is perfect as a society to be at the forefront of developing a vibrant crypto-currency economy.
About the Author: Mr Sandeep Goenka, co-founder Zebpay, a Bitcoin marketplace in India.