India slowly waking up to the Bitcoin dawn and here's why
China does Bitcoin trade of Rs 1,000 crore per day. Globally,Venture Capitalists (VCs) from all over are close to pumping in a billion dollars of investment in Bitcoin companies this year.
India was behind in Internet adoption, behind in eCommerce and was behind in the penetration of smartphones. And now India is behind in Bitcoins. The Indian Bitcoin industry today is where Bitcoin was globally in 2012. Users in India are only in tens of thousands and generate around Rs 300 crore worth of trade a year, which is just a fraction of the global Bitcoin ecosystem.
But the times are changing now
A bit of history first - Mahin Gupta started BuySellBitco.in, India’s first Bitcoin Company, in early 2013. Much to his annoyance, I call him the father of Bitcoins in India. Volumes on BuySellBitco.in grew as word about Bitcoins started spreading in India. Later, Gupta suspended trading when RBI released a circular against the use of Bitcoins.
In 2014, a couple of new Bitcoin ventures started in India. The most prominent among them are Unocoin and Coinsecure. They continued to give Indians a way to buy and sell Bitcoins. As the regulatory environment became more encouraging, BuySellBitco.in was restarted as Zebpay.
A handful of Indian Bitcoin companies are now in their second phase. They are close to raising investments and are becoming more aggressive in spreading Bitcoins in India. We just have to look at our neighbour to see the potential.
Contrary to popular belief, Bitcoin is no longer a fringe currency. Microsoft, Dell, Expedia, and Rakuten (Japan’s Flipkart) amongst others have started accepting Bitcoins on their websites. Large banks and software companies like Infosys are working on ways to use Bitcoins. The number of daily transactions on the Bitcoin network is growing. It has already touched 150,000 transactions per day, up from 100,000 in 2014.
5 per cent of India’s rural population has a bank branch. Alarmingly, almost 60 per cent of Indians don’t have a bank account. Further, only 13 per cent have debit cards and a meagre 2 per cent have credit cards. How are we going to usher in the era of financial inclusion for billions with such abysmal figures? The hard fact is that it takes some amount of cost to build bank branches, to open bank accounts, and to issue credit cards.
We are building a mishmash of different payment networks and mobile wallets. As mobile phones helped Indians skip landlines and jump to modern communication infrastructure, similarly, Bitcoins has the power to skip banks and jump to a modern infrastructure powered by Bitcoins.
I am sure that within 2 years, Indian Bitcoin users will be in lakhs from the current tens of thousands. We will also see a few major eCommerce players experimenting with accepting Bitcoins. In my view, users will adopt Bitcoins for two reasons – first, as a potential investment and second, as a form of online payment.
By design, Bitcoins supply will be limited to 21 million Bitcoins. Since the supply is limited and demand is increasing, the value of Bitcoins is expected to increase. The price of Bitcoin has increased from a few Rupees in 2010 to around Rs 15,000 today.
The other reason is that people are using it as a more convenient way to do online transactions. For example, Zebpay allows its users to buy vouchers of Amazon and Flipkart. Users can also pay their mobile or DTH bills using Bitcoins. The first few eCommerce companies have started accepting Bitcoins via Unocoin. As this trend grows, people who cannot get debit or credit cards will use Bitcoins.
Though the adoption of Bitcoins is growing in India, it is being hampered by a myth that Bitcoins is illegal. This has been due to the above RBI circular. Besides RBI, most central banks in the world had released similar warnings in 2013. This was because governments had noticed Bitcoins for the first time. Since they did not understand it well, they issued these general warnings. But most countries have now realized the potential of Bitcoins.
Countries like Canada, UK and Singapore are at the forefront of encouraging Bitcoin companies. Two prominent organizations in India are helping clear this myth – first is Nishith Desai Associates, who is a leading law firm. Another firm is CIS, an organization that led the net neutrality debate in India. Both of them have released white papers stating that Bitcoins is legal in India.
More and more users are looking for ways to buy Bitcoins. Till now, trying to use Bitcoins has been the domain for geeks. To store and protect your Bitcoins has had a learning curve and has scared away non geeky users. But simpler wallets by Blockchain, BitGo and Zebpay are allowing users to use Bitcoins on a day to day basis. Bitcoins worth Rs 5,000 in 2010 would be worth Rs 2 crore today. Like any investment, there are risks. But, I believe, Bitcoins have just got started.
Sandeep Goenka is the co-founder of Zebpay, India’s first bitcoin company. Zebpay is a bitcoin app for non geeks. It is the most popular bitcoin exchange in India.