Within few years crypto will be mainstream in India, and with regulation, cryptocurrency will have a superior edge over China and the US markets.
During the last few days, cryptocurrencies have made headlines for their escalating prices. The prices of Bitcoin and Ethereum have tremendously grown. One of the reasons being big market players like Tesla, MasterCard and Paypal having heavily invested in Bitcoin recently. The world’s most popular cryptocurrency ‘bitcoin’ today stands at $52747 per bitcoin as compared to $7934.52 on the same day last year, which indeed says that the price of bitcoin has increased by approximately more than 500% over last year.
What is cryptocurrency.
The very first cryptocurrency system in the world called bitcoin was invented in 2008.
To understand the cryptocurrency, lets first dive into the history of currency. The first form of currency this world has known was called Barter system, where people traded things for things or things for services and vice a versa for example a milkman will trade milk for bread to the baker. The values of the exchanged materials were inherent to their nature. Next the physical currency like coins and notes came into the picture. Then came the digitization era where the coin and notes were converted to credit cards. Until now, with cash, notes or credit cards, there was the centralized system like governments and banks which controlled the money.
In this digital era, and with all the progression made, today we are talking about a huge paradigm shift where we are entrusting a digital system to create money and to handle all the monetary transactions, instead of banks and governments.
How does the cryptocurrency work.
Cryptocurrency works like a network of aunties in every colony in India. Let’s say Sharmaji’s daughter elopes from her home overnight and gets married. Aunty A would get the news and will update aunty B. Aunty B will then update aunty C. Now let’s say aunty B makes a mistake and informs aunty C that its Guptaji’s daughter who has eloped. Since Aunty C is also in touch with aunty A, aunty A will correct her and thus each aunty has the updated information or ledger for the entire colony.
Now similarly these aunties are the computer system in a network which talk to each other about all the transactions. In the case of physical money, the aunties are the banks and in the case of cryptocurrency these aunties are the computer system. Every computer in the network confirms the transaction, thus making the system robust and fool-proof so that no one can trick the system. Cryptocurrency is nothing but a key of digital characters in contrast to the physical money, which can be owned by anyone. Like gold, these keys or coins in case of bitcoin are limited in the system, and will never exceed 21 million.
What does the government of India think about cryptocurrency.
In 2018, the reserve bank of India (the central bank and the regulatory body) had advised against dealing with crypto currencies due to the risk of increased frauds. However, in March 2020 the Supreme Court ruled against the RBI ban. Current news is that the country’s finance minister Nirmala Sitharaman said that she wants to foster innovation in crypto. To regulate the crypto, the Cryptocurrency and Regulation of Official Digital Currency Bill, 2021, will be introduced to launch any official digital currency and bolster an ecosystem around it.
What is the future of cryptocurrency in India.
India is one of the fastest-growing crypto markets. Indians hold assets worth over $1 billion in this space and have about 350+ start-ups. As said by Elon Musk “Crypto is inevitable” and with a very positive outlook form government of India for regulation, Indian crypto currency market will of-course see a sunshine. After experiencing recession due to the mishaps from the governments and big banks like lending bad loans and failures to pay the same, and experiencing sudden ban of five hundred and thousand rupee bills, the millennial’s are gradually developing trust in crypto urrency, as its major advantage is being “decentralized” and government/banks not having a power to trick the system or take advantage of the same.
Another major advantage of crypto is “no involvement of the middlemen”, which will lead to save large amount of remittance fees for cross-border payments as number of remittances by Indian immigrants has been the highest in the world. Most Indians will choose to first convert rupee to bitcoin and then to any other currency, as this will save them the conversion cost. Due to all these factors, India saw the highest increase in the number of the newly registered users for cryptocurrency. Also, new crypto exchanges are launching in India, encouraging trading of cryptocurrencies, like bitcoin (BTC) and tether (USDT) against the Indian rupee via several payment channels. India can become a pioneer in cryptocurrency tech space due to its achievements in fintech space and having a base of brightest computer science students and can lead the fintech innovation and with govt having a positive outlook.
Within few years crypto will be mainstream in India, and by regulating cryptocurrency it will have a superior edge over China and the US markets.
About the author:
Rajendra Valllecha is a Senior Business Analyst at Atos Syntel Europe Ltd. and also the CTO at dhyanful.com, a digital product start-up focusing on meditation and mindfulness. He has also successfully designed and implemented the entire digital platform of carjasoos.com, a start-up focusing on buying and selling cars.