Bitcoin is the new fad that's slowly becoming part of our daily discussions in India. Many people don't understand exactly what it is or how it is used but they know it's something important. Media in recent times have it made it part of it's daily newsroom discussions in the country. But, we're far from mainstream adoption or even thoroughly knowledgeable about it in our country.
Even as cryptocurrency wildfire took longer than most other places to reach India, it is turning into a raging beast! But there's a lot of ambiguity about it's future here with respect to mainstream adoption owing to lack of any real govt regulations governing it's use.
Demonetisation Snowball
Modi led government demonetised INR 1000 and INR 500 notes on the 9th of November, 2016 and that had a rather unexpected and desirable effect on the 'Bitcoin economy' in India. It put India on the map with trading volumes from India accounting for nearly 10% of global trade at one point after this rather poorly executed move by the government.
But, this is was exactly what was needed to light the fire that would get hundreds of thousands of users signing up on the various exchanges in the country.
Gold or Bitcoin
Indians love purchasing gold and it runs in our blood. The first time I discovered an online service-Vaultoro.com that allows you to purchase and hold gold using Bitcoin, I dived right in! In my city there are a small-size shopping malls exclusively for gold purchases and that's quite common across many places in my country.
Digital gold as Bitcoin has been portrayed often by media has led people to believe that it's a great speculative asset. This has resulted in several traditional investors looking beyond their regular investment options and opt to HODL their extra money in Bitcoin.
The Sky Is Blue
RBI's warning towards use of cryptocurrencies is well documented. However, as I've stated before, a central bank's warning on using cryptocurrencies that was built to disrupt traditional banking is nothing new. It's obvious as the color of the sky!
The government continues to delay on a framework around cryptocurrencies but has allowed the crypto exchanges in India: Zebpay, Coinsecure, Uncoin and others to operate without any restrictions other than mandatory KYC procedures.
Rise Of The Indian Crypto Economy
We're now adding over 200,000 new users on existing exchanges. In fact just Unocoin reported not long ago that they were having 5,000 new signups everyday. Many new exchanges have opened up in the past year and p2p transactions have spiked as well.
Many Indian users are beginning to make most of the partnership between Bitwage and Unocoin. The former is a Bitcoin payroll company and the latter is one of the first few Bitcoin exchanges in India. This has freelancers to use the system to earn a living, and this is certainly helping the ecosystem.
Every rally has added scores of new Bitcoin users and at every dip, many more have bought it. Indians love trading stocks next to holding gold and a few day-traders/investors that I know of personally have begun diverting some of their large investments into cryptocurrencies in recent times.
Bitcoin is supposed to be a mode of payment but in India it is nothing short of a store of value. That's exactly how majority of the users look at it-as something that is likely to continue rising higher in value overtime.
Entrepreneur's Gold Mine?
Entrepreneurs are rushing to the Indian Registrar of Companies (ROC) to register their companies with the word 'Coin' in their names. Interestingly the ROC is granting them licences to operate. However, India is lagging behind in terms of radical development in the world of cryptocurrencies and ICOs. Hopefully, 2018 will see some credible projects from India in this space.
However, many Indian engineers are already working for existing companies in the crypto space. Blockchain technology is being welcomed with open arms as many banks start adopting it for internal use.
Ponziland!
Just 2 days ago someone tried to peddle me some Omnia tech rubbish at the local micro-brewery. This man went on to explain how it compares with Genesis mining, what cryptocurrency and blockchain tech is and how I can profit from it all.
He also went on to explain how this high-yield investment program (HYIP) will give me 10% returns everyday for the rest of my life! I listened carefully without interruption so as to avoid disrespecting my friend who introduced me and bolted away at the first opportunity. Later, I informed my friend about the scam he was selling and asked my buddy to be cautious!
India is not new to these types of scams. We've all fallen for them at one point or the other. It's quite common and sometimes I wonder if people love them over legit forms of investing. However, most traders here are looking for a quick buck and fall for these scams.
This is where paying attention to the various warnings issued by the central bank makes sense. However, most people are gullible and easily fall into this trap through word of mouth references. This is why we need regulations and sooner it arrives, the safer this market will become.
Wolf in Sheep's Clothing
However, the government is hungry for tax payer's money as it launched a wave of raids across exchanges in the country. It has served notices which seems nothing short of harassment to anyone who's received them. But nonetheless, we can only hope that this move will take our market a step or two closer to legalisation via legislation, and without compromising on our rights, especially-right to privacy and earning a legitimate income!
Here's a guide on filing your returns if you have any Bitcoin or cryptocurrency related income in India.
Moving On
It has been quite a roller coaster year for Bitcoin users from India. From riding the rally to stomaching the corrections, the new wave of crypto has taught us a lot. 2018 is welcomed with open arms and I hope that India continues it's growth to become one of the major players in the crypto-space in the near future.