Number of Bitcoin users is still very small in India, less than a few hundred thousands, as per the number of registrations in Zebpay and Unocoin which two of the major bitcoin exchanges here. However India saw its use surge amidst the demonetization drive by Indian govt in November 2016.
What are the hindrances for crypto currencies to become ubiquitous in India? What are some of the attitudes of people in my sphere towards them?
I had some conversations with few of my colleagues and it gave me some insights ... They are a bit cringe worthy, but they give you an idea of what needs to be addressed in the education of the masses
To talk about my background a bit,
I work in a technology MNC in India and keep myself fairly abreast via Techcrunch, TechinAsia and a few other resources.
Most of my colleagues have a very similar background.
Conversation with Friend1
Friend1: Hey, whats up?
Me: Hey, have you looked at the rise of BitCoin price, its at 2500$ !!
Friend1: Hmmm, so what. Its only traded in US right ...
Me: No dude! There are exchanges like Zebpay and Unocoin which exchange bitcoins for rupees.
Friend1: Nah man, thats illegal.
Me: Why? They use your bank accounts to pay for the bitcoins and also transfer sell proceeds to your bank account.
Friend1: How are taxes collected??
Me: There might be capital gains taxes applicable but the Central board of taxes has not issue any guidance as of now. So you need not pay anything on taxes as of now.
Friend1: See, thats illegal.
Me: ah well, you see ... (about a 20 min of monologue on Ripple, bitcoin and blockchain) ..
Friend1: Hmmm, its still illegal, and the govt can fine you later along with taxes or cesses etc for the previous transactions.
** Some more discussion ensued, but at the end of it I could not convince him of legality of exchange concern. **
Conversation with Friend2:
Me: Hey dude, do you know blockchain technology is picking up and crypto currencies like Bitcoin are all the rage, its worth over 2500$ now
Friend2: I've heard of bitcoin but I have not paid much attention to it. How much was it before?
Me: it was around 200$ about two years back and it is now 2500$
Friend2: Hmm... isn't that pure speculation ... any ways who would trade bitcoins in India.
Me: well yes, it is speculation, but there are a couple of exchanges like Zebpay and Unocoin. They are doing a reasonable sized business of about 100Cr on their websites as well.
Friend2: I dont see much value in it. It is just some virtual coin which has no intrinsic value. What benefits does it give?
Me: Again a monologue about Ripple, BlockChain, Bitcoin and altcoins, Ethereum, smartcontracts, Softforks, hardforls, yada yada ...
Friend2: Looks like you are saying there are many alternatives to bitcoin already, and there are Hardforks!! Looks like we can just start another coin, or fork from one of them ...
** The discussion continued for some more time, but he was unconvinced about the value of smart contracts as long as there is no single currency which has some intrinsic value. **
In most of my conversations, i see the same theme. Below are the distilled concerns ..
Where is the legality established by the govt, including clarity on taxation.
What crypto currency can we start with when there are so many changes happening to each of them and the associated volatility.
There are so many alternatives so looks like anybody can start a crypto currency and mint some quick money. Looks like a scam
Legality concern will hopefully get answered soon.
After several warnings by Reserve Bank of India; Now, Govt of India has started a discussion on myGov and also constituted an Inter- Disciplinary Committee in Economic Affairs under ministry of finance to examine the existing framework with regard to Virtual Currencies .
However, other 2 concerns arise out of the nascent nature of the technology.
Several changes and failures like DAO, Smart contracts, finality over POW vs POS, so many Altcoins with values fluctuating so randomly, erode confidence on crypto currencies in general population.
Will this be inherent nature of crypto-currencies? Do we have any other ideas being explored which address these concerns?