Bitcoin: State of Affairs in India Nearing 2018!
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.
If you like my work kindly resteem it to your friends. You may also continue reading my recent posts which might interest you:
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There was this price rally a year ago, fuelled partially by the news of the rapid demonetising of the INR 1000 and INR 500 notes in India, and Bitcoin found as a solution to unreliable fiat. There was similar news from Venezuela, and even in Australia there were news of Bitcoin becoming more dominant due to government, banks and others pushing for abandoning paper money.
What struck me then was that Bitcoin, with it's current capacity ceiling, never can make any significant advancements as a payment medium even in Venezuela - and absolutely not in India. If a significant part of the Venezuelian population (29M, according to Wikipedia) was to start using Bitcoin on a daily basis ... no, it just can't work out with the current 1MB block size limit. If a significant part of the Indian population (1200M according to Wikipedia) would start using Bitcoin on a daily basis ... the transaction fees would quickly rise to a point where only the richest of the richest would be able to use Bitcoin. Hence I believed we were at the top of a bubble set to burst - obviously I'm not very good at predictions, the Bitcoin market price has appreciated with ~15X since then. And Bitcoin transaction fees have grown dramatically, too.
Now 2000 INR is a perfectly normal fee for a "native" Bitcoin transaction, how many Indians can really afford to actually use bitcoins? Then again, if people are satisfied with being indirect owners of both Bitcoin and Gold (I understand that's how it works, both with Vaultoro.com and Unicorn) ... yes, for sure it can work out.
At the other hand, if you want to fuel a cryptocurrency revolution, it's not enough that people are merely investing in Bitcoin as a "speculative asset" and having some Bitcoin balance on some exchange ... no, I believe the true revolution will only come when ordinary people actually use crypto currency, hold it in their own wallets, and use it for daily purchases. Obviously, this won't work out for Bitcoin with it's current 1 MB limit. Could it work out with Bitcoin Cash? Could it work out with other crypto currencies?
With the governments push to introduce Banking Regulation Bill (FRDI) soon, people in India now fear whether the money deposited in bank accounts are safe? With this new Bill, if the financial situation of the bank deteriorates so much that it becomes unable to repay the deposits then it holds, which means there is possibility that a bank account holder with a large deposit might lose a lot of money if the bank goes down. Bitcoin seems to be the safe place than any bank for Indians...
This comment has received a 0.26 % upvote from @booster thanks to: @hms818.
Great article!
Bitcoin is a slightly complicated and very profitable asset. Without physical form is one of the uniqueness of bitcoin. bitcoin is hard to steal.
I think India will and doesn't Modi want to make a cashless society?? Something I and a lot of people in India don't want to see.... I hope for India it will keep both options and methods of paying.
Exactly ! ...Indians love purchasing gold and it runs in our blood....but i sold my gold chain and that money i invest in steem....
making it a steem gold
With the governments push to introduce Banking Regulation Bill (FRDI) soon, people in India now fear whether the money deposited in bank accounts are safe? With this new Bill, if the financial situation of the bank deteriorates so much that it becomes unable to repay the deposits then it holds, which means there is possibility that a bank account holder with a large deposit might lose a lot of money if the bank goes down. Bitcoin seems to be the safe place than any bank for Indians...
This is the same problem here in Pakistan:
we're far from mainstream adoption or even thoroughly knowledgeable about it in our country
Indians love purchasing gold and it runs in our blood. Same happened in here.
Thanks a lot @firepower for sharing such a valuable blog post with detailed overview of the culture of Asians towards mainstream adoption. As we are living in such countries which are still in the process of development almost every filed of life specially information technology. Although India is too advance in IT as compared to Pakistan but still in rural areas people are not aware of IT.
I believe that in 2018, crypto world will rise and shine and there would be lot of participation from Asia Specially from India, Pakistan etc.
I must appreciate your great work, which you have done in this blog. This is my first ever comment on any of your posts. And I'm now on one of your regular reader. Because I really found a person who comes with the real stuff in very detailed way.
All the best Dear @firepower. Waiting for your your next Blog. Stay Blessed!
By the way 100% upvoted and Resteemd your post!
steem I love it
All is good that we are starting accepting and recognizing cryptocurrencies everywhere, but the governments are overstepping over the freedoms that these coins were built on. The entire concept was to have a free coin, not-governed (thus not taxable) that can be used in any of the world states and in the entire universe of all.
Now, each country tries to charge the ones involved in cryptocurrencies, even if they don't have any contribution for that. We all worked one way or the other for where we are today in the cryptocurrency world and why should we give to our governments a piece of our hard work? They didn't do anything for us so why should we give any? And, another thing is that if applicable - it should not be retroactive but from a certain point in the future. At least, this way, there will be less residence from us.