Why India's Unified Payments Interface won over Bitcoin

In November 2016, the Indian government demonetized the two most common banknotes - INR 500 and 1000 - overnight. Effectively, wiping off $260 billion worth of cash.

It was a significant opportunity for digital and cashless payment systems to capitalize. For a while, BTC mooned - reaching USD 1,000 in late November when the USD markets were hovering in the USD 700-750 range. It never quite materialized, as India's Unified Payments Interface (UPI) system won massively. Today, wallets based around UPI like Paytm have soared through the roof in popularity and usage. So why did BTC fail?

I'm going to take the consumer mass' perspective, not necessarily my opinion. There's going to be no quarters given - this will be a brutal critique.

Convenience

UPI is an open platform developed by the Reserve Bank of India that has been adopted by both traditional fiat banks and digital wallets. All you need to do is log in to your bank account and create a UPI address - name@bank. That's it. The digital wallets take it further by associating your wallet with your phone number or email.

Compare this to registering on exchanges, creating difficult to remember wallet addresses, buying/selling between INR and BTC every time. It's a chore.

Stability

This one's obvious. BTC is very volatile, particularly in India during the demonetization days. By using UPI, you know when you send someone INR X, they receive exactly that.

It's free

There are no transaction fees for UPI. (though some banks or wallets may charge nominal fees at their end). Contrast this with BTC transaction fees plus exchange fees. In India, the exchange fees are exorbitant, at between 0.3% to 1% per transaction.

Reliability

Indians are very risk averse people. They don't trust anyone with their money. Indeed, till recently, most Indians would refuse to use their debit/credit cards online for fear of theft!

Who's going to trust their money with some random anonymous miners located who knows where? With UPI, you know your money is backed by every major bank and the RBI.

Privacy

While everyone knows yours UPI address, no one can poke their noses into places they don't belong. Your balance, transactions and everything is private and anonymous.

Universal adoption

Currently, over 200 million people are using UPI on a regular basis. Heck, the Paytm app alone has a 50 million userbase! Precious few have heard of BTC, let alone have a BTC wallet or understand how to create one. Nearly every urban citizen has a UPI wallet of some kind.

Scalability

UPI is built to scale to a peak of 15,000 transactions per second, with a daily volume of 10 million transactions. Meanwhile, BTC is already choking at well under 0.5 million transactions per day.

Speed

Last, but not least, UPI is instant. You can send payments from any bank to any bank and it always goes through in 0 seconds. No one's going to wait around 10 minutes to an hour to wait for their transactions to process. Wallets like Paytm saw enormous success in retail. The retailer would put up a QR code or a phone number. All the customer would need to do is open their app, enter the amount, and voila!

Simply impossible with BTC.

Consumer want simplicity and convenience

The average consumer doesn't care about decentralization or related political propaganda. Decentralized services absolutely must measure up to the quality of service centralized services offer, or it will remain a niche solution. They just want a service that is convenient, reliable, fast, and always just works!

Consumers, retailers, e-tailers are adopting UPI en masse. It's not just BTC of course - PayPal is well and truly beat, with cash on the way out. So much so that they have withdrawn from the Indian consumer market and are now focusing only on businesses.

There's a lot to be learned from UPI - the cryptocurrency that follows this model will win. This will require integration with fiat banks, but at the same time, remain independent of them. Over time, who knows, cryptocurrency can leech consumers from the same banks.

Lastly, yes, Steem has technically made major strides in areas where BTC has failed.

You can learn more about UPI here - http://www.npci.org.in/UPI_Background.aspx