Rich rewards often entail great risks, and the exact same is true with the highly volatile cryptocurrency market. The uncertainties in 2020 globally led to a heightened interest of masses and large institutional investors in trading cryptocurrencies, a new-age asset class. Increasing digitization, flexible regulatory framework, and supreme court lifting ban on banks working with crypto-based companies have parked investments greater than 10 million Indians within the last year. Several major global cryptocurrency exchanges are actively scouting the Indian crypto market, that has been showing a sustained surge in daily trading volume over the past year amid a large drop in prices as much investors viewed value buying. While the cryptocurrency frenzy continues, many new cryptocurrency exchanges came up in the united states that allows buying, selling, and trading by offering functionality through user-friendly applications. WazirX, India’s biggest cryptocurrency trading platform doubled its users in one million to two million between January and March 2021.
What’s Driving World’s Largest Crypto Exchanges to the Indian market?
In 2019, the world’s largest cryptocurrency exchange by trade volume, Binance acquired the Indian trade platform, WazirX. Another crypto launch, Coin DCX secured investment from Seychelles-based BitMEX and San-Francisco based-giant Coinbase. CashTab The crypto and blockchain start-ups in India have attracted investment of USD99.7 million by June 15, 2021, which totaled around USD95.4 million in 2020. Within the last five years, global investment in the Indian crypto market has increased by a whopping 1487%.
Despite India’s unclear policy, global investors are making huge bets on the country’s digital coin ecosystem because of variety of factors such as
Tech-savvy Indian Population
The predominant population of 1.39 billion are young (median age between 28 and 29 years) and tech-savvy. As the older generation still prefers to invest in gold, real estate, patents, or equities, the newer ones are embracing the high-risk cryptocurrency exchanges as they are more adaptable to them. India ranks 11th on Chainalysis’s 2020 report listing for global adoption of crypto, which shows the excitement about crypto one of the Indian population. Nor does the less-than-friendly attitude of the federal government towards crypto or rumors swirling round the crypto have the ability to shake the confidence of the youth population in the digital coin market.
India offers the cheapest internet in the world, where one gigabyte of mobile data costs around $0.26 as the global average is $8.53. So, almost half the billion users are using affordable access to the internet, which enhances India’s potential to become one of the largest crypto economies in the world. Based on SimilarWeb, the nation is the second-largest supply of web traffic to peer-to-peer bitcoin trading platform, Paxful. As the mainstream economy continues to be struggling from the “pandemic effect”, cryptocurrency is gaining momentum in the united states as it provides the young generation a brand new and fast way of earning money.
It’s safe to say that cryptocurrency might become Indian millennials what gold is for their parents!
Rise of Fintech Start ups
The cryptocurrency craze led to the emergence of multiple trading platforms such as WazirX, CoinSwitch, CoinDCX, ZebPay, Unocoin, and many others. These cryptocurrency exchange platforms are highly secured, accessible across various platforms, and allow instant transactions, providing an agreeable interface for crypto enthusiasts to get, sell, or trade digital assets limitlessly. Several platforms accept INR for purchases and trading fees as little as 0.1% so simple, fast, and secure platforms present a lucrative opportunity for both first-time investors and local traders.
WazirX is one of the leading cryptocurrency exchange platforms with over 900,000 users that gives customers with peer-to-peer transaction capabilities. CoinSwitch Kuber provides the most effective cryptocurrency exchange platform for Indians and is ideal for beginners as well as daily doers. Unocoin is one of the oldest cryptocurrency exchange platforms in India that account fully for over a million traders through mobile applications. CoinDCX provides users with 100+ cryptocurrencies as an option to produce exchanges and even provides investors with insurance to cover losses in case there is a security breach. So, global investors are eyeing the plethora of cryptocurrency exchange platforms in India to make the most of the emerging market.
Mixed Government Response
The legislative bill regarding a ban against an electronic currency that will criminalize anyone engaged in possession, issuance, mining, trading, and transferring crypto assets could easily get enacted into law. However, Finance and Corporate Affair Minister Nirmala Sitharaman eased some investor’s concerns saying that the federal government hasn’t planned to completely bar cryptocurrency use. In a statement fond of a respected English newspaper, Deccan Herald, the Finance Minister said, “From our side, we’re clear that people aren’t shutting all options. We allows certain windows for people to complete experiments on the blockchain, bitcoins, or cryptocurrency.” It’s evident that the federal government continues to be scrutinizing the national security risks posed by cryptocurrencies before deciding on putting a whole ban.
In March 2020, the Supreme court overturned the central bank’s decision to ban financial institutions from dealing in cryptocurrencies, which prompted investors to pile in to the cryptocurrency market. Inspite of the lingering anxiety about ban, transaction volumes continued to swell, and user registration and money inflows at local crypto-exchange became 30-fold from a year ago. One of India’s oldest exchanges, Unocoin added 20,000 users in January and February of 2021. The total volume of Zebpay each day of Feb 2021 got equal to the amount generated in the complete month of Feb 2020. Addressing the cryptocurrency scenario in India, the Finance Minister said in a CNBC-TV18 interview, “I can only just offer you this clue that people aren’t closing our minds, we are considering ways by which experiments sometimes happens in the digital world and cryptocurrency.”
Rather than sitting on the side-lines, investors and stakeholders want to help make the best of proliferating the digital coin ecosystem before government introduces the ban on “private” cryptocurrency and announced sovereign digital currency.
Is India Heading Towards Financial Inclusivity with Cryptocurrency?
Once considered a “Boys club” because of predominant male population engagement in the cryptocurrency market, the steadily rising number of women investors and traders has led to more gender neutrality in the brand new and digital form of investment methods. Earlier, women used to adhere to traditional investments nevertheless now they are becoming risk-takers and venturing in to the crypto space in India. Following the apex court clarified the legality of “virtual currency”, the Indian cryptocurrency platform, CoinSwitch witnessed an exponential 1000% increase in its women users. Although women investors still constitute a tiny percentage of the crypto community, they are adding fierce competition in the Indian market. Women tend to truly save far more than their male counterparts and more savings means more diversity in investments such as high-return assets like cryptocurrencies. Also, women are far more analytical and better at evaluating risks before making the proper investment choices, so they are more successful investors.
Increasing Mainstream Institutional Adoption of Cryptocurrencies
Uncertainty and panic aroused by SARS-Covid 19 led to a liquidity crisis even prior to the economic crisis set off. Many investors converted their holdings into cash to guard their finances, which triggered the collapsed prices of bitcoin and altcoin. But even though crypto suffered an important crash, it still was able to be the most effective performing asset class of the year 2020. With the increased vulnerability of the machine and lack of trust in the policies of the central bank and money in its current design, people have an elevated appetite for digital currencies which triggered the rebound of cryptocurrency. Due to the stellar performance of cryptocurrency in the midst of the global financial crisis, the uptrend has strengthened interest in the virtual currency market in Asia and the rest of the world.
Furthermore, to fuel society’s demand for convenient and reliable transaction solutions, digital payment gateways such as PayPal have also shown their support towards cryptocurrencies that may enable consumers to keep, buy, or sell with virtual assets. Recently, Tesla CEO Elon Musk made an announcement of investment in the cryptocurrency market worth USD1.5 billion, and that the electric company would accept bitcoin from buyers, which led to an international bitcoin price jump from USD40,000 to USD48,000 within two days. Two of the biggest platforms for making payments across the world, Visa and Mastercard are also endorsing cryptocurrencies by introducing them as a moderate to produce transactions. While Visa has made the announcement of allowing transactions with stable coins on the Ethereum blockchain, Mastercard would begin transactions with crypto sometime in 2021.
What does the future hold for the Cryptocurrency market in India?
The Indian cryptocurrency market is not immune to the terrible crypto crashes. Despite humongous investment from global counterparts, local investors remain maintaining distance from crypto investments because of uncertainty concerning the legality of the digital coin ecosystem in India as well as the high volatility of the market. Even though cryptocurrency market is booming since a year ago, Indians own less than 1% of the world’s bitcoin, which creates a strategic disadvantage for the Indian economy. The Indian government is about to appoint a brand new panel to examine the possibility of regulating digital currencies in the united states as well as focus on blockchain technology and propose it for technological enhancements.
The capability of blockchain technology to offer a secure and immutable infrastructure has been realized by various industries to instill transparency in transactions. For a country with over 15 million crypto adopters, the brand new recommendation from the committee could hold great value to ascertain the future of cryptocurrency in India. However, the stakeholders genuinely believe that the technical and economic power can make India a key player in the crypto and blockchain market. Gradually, the cryptocurrency is gaining mainstream acceptance, which could lead to raised adoption of digital currency.